The former Hilti Australia MD spoke to Dynamic Business about the ongoing success of his first digital startup Mad Paws and the rapid growth of his second, Flare, which he co-founded with joint Managing Director Daniel Cohen, CTO Saul Kaplan and Solution Architect Colin Mierowsky.
DB: What is the elevator pitch for your latest business Flare?
Pacas: Flare is Australia’s first all-in-one HR, payroll & employee financial wellbeing platform. We serve employers and employees, meaning we have a dual value proposition.
For employers, it’s an all-in-one HR, benefits and payroll platform that enables HR personnel to outsource often complex tasks, such as onboarding new employees, to the cloud. By automating admin and paperwork, we’re saving HR professionals hours of time while eliminating the potential for mistakes.
On the other side of the equation, Flare is a financial wellbeing platform for employees. It assists them to set up their salary package in a way that best suits them, and make informed decisions around their life insurance and superannuation throughout their employment.
Nearly all Australians have an inadequate level of life insurance. Similarly, 80% take a passive approach to their superannuation – in other words, they opt for compulsory contributions to be paid into a default fund. We’re convinced this is because new employees feel pressured to make snap decisions when they join a company but there isn’t necessarily transparency around the available options. We’re giving employees transparent, independent information about every fund at the right time.
Although there are other players in our space, our big differentiator is that we’re not just a B2B HR platform, we’re also a B2C employee Benefits platform. From the beginning, our mission has been to maximise engagement with our platform, on both sides, by making it as user friendly as possible.
DB: How did you come to know your Flare co-founders?
Pacas: I knew Daniel – the founder of IoT business Park Assist – through the Young Presidents Organisation (YPO). In turn, Daniel knew Saul who’d collaborated with Colin on MacromatiX, a cloud software company Saul founded.
DB: What motivated the four of you to launch the startup?
Pacas: We were drawn together by our shared desire to change the employment experience in Australia. We were surprised by the fact that Australian companies hadn’t yet fully woken up to the benefits of HR tech. For instance, you’d assume all ASX200 company on-board their employees in an organised way… but they don’t.
The four of us got together to discuss the possibility of essentially migrating HR to the cloud in the same way that accounting and CRM had been. Noting that similar business models had been very successful in the US, we saw a huge opportunity to make an impact in Australia.
James Windon joined our founding team a few months ago and has been able to add value to the company due to his consumer background, experience in Silicon Valley and strong understanding of start-ups. As Flare is becoming a B2B2C business, we wanted to have somebody with a digital consumer product experience
DB: How would you quantify the success of Flare?
Pacas: Since launching in June, last year, Flare has grown to have a team of 35 people, partnered with the likes of Westpac and raised approximately $9 million in funding from Reinventure and other strategic investors. Critically, we’ve signed up over 40,000 employees across 140 businesses including Peoplebank, Sephora and Employsure as well as Fortune 500 and ASX-listed companies such as GUD. In fact, 90% of the companies signed up with Flare have between 100 and 1000 employees. Compared to some of our American equivalents, who’ve been around for around the same amount of time, that’s very fast growth.
DB: What key factors have fuelled these results?
Pacas: A focus on building a scalable sales and marketing team has really enabled us to acquire new customers and increase our customer awareness. More broadly, we’ve assembled a really great team representing different backgrounds – we’re all high achievers at Flare. Our strategic partnership with Westpac has helped us scale too – they’re promoting Flare to their clients through different channels. Another valuable partnership has been with fast-growing applicant tracking/recruitment platform LiveHire, which was founded in Melbourne. Our technologies work perfectly together due to an API integration and we continue to support each other by sending each other leads.
DB: What have been the main challenges with Flare?
Pacas: Being a startup, we’ve had to be very ruthless in terms of our priorities and we’ve had to think differently than we would if we were a corporate because our horizons are significantly shorter – our focus is on what needs to happen in the next sprint, the next month, the next quarter. While it can be daunting to create a vision that employees and customers alike want to follow, that’s part of the excitement. In a short space of time, we’ve been able to excite a large number of people and have them join us on our journey.
DB: What has been a defining moment in Flare’s story?
Pacas: It’d be naïve to think that we’ve made it just yet… but signing our first Fortune 500 client – Henry Schein, an American-run multinational with 1000 staff in Australia – was definitely a defining moment. The due diligence they undertook before signing with us was VERY comprehensive – there were a lot of questions and even their CIO got involved. I thought, ‘Oh dear…let’s see how we go’… but we succeeded and that gave us a huge confidence boost. Passing such a relatively demanding test helped position us to take on bigger clients because we could always refer, internally and externally, to this situation.
DB: What is the philosophy you live by in business?
Pacas: You need to be very deliberate about who’s going to join your company, especially when you’re building a startup. This means surrounding yourself with the right people, who align with your vision, which isn’t always possible if you subscribe to traditional recruiting models. These models have tended to focus on competencies and experience, with companies hiring candidates who’ve performed a similar job or jobs previously. I wouldn’t say that industry experience isn’t important – when it comes to certain job functions, it certainly is – but I’m very open to people from a variety of backgrounds and give weight to things like a job candidate’s potential (i.e. how far he or she could go), their intrinsic motivational drivers and whether they possess attributes that are necessary in a startup.
DB: What sort of attributes are you referring to?
Pacas: The ability to problem solve, resilience, creativity, customer focus, and the ability to just get things done in the absence of all the facts (even it means not delivering a perfection solution).
DB: Mad Paws, Hilti, Flare… is there a common theme?
Pacas: They’re very different businesses, yes, but I’m passionate about a great many things that don’t, on the face of it, have an any sort of obvious connection. I’m passionate about people, pets, travel and sports and I’m fortunate to have been able to build businesses in some of those fields. If you back those causes that align with your values, you’ll find it easier to get through the day whereas if you’re doing something that doesn’t interest you, it’s tough to get up in the morning.”
DB: What skills have you utilised across all three?
Pacas: I’ve had to be good with numbers and be very strategic. I’ve also had to balance the need for a long-term vision with the ability to dive into the detail. On the leadership side, I’ve had to create a transparent and inclusive environment where people feel they’re part of something special.
DB: What prompted your leap into the world of startups?
Pacas: I was at a point in my career where I had a number of options. I could have pursued something internationally, or gone into an ASX environment but I really wanted to delve into the world of digital startups because I’m convinced they’re the future. I really wanted to understand digital technologies and new business models from ten feet not from 10,000 feet. The best way to do that is invent the future, create those companies.
DB: Do you prefer the experience of being in the thick of it?
Pacas: There are some moments of absolute joy – you make your own decisions and, unlike in a big company, you can innovate and change direction very quickly. It can, however, be frustrating when you realise that you had more resources, in terms of finance and people, when you were at a large company. Also, in the beginning, it can often feel like you’re ‘winding back the clock’ and doing work that you were doing in your early twenties. That said, it’s all part of the journey.
DB: What have been two key learnings from your two startups?
Pacas: The first is that you have to really believe in your vision for your business because there will undoubtedly be lows along the journey and the safety net in a startup is much smaller than in a corporate. It’s important to make progress every week, every month… but at the same time not get down about not being able to do everything perfectly yet.
The second key learning relates to the tendency amongst founders, at least in the beginning, to be overly optimistic and only plan for the best-case scenario. While it won’t always be your fault, certain things will inevitably go wrong in a startup. For this reason, it is important to set time buffers, account for delays, have contingency plans and be able to change direction quickly.
DB: What are your ambitions for Flare and Mad Paws?
Pacas: I want them – as do my respective co-founders – to become household brand names in the Australian market. That won’t happen overnight, nor will it happen in a month or even half a year’s time…but both are enjoying huge growth and will continue to grow. Flare has had some significant early wins – most recently a $7 million funding round. Meanwhile, while Mad Paws, which I co-founded with CEO Alexis Soulopoulos three years ago, has been growing at 300% per annum and today boasts more than 150,000 users – as a result, we’ve attracted some really interesting investors and are finalising a funding round as we speak (stay tuned). In the case of both business, there’s a huge market opportunity so I’m hoping they’ll have great futures.
DB: Are you able to nominate a career highlight?
Pacas: There are so many moments I’m proud of. Being named AHRI’s CEO of the Year, two years ago, was a thrill but what has been a real source of happiness for me has been seeing my team members developing and growing over time. Many people that I have hired have moved into much bigger roles and maybe I’ve helped them develop a little on their way.