INVESTING

Who Gives A Crap founder on toilet paper as the hottest commodity

By

There was a time in our not too distant past, before we collectively became bakers of sourdough bread, when toilet paper was the most sought-after commodity in the nation. And as we write this story in late June, toilet paper sales are again on the rise.

During the first wave of COVID-19, subscription toilet paper company Who Gives A Crap found its website overwhelmed with requests from new customers as it struggled to meet the increase in demand. The socially conscious company has now been around for eight years, with the founders still hands-on and driving the now global business.

The Who Gives A Crap story began when the three founders - Simon Griffiths, Danny Alexander and Jehan Ratnatunga - realised that 2.5 billion people didn't have access to a toilet.

Simon Griffiths paper profits

There are health benefits in, first of all, having a toilet and then making sure waste that should go into the sewer is not polluting clean water.

"Globally, unclean water is the second largest killer of kids under five," says Griffiths.

The founders ensured their business plan was underpinned by the social impact of the company - and that commitment turned into donating 50% of profits to building toilets for those in need. The business model also included all products being made in an environmentally friendly way.

Money versus happiness

Griffiths figured out early in his career that he was most miserable working in his highest paid job.

"I was 21 and had enough experience to figure out that money and happiness were not correlated, so the focus became, 'Why am I less happy in this job than other jobs?' And it was because I was not able to unlock my full potential - I wasn't really passionate about what I was working on. If I'm going to optimise work for happiness, it's to work on problems that I care about," he says.

That's how the focus on social business came about. No one was thinking about social businesses in the way Griffiths thought they should. This meant there was no ability to join another company - and that's when the founders realised they had to create their own business.

Not having a wealthy family to support him, Griffiths looked at how he could best support himself while starting up Who Gives A Crap. The highest hourly rate he could earn with his current skill set was tutoring. He tutored nights so that he could have a 40-hour work week for his own business.

"While not from a wealthy family, I acknowledge that as a white male growing up in Australia, I do come from a privileged background, which has made it easier for me to take risks," says Griffiths.

He was lucky and was street-cast in a Tourism Victoria ad, and then when the business started he was able to do public speaking, which had an even higher hourly rate, so he could put his time and energy into the business.

Griffiths has always been the chief executive but his role has changed a lot over the course of the business. In the beginning he was the only one working in a full-time capacity.

Marketing the product

Who Gives A Crap started with a crowdfunding campaign in 2012.

"There were six crowdfunding campaigns on the day we launched ours. We realised we were selling one of the most boring products in the entire world," says Griffiths. "One of the guys had the idea of filming our crowdfunding video of me sitting on the toilet in our warehouse apartment until we pre-sold $50,000 worth of product. Fifty hours after that we went viral with 2.5 million media impressions and we sold product to the first 1000 customers."

At the time, the company was just selling to Australia and the US, and was trying to gauge which would be the better market. The campaign was shared twice as often in Australia as in the US, and it was leading to three times the sales rate in Australia than in the US.

"Not only were we more likely to be shared in Australia, but we also had a higher conversion rate," says Griffiths.

This was a surprise. "We thought ecommerce was much stronger in the US and buying toilet paper on Amazon was not unfamiliar, while in Australia it was totally abnormal."

After the results, Griffiths says the business decided to focus on Australia as its first market and then launch in the US after it had built up a stronger and better business.

Two markets at once

In 2017, Who Gives A Crap was launched in the UK and again in the US.

"We still believe it is one of the best things we ever did. If we launched one market then we'd think that the other would be better," says Griffiths.

"We learnt a big lesson - that you need to reach critical mass before business picks up momentum and naturally gets bigger, which is easier to do in smaller markets - 1000 people is a larger proportion in a smaller market. That happened in the UK, but it took longer to reach that point in the US."

Australia remains the biggest market. Most of the revenue now comes from overseas, but Australia accounts for 40% of sales now and the UK and US are each 30%. Australia now has a slower growth rate as it's a more mature market, says Griffiths

Currently, Who Gives A Crap is manufactured in five regions in China to ship globally to all markets. There are also warehouses in Australia to reduce shipping.

"One of the big things we've learned is that relationships are really important, especially in China, and they take an incredibly long time to build up. The production partner today is the same one I first met almost 10 years ago. We've had a big influence in their business and they've grown with us," says Griffiths.

When it comes to distribution, the UK and Australia are quite similar in parcel freight (Australia Post and Royal Mail). The US is different, though, with USPS, FedEx, UPS, and regional offerings. It's also regulated differently state by state, so the way to do business there is different from what they've experienced in Australia and the UK.

The Covid-19 crisis

Selling out of toilet paper, seeing huge volume spikes and having more than half a million people on waiting lists put enormous stress on the business.

"During March, 5% of all Australians [all age groups] visited our website and when we look at what happened when we sold out - we had a back-in-stock email that more than 600,000 customers had signed up for. We had challenges working with volumes that big," he says.

"We have a lot of data that we look at, and we saw in the press that Hong Kong was running out of toilet paper, then Singapore and Japan. We thought there was no way that could happen in Australia and yet it did.

"In the space of three days the demand grew exponentially. On March 2 orders increased 300% and on March 3, 1100%, then 20 times and 30 times and 40 times as much as a regular sales day. Our systems couldn't cope with that level of fluctuation."

They had enough inventory for clients in Australia and for hotels. In the US and the UK, demand was a little above normal,
but not hugely.

But when the news about panic buying in Australia hit, the UK daily demand rose three to four times before supplies ran out.

Griffiths had to remind the team that they are in "the business of delight".

"When we sold out of toilet paper, if we were just a toilet paper company we would have had no toilet paper to sell. We took a step back and said we're in the business of delight so what would we do? We took out a full-page ad that read, 'Have you run out of toilet paper? We have too. We have printed this page for you to use.' This created delight."

His other big lesson from Covid-19 is that honesty is always the best policy.

"When doing something no one has ever done before you'll always make mistakes and you have to be open and honest with them. So, with customers, you have to let them in on the truth. We're actually a bunch of humans trying to run a business. Things don't always go perfectly so customers will forgive us for lumps and bumps," he says.

"It meant that we had to come back to our purpose. When our business is good, we're all sailing to the same star and when the going gets tough we are anchored through this."

Who Gives A Crap was back online in early May in the UK and mid-May in Australia and the US.

"I think we probably saw a 40% increase in sales globally from February to March and that's been sustained through April and this will be a step-change going ahead," says Griffiths.

Figures for May 2020 were double those for December 2019 figures and three times more than those for May 2019.

A silver lining

For Who Gives A Crap, to have that sort of an increase month on month and be sustained over time allows it to make a better donation to its partners.

In June, it made its biggest donation so far - $5.85 million for the financial year, which brings the total donations to date to about $8.38 million. The company had already donated $100,000 in March to four of its partners to run Covid-19 specific programs.

Part of the success is attributed to investing in growth in addition to some strong sales months with very little marketing, says Griffiths.

He believes the company would be successful without the social impact, but it would not have achieved the scale it has without the "special sauce".

"When we look at what happened in March, there were thousands and thousands of media mentions, and pretty much all of them said, if you're looking for toilet paper look at these guys, they donate 50% of their profits," he says.

Who Gives A Crap partners with four charities: WaterAid US, WaterAid Australia, Lwala (an organisation bringing healthcare to Kenyan communities), and SHOFCO (Shining Hope for Communities) in Africa. Lwala sent 350 community health workers to deal specifically with the pandemic, SHOFCO educated communities about the virus and distributed soap and sanitisers and installed handwashing stations.

"We really believe the best model for philanthropy is to give unrestricted funding. We could say here's $100,000 to build a toilet
in that location or say here's the money to do what you think is best with it. We choose to allocate the capital and let it happen," says Griffiths.

The work continues, as 2.3 billion people still don't have access to a toilet or clean water.

The business has grown at the same pace as the revenue, tripling in size over the past seven years. It's gone from one full-time staff member to 80.

"We have an incredibly high retention rate. A lot of our staff members have been with us for many years and we've all been through a lot together," says Griffiths.

He credits the power of purpose as one of the reasons for the tightness of the team. "As a business, purpose is at our core, part of our DNA and we would not be as successful without that," he says.

The working-from-home environment was nothing new for Griffiths' team. "In a way it was like we've been training for this moment for six years and now's our time to shine."

While the team value face-to-face interaction, they realised they didn't have to be in the office together 40 hours a week.

"We looked at what else was important to us. Benefits are a big deal in the US so we look after that for all team members. In the Philippines, remote work was really powerful in cities like Manila, where traffic is such a problem. It meant the team could have a higher quality of life."

What's next?

For the year ahead Griffiths says the business will be doing a few different things: new markets, (European and non-English-speaking), a new product and a new category as well.

"Where we've landed is that if we're trying to have the most impact possible we need to show that business models like ours can be replicated in other businesses and categories and that's how we'll solve the most problems," says Griffiths.

"We can achieve social impact at scale and financial returns at scale and treat our teams well. We're no longer at the bottom of the salary bands for staff."

Even the founders who were underpaid in the early years are now earning market salaries because, as Griffiths says, "We need to build a business we could step out of and someone else could take over".

"The model we have is that products need to look good, feel good to use, and to do good too.

"They need to be price competitive, great quality and make you feel great when using them."

In the past 24 months more competitors have emerged, but Griffiths sees imitation as the sincerest form of flattery.

RELATED STORIES

Julia Newbould is a financial writer and commentator with a background in journalism. She was previously editor of Financial Planning and Super Review magazines; managing editor at InvestorInfo and at Morningstar Australia. Julia co-authored The Joy of Money, a book on women and personal finance. She holds a Bachelor of Economics from the University of Sydney where she serves on the alumni council.
Post a comment
Link to something M4NpFqyO