Campaign Monitor is shaping up to be Australia's next tech unicorn

Campaign Monitor founders Ben Richardson and David Greiner. Photo: supplied.

The views from the top floor of the skyscraper on the corner of Elizabeth and Park Streets in downtown Sydney are as spectacular as you might expect. In each direction there’s something to catch the eye; the city’s tall buildings, its famous harbour and its sprawling suburbs out to the Blue Mountains.

But the space inside is far from your typical office setting. There are ping pong tables, cornhole boards and a dedicated video games area. Young staff dressed in T-shirts and jeans wander around, a full kitchen team prepares them free meals.

On the lunch menu today: hot dogs, fries and organic corn on the cob. Once occupied by global law firm DLA Piper, this two-floor space is home to Campaign Monitor, an email marketing company that many think might eventually become Australia’s next $1 billion tech giant. In other words, the next Atlassian. Campaign Monitor moved here just over a year ago from a nondescript suburban base in Sutherland, about 30 kilometres south of central Sydney.

Downing hot dogs at one of the cafeteria-style tables in the dining area, Ben Richardson and Dave Greiner are the antithesis of cliched tech geeks. Far from pale and thin, the 37- and 38-year-old avid surfers are tanned and fit looking. There’s none of the awkwardness or arrogance that tech founders often exude. When we finish eating, it’s Ben and Dave, as everyone here seems to call them, who clear the tables.

The duo banter about sport, fatherhood and work, as you’d expect from a couple of suburban dads from Sydney’s down-to-earth Shire. Which is what they are; they each have two kids. Their matching plain white T-shirts and jeans imply some kind of telepathy but apparently it’s a coincidence. That said, it’s a fitting metaphor for a friendship that spans three decades and encompasses a rise from obscurity to a combined wealth estimated by this year’s BRW Rich 200 at $543 million.

It’s a relationship Greiner says is built on a “combination of trust and no bullshit”. And arguments. “We’ve had some beauties, and I’d be very worried if they stopped happening. It would mean that one of us doesn’t care any more.”

For his part, Richardson describes as “both awesome and challenging” the process of building a business with his best mate. “I actually think it allows us to have far more heated debates because we have complete trust in each other.”

Campaign Monitor’s business is sexier

Campaign Monitor is not just one of Australia’s most valuable technology companies, it’s arguably the most exciting tech firm this nation has produced. Let’s face it: the biggest names in Australia’s blossoming technology scene make their money in pretty boring ways. Even Atlassian, whose founders Mike Cannon-Brookes and Scott Farquhar are estimated on this year’s BRW Rich 200 to have combined wealth of nearly $4 billion, makes relatively unexciting products for IT help desks and software development teams.

By contrast, Campaign Monitor’s business is much sexier. Its software helps companies design and create beautiful looking emails, send them to millions of people, then analyse how successful those emails have been in reaching their targets. It is used by some of the world’s most important companies and best-known consumer brands. Think Apple, Facebook, Nike and Coca-­Cola.

Yet Richardson and Greiner are not household names. The business community only sat up and started to take notice about two years ago, when Campaign Monitor shocked both Sydney’s investment community and the Silicon Valley tech scene by pulling off a mammoth $US410 million financing round. Orchestrated by Goldman Sachs, it was the biggest single fundraising for an Australian start-­up, if you can call a 13-year-old company with 200-odd staff that.

As part of the deal, Richardson and Greiner sold about half of the company to two top-tier US venture capital firms. Soon after, they stepped away from the day-to-day running of the company, remaining involved in product development and on the board.

The deal valued their business at about $600 million, catapulting the duo into the ranks of the richest Australians. Part of the $US410 million financing deal involved the unusual step for an unlisted tech firm of borrowing $US160 million on America’s private debt markets.

This provided them with a huge war chest for growth but also significantly increased the company’s risk profile, to the point that its debt was downgraded by two ratings agencies to the junk status of countries such as Greece and Mozambique.

The founders were sanguine about all that. In effect, they’d made a high stakes bet: that Campaign Monitor could become Australia’s next multi­billion-dollar tech success story.

Campaign Monitor senior management team. (L-R) CMO Kraig Swensrud, CEO Alex Bard, and co-founders Ben Richardson and Dave Greiner. Photo: Supplied.

Richardson and Greiner shun the spotlight

The Campaign Monitor story has never really been told. Despite being two of Australia’s most exciting entrepreneurs and despite interest in tech start-­ups reaching fever pitch, Richardson and Greiner rarely give interviews and haven’t spoken to the press for nearly two years. While some of their contemporaries need to be restrained from weighing in on everything from Sydney’s lockout laws to the national education system, this duo has preferred to focus on building their company.

“Yes, it’s a conscious thing,” says Richardson of staying out of the spotlight. “The two of us have no particular interest in building a profile or pushing a political agenda.”

Their story begins in 1984, when the Richardson family, led by an accountant father and financial adviser mother, moved in across the street from the Greiners in Sutherland. Both families had two children, including five-year-old boys, who struck up a friendship. They would skateboard together in the street and, as they grew older, surf together at nearby beaches.

Their friendship endured through adolescence, a tumultuous period. At the age of 16, Greiner’s father passed away. His mother worked two jobs and made a lot of sacrifices to support him and his younger sister.

Upon graduating from Kirrawee High School, these two close mates were set to follow different paths. Greiner went to Sydney University to study economics, Richardson to the University of Wollongong to study commerce. After a semester, Greiner quit and decided to join Richardson in Wollongong, where they both ended up studying computer science.

In 2000, at the peak of the dotcom bubble and in the final year of their degrees, they started designing websites for family and friends. After finishing their studies, they decided to forgo following their peers into jobs with big telcos or banks in favour of continuing to work out of the Richardson family’s garage on their fledgling web design consultancy, Switch IT.

“It was just the two of us and we were making much less than a graduate salary,” Greiner recalls.

Time for a Switch?

Six months in, it wasn’t going that well. Greiner’s mother advised them to rethink. “She said it was great that we gave this business thing a try, but maybe we should consider getting real jobs now,” Richardson says.

Fortunately, the work started to pick up and they were able to ignore that advice. The pair started building websites and intranets for companies of the ilk of Telstra and Foxtel. Greiner recalls pitching his consulting wares to Foxtel in his year 12 formal suit – he didn’t own any real business attire at the time. “A lot of those very early wins were us saying ‘yes, we know how to do that’ when we really had no idea,” he says. On one occasion, a client visiting Switch’s suburban base slipped and fell down the steep driveway. After that, they held client meetings only at the client’s offices.

The real breakthrough came in 2004. After running some email campaigns for clients and getting frustrated with the existing software on the market, they decided to build their own. At that point, what’s known today as Campaign Monitor was born. Then, and now, their software did essentially the same thing: help firms send out lots of non-spammy emails that look nice. Initially, they focused on ease of use and simplicity. Greiner says that when they launched Campaign Monitor, it took 40 steps to send an email using the most popular tool on the market. Their product involved just four.

Its appeal spread quickly. Within six months, they were making more money from software than they ever had from web design. Within a year, the business had tripled in size. By 2006, barely two years after launch, it had taken hold among big marketing agencies in the US and Europe, and caught the attention of US venture capital funds.

“We had been calling and talking to the company for six and seven years, and visited them in Australia a number of times,” says Deven Parekh, managing director at New York-based Insight Venture Partners, which became Campaign Monitor’s biggest shareholder following the 2014 funding arrangement.

Insight – which has also backed Twitter, Alibaba and Tumblr – heard about Campaign Monitor on the start-up grapevine. Other companies in its portfolio had been using the software and loved it. This obscure firm on the other side of the planet was also snaring business away from more established players such ExactTarget, which Insight had invested in, and which tech giant Salesforce.com ultimately acquired for $US2.3 billion.

Product focus was key for investors

There was something else about Campaign Monitor that appealed to Insight and other venture capital outfits. “These guys were super product-driven founders,” Parekh says. “When we were doing product demos, they would be doing the demo. They knew the product intimately, and that was their passion. It wasn’t sales or marketing, that’s not what got them excited.”

The product – how Campaign Monitor’s software looked and worked – has always been its founders’ main focus. Richardson is the more hard­headed of the two. Until relatively recently he was still involved in writing code and developing, and he still oversees the nuts and bolts of the software. Greiner, meanwhile, is more aesthetically inclined, focused on making Campaign Monitor’s software, and the emails it produces, look good and work well. He is notoriously obsessed with that.

“I’ve certainly had my fair share of late night SMS’s saying there’s this thing wrong on the website, can you log in and fix it now,” says their long-time technical operations chief Cameron Newman. “Because it’s killing him, it’s like a tick that he can’t get rid of. He’s always been incredibly focused on the design and the look and feel.”

For Greiner, design is about much more than what something looks like. It’s about making software easy to use, and actually limiting what people can do with it. “The key here is to give people enough control so they can create something they love, but not too much control so they build something that looks and performs terribly,” he explains.

His passion for design stems from childhood. Growing up, his mum bought him a book of fonts and typefaces that he would spend hours trying to copy. At the age of 15 he got his first computer, and fell in love with software interfaces.

Greiner’s history of obsession

To get a sense for how obsessed Greiner is with the finer details we need to go back to 2007. That year, Microsoft decided to change the way emails rendered in Outlook, the dominant office email provider at the time. Greiner thought it made them look worse. He was so annoyed that he set up a website, fixoutlook.org, on which users could vent their frustrations. “They hate us,” a clearly exasperated Greiner wrote in a blog post. “OK, this one might be pushing it, but I’m running out of explanations here … seriously, they’ve taken five important years off the email design community in one fell swoop.”

His crusade continued for years. In 2009 it was picked up by media outlets including CNN and Reuters. Microsoft eventually responded, saying it had heard their concerns.

In 2011, Greiner became engaged in another online spat, this one with the founder of rival firm MailChimp over the arcane topic of “deliverability”. This refers to the percentage of emails sent en masse that actually make it to the inboxes of intended recipients. Greiner described MailChimp’s claims that deliverability rates were being miscalculated as “incredibly misleading and just plain disingenuous”. MailChimp’s analysis gave Campaign Monitor a lower deliverable rate than it claimed.

Greiner and Richardson admit to spending years perfecting small aspects of their software, and say that process never stops. They are constantly testing, tweaking and making improvements to it.

They might be obsessive about their product, but Campaign Monitor’s founders also appear to be pretty generous bosses. For years their personal credit cards were listed on the company’s intranet for staff to use for expenses. “You could just do things there that you couldn’t do in a normal company,” says one former senior employee.

Work-life balance more than lip service

They are fiercely protective of their company’s relaxed culture and their own work-life balance. Unlike many managers, they practise what they preach. Neither has worked on a Monday for years; it’s reserved for surfing and time with their kids. They have been known to order people working long hours on business-critical issues to go home, and stay there until adequately rested.

“Everyone talks about work-life balance, those guys enforced it,” says another former employee. “I haven’t seen that anywhere else.”

Being both work colleagues and close friends has its challenges. On social occasions, “it’s incredibly easy to drop into work mode and start chatting about the latest problem we’re facing,” Richardson says. “We’ve become better at not doing that over the years, and we’re lucky to have wives and friends who pull us up whenever we start talking shop.”

Some think the duo’s generosity and laid-back natures stem from a kind of guilt about their unexpected success, and a perhaps naive assumption that it will endure. “They started a business to make some pocket money and it blew up beyond anyone’s expectations,” a former employee says. “They’ve never had anything but screaming success.”

Others insist it’s just them being themselves. “They are exactly how they were all those years ago,” says Karen Clark, Campaign Monitor’s sixth employee, who now looks after its internal culture and philanthropic efforts. “Super laid-back, and it tells the story of how the business was built.”

Two million customers

Regardless, their blend of passion for the product and relaxed attitudes towards life looks to be paying off. Campaign Monitor claims today to have 2 million customers in 151,000 businesses across 186 countries. Like Atlassian, it has amassed much of this customer base with no sales force, relying on word-of-mouth for its viral growth. Richardson and Greiner wagered that as long as their product was excellent, it would effectively sell itself. And they were right.

But it was for this reason that they were slow to grasp what turned out to be a fundamental change to their business. At a certain point it wasn’t just marketing agencies using Campaign Monitor to send out emails for big brands – it was also big brands themselves. Such as Facebook.

“We didn’t realise until their legal department asked to talk to us,” says Greiner of Mark Zuckerberg’s $300 billion social media behemoth. “They wanted to know whether we met their requirements for internal software. We had no idea the world’s biggest social network was even using our software.”

Suddenly, after years of resistance, it dawned on Greiner and Richardson that the opportunity for their business might be bigger than they’d thought. “We were not doing our product, our team and, most importantly, these customers justice if we didn’t grow with them,” Richardson says.

In other words, it might be a good time to actually set up a marketing department and a sales force and go after this opportunity. And it might be a good time to field pitches from the venture capital money men to fund it.

How Campaign Monitor met Atlassian

Despite all hailing from Sydney, and building globally significant technology businesses that sprang up at roughly the same time, the founders of Campaign Monitor and Atlassian’s Scott Farquhar first encountered each other in person at a conference in the US in 2006.

“It was random because we’re Australians and we had never met each other,” the Atlassian co-founder says. “We ended up having a steak dinner one night with just the three of us and we got on like a house on fire.”

They have remained close friends. Farquhar acted as an informal sounding board as Greiner and Richardson went through the exhaustive process of securing funds for expansion, providing informal advice on everything from which bankers to use to how to deal with the attention that would follow. “Because they’d flown under the radar for so long, they had a lot of school friends who went, ‘I thought you just ran a fish and chip shop’,” Farquhar recounts.

Greiner describes the ensuing process as “very intense”. He and Richardson flew to San Francisco for a week of presentations to investors. “It was so competitive,” Greiner says. “We saw a whole host of interesting behaviour from a number of brand-name venture capital and private equity firms. All the tricks you’ve probably heard of and more.”

Campaign Monitor staff. Photo: Campaign Monitor.

Tech companies the new darlings

It’s fitting that the founders of arguably Australia’s two hottest tech companies met in person for the first time outside this country, because in a sense they were outcasts at home. For a long time, Australia’s mainstream corporate and investment community ignored the technology industry. The realisation that it can no longer afford to do so sank in as the traditional pillars of the private sector started to wobble.

As mining, finance and property threatened to come off the boil, Atlassian made a stunning debut on the Nasdaq, which valued it last year at $US6 billion.

Everywhere you go in Australia’s biggest cities, if people aren’t talking about house prices they’re preaching the merits of technology – to a point where it’s almost nauseating. Few companies exemplify the risks and rewards in building a vibrant innovation-based economy better than Campaign Monitor. Greiner and Richardson employ 90 people in Sydney, another 90 in San Francisco and another 20 people remotely. They’re in the process of opening their third office in London.

But for all of Campaign Monitor’s achievements to date, its long-term success is far from assured. Competition in the email marketing industry is fierce. In addition to Salesforce’s ExactTarget product, and MailChimp, there are myriad other players such as Constant Contact. There’s even a product from Microsoft.

Campaign Monitor’s venture capital investors – Insight and Accel Partners, the latter also a backer of Atlassian – will be eyeing a big exit in the coming years. That means a sharemarket listing, probably in the United Sates, or a sale of the business to another, bigger technology firm, at a valuation many times higher than the $600 million at which they bought in. That’s how venture capital works.

Growing pains on show

All of which is to say, Campaign Monitor is now under huge pressure to grow, and grow rapidly. There are already some signs of growing pains. Financial controller Anthony Vlandis left the business last year, as more recently did senior executive Mathew Patterson, who looked after customer service.

More alarmingly, the company’s debt has been downgraded by both Standard & Poor’s and Moody’s, which cite intense competition and weaker profits as the company chases growth as key concerns.

In March, Standard & Poor’s downgraded its rating to B minus, putting Campaign Monitor’s debt on a par with that of Greece, and far below the level generally considered a safe investment. It said the company’s new and heavy investments in sales and marketing “significantly worsen” its risk profile and warned that it has a “narrow product mix” and a “small earnings base”. It said it faces strong competition in an industry with “relatively low barriers to entry”.

S&P expects Campaign Monitor to generate a profit of between $12 million and $17 million this financial year, down from an earlier forecast of $20 million to $25 million. It expects profit margins to fall from 65 per cent last year to the mid-30s this financial year.

In April, Moody’s went a step further, downgrading Campaign Monitor’s rating to Caa1, putting it on a par with its rating for the developing African nation of Mozambique. Moody’s cited the company’s “weaker than expected operating performance” and its “high business risk”.

Profitable every year since inception

Balanced against this, both agencies acknowledged the company’s strong track record of profitability. It has turned a profit every year since it was founded in 2004.

Richardson and Greiner say they’re relaxed about the downgrades, arguing that they made a conscious decision to invest in global expansion, which is obviously going to hit margins and the bottom line, in the short term at least.

For his part, Atlassian’s Farquhar is a big believer in Campaign Monitor’s long-term potential. “I think they have built an incredible business that has all the right ingredients for a great IPO or trade sale if they wanted to,” Farquhar says. “Stable cash flow, great management team. Everything points in the right direction.”

The similarities between Campaign Monitor and Atlassian are striking. Both are run by two close friends, both eschewed a sales force during the initial growth phase, and both have moved their statutory corporate headquarters to Britain – moves industry observers believe were about minimising tax.

Atlassian opened for trading on The Nasdaq Stock Market on December 10, 2015. Photo: Getty Images.

How Campaign Monitor differs from Atlassian

Unlike Atlassian, Campaign Monitor has decided to invest in sales and marketing. As part of the decision to go for growth, Richardson and Greiner made the tough call to surrender control of the day-to-day running of their company. Shortly after the fundraising, Alex Bard was brought in to be the firm’s CEO. In an unusual arrangement, Greiner and Richardson still run the product from Sydney – but technically report to Bard, who handles sales, marketing and finance from San Francisco. Yet Greiner and Richardson still own a big stake in the company and hold two board seats. In that sense, Bard reports to them.

Bard, who came from Salesforce.com, agreed to take on the job after a whirlwind, 24-hour visit to Sydney in 2014 to meet with Greiner and Richardson, who’d been interviewing other candidates for months. “They were a big part of what sold me,” says Bard, whose departure from the $US50 billion Salesforce was described as a “big loss” by Forbes. “This was their baby for a decade. For an entrepreneur to step back and hand over the reins to someone else is a meaningful thing and an emotional thing, and they’ve just handled it with extraordinary class and support.”

Farquhar sees their decision to let go of the reins as a sign of strength. “Many other guys wouldn’t do that because the CEO title is pretty prestigious,” he says. “Ben and Dave have always been really good about saying what they do and don’t know. In the US, no one will admit that they are wrong. They have always been really solid on that.”

In Campaign Monitor’s Sydney offices, the meeting rooms are named after Californian surf breaks. The company’s core values are emblazoned across the walls. “Make Mum Proud”, “Do Less But do it Best”, “If our customers kick ass, we will too”. You could dismiss all of this as start-up excess. Or you could view it as a statement of intent. Campaign Monitor is determined to realise its potential and become the nation’s next multibillion-dollar tech company – or go down swinging in the attempt. If Australia really wants to promote a culture of risk-taking and ideas, that’s exactly the way it should be.

This story first appeared in The Australian Financial Review. Read it here or follow the Financial Review on Facebook.

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