The life and times of Zuru’s Nick Mowbray
Together with siblings Anna and Mat, he runs one of the world’s fastest growing toy companies. Welcome to the extraordinary world of Nick Mowbray.
He hangs out in one of New Zealand’s most high-profile mansions and together with siblings Anna and Mat runs one of the world’s fastest growing toy companies. Welcome to the extraordinary world of Nick Mowbray.
On a glorious autumn morning it’s easy to overdo the superlatives when arriving at the immaculately-groomed Mahoenui mansion estate. Its previous tenant may have given the Coatesville address a degree of notoriety, but the current owners – Mowbray siblings Nick, Anna and Mat – have provided the sprawling property with a fabulous new lease on life.
In his bright, sun-filled office brimming with toy samples and evidence of the Zuru toy empire’s meteoric rise, 34-year-old joint-CEO Nick Mowbray reflects on the extraordinary journey that has taken the company from tiny beginnings to international success in a little more than a decade.
It’s a remarkable story, told many times, but one worth reflecting on for its lessons on hard work and perseverance.
While the trappings of all that endeavour are obvious when looking around the hotel-sized residence, the impression one gets, after chatting with Nick, is that this was no lucky streak (although there were many serendipitous moments!).
On the contrary, the bulk of the spectacular rise in Zuru’s fortunes came through sheer tenacity and an all-consuming passion to succeed.
But enough of the superlatives. I have just 60 minutes of Nick’s precious time, before he has to make a dash (by chopper) to the airport.
Nick quickly outlines some of the exploits that tested the siblings – particularly after they first arrived in China with $20k of their parents’ money and dreams of successfully creating and marketing toys around the world. He was still a teenager.
He points to a small David Beckham Tamagotchi-style video game player hanging on the far wall, and dives into the story behind it – a story he shared with the audience at last year’s EY Entrepreneur of the Year awards, where he was awarded top honours.
In the early days Nick and Mat had secured the rights to the toy player from Americon Idol founder Simon Fuller for a US$1 million-plus fee. They approached a Walmart buyer in the US who, fortunately, was obsessed by the real-life LA Galaxy footballer. Nick was desperate for an order so they could, in turn, pay for the licence, and was blown away to get one worth around NZ$40 million.
But after convincing a Chinese OEM manufacturer to both fund (through letter of credit) and fulfil the order, and the production process getting under way, Walmart threw a spanner in the works by first cancelling 1.4 million pieces of the 2.2 million-piece order, then subsequently reducing the order further to just 300,000 pieces.
Needless to say Nick was reluctant to break the news to the businessman who’d stumped up the money to fund the production, and after some pleading with the buyer, managed to get the order back up to 800,000 pieces and turn a modest profit for Zuru.
Unfortunately, sales for the toy were dismal.
The big lesson? “Build a better product,” says Nick.
Nick and Mat’s journey in the early years is littered with similar tales of risk and reward; often a case of ‘faking it ‘til you make it’. Such was the strength of their resolve, it even saw Nick behind bars (the jailhouse variety) on one occasion.
“Don’t ask,” he tells me.
As a result of the David Beckham episode Zuru was “black-banned” from Walmart for a number of years. But that didn’t stop their slow but steady march to fame and fortune.
Nick points to a large pile of photos scattered over his coffee table. There are several snapshots of Zuru’s expansive showrooms, R&D centres and manufacturing facilities around China and the globe – some so big scooters are provided for employees and leisure facilities include full-size basketball courts.
In addition to 18 offices worldwide, there is a 10,000 square metre robotics and automation development facility and 54 acres of factory space brimming with cutting-edge automation and robotics (more the realm of engineer Mat, who won the New Zealand Science Fair with his hot air balloon kitset when just 12).
“Mat recently built a whole new factory to produce our toy brick products,” Nick explains. “It makes any combination of bricks. You simply program a piece into the software and, from plastic granules to final product, it does everything automatically. All the build and factory design is done in-house.”
Meanwhile, as Zuru’s COO, Anna works across all the company’s operations and ensures the global operation of Zuru runs smoothly. “It’s a huge job considering the share size of Zuru these days,” says Nick.
Disrupting the markets
As Nick explains, one area where Zuru has the edge on its competitors is through the use of its lean, direct-to-retail business model and its China-based robotics and automation – technologies which Mat is using to good advantage for his latest venture: building production-line houses. His admiration for his older brother, whom he describes as “an absolute genius”, is obvious. “I come up with or source a lot of the toy ideas, but the building project is his baby.”
On the subject of babies, nowadays much of Nick’s time is taken up helping nurture some new babies of his own. He’s backing and creating a bunch of disruptive FMCG brands – no less than ten, and is getting a lot of enjoyment and satisfaction from doing it.
His first launch was in 2017 with partner brand Rascal + Friends, which produces premium nappies. The goal is to build one of the largest nappy brands in the world. Rascal + Friends already enjoys a considerable market share in Australia and New Zealand, and launched with some of the world’s biggest retailers including Foodstuffs, Coles, Walmart and Tesco.
The brand has gone from $30,000 dollars a year in sales in 2017 when Nick bought a stake in the domestic business and formed an international arm. In 2019 sales are expected to reach almost $100 million.
Nick says a key pillar of that growth will be product biodegradability, “no nasties”, and 12 prototypes have already been developed.
Nood petfood, another consumer brand with “no bad stuff”, is due to be launched with Walmart Canada in June followed by other major retailers.
“We’re looking to develop data-driven brands relevant to consumers and built around things like sustainability, transparency – brands that have a purpose as well as being profit-driven.
“With all the FMCG brands we’re growing, effectively we’re endeavouring to make them relevant to new-age audiences.”
It’s all about building new-age relevant brands, he adds, because most millennials do not support the same brands their parents did, and are more likely to trust small niche brands.
Of the ten consumer brands he’s building, Nick’s audacious goal is to build at least five of them into billion dollar valuation brands in the next five years (yes, he did say billion, not million!).
He says with the rise of social digital targeted ads it is much more efficient to build brands against the major incumbents. “You can build them ten times more efficiently than you could ten years ago. You can reach segmented audiences and make every cent you spend an efficient cent.
“The major macro-shift has been from traditional media to highly targeted, optimised media – so artificial intelligence around ads and optimising towards data-points that resonate with people with those ads.”
With the rise in social media, reviews are becoming as relevant as brands, he explains, “which means making great product is really important now. That instant feedback is happening all the time.”
Nick says the rise of e-commerce has caused margin erosion in traditional retail, “so retailers need more brand differentiation than ever before to protect their margin”.
To think all the prosperity and success associated with Zuru came from extremely humble beginnings – Mat’s win at the Science Fair, and a small factory making hot air balloon kit-sets in a converted barn on a dairy farm near the Waikato town of Tokoroa. And one particular day when Mat and Nick were chatting in the garage and the idea first came up to go to China – the world’s toy capital – to make their own toys.
“Mat went over to China and India to explore both countries for the best fit and decided China was the right place to head to,” remembers Nick. “So we both went with no contacts and little money. Anna joined us a year or two later.”
Never mind that their second and third toy ideas ended up in lawsuits; or that they would have to endure many years of hardship and frustration in China – convincing buyers in an extremely competitive environment that their ideas were sales winners.
And on a personal level, Nick would go on to face an even greater challenge when diagnosed with Crohn’s disease – a potential life-threatening illness that attacks the gastrointestinal tract. It saw him return to New Zealand for medical attention, and he plans to continue spending more time in this country as he works to control the condition.
Despite all of the above the three siblings prevailed through thick and thin.
But now comes another concern from an increasingly environmentally-conscious world of business and consumerism. It’s all very well to chase profits, but what about all that plastic?
Nick acknowledges the problem the world faces with single-use plastics, and the gargantuan amounts created by certain major multinationals. But no-one seems to be coming up with proactive solutions to single-use plastics, he says. “It’s not necessarily a war on plastic, it’s about finding solutions around them – that’s the problem.
“The only way to solve it is at a macro, or government, level. And the only way to create balanced and sustainable economics is through regulation.”
There is a multi-pronged way to do it, he believes. First, tax virgin plastic packaging. Make recycled plastic cheaper on the store shelves and it will disincentivise consumers to buy single-use plastic products. It will also create a revenue stream to create recycling solutions and encourage manufacturers to use recycled plastic or alternative materials – and that starts to make the economics sustainable and creates a circular system, he says.
“Without regulation and making the playing field equal for everyone you’ll never have substantial change.”
Nick also suggests increasing landfill taxes, and zero taxes for recycling operations to make them sustainable.
Zuru has partnered with Terracycle globally to upcycle its products. It is also moving to more recycled materials – for example the stems on Bunch O Balloons – and materials that will biodegrade faster. “Our new Bunch O Balloons Party balloons allow users to fill, tie, string and ribbon 40 party balloons in 40 seconds,” explains Nick. “The stems are completely re-usable so you can continually re-use and re-fill the balloons – which makes the entire category re-usable.”
Governments should also mandate that any plastic that can be fully substituted by an alternative that’s both economically and functionally as good, be banned, he says, citing paper straws as a good example.
Passion the key
Building a business – any business – is tough, and requires passion and hard work over a “really long time”. That’s Nick’s advice for start-up entrepreneurs. “The people who succeed are the ones who are the most persistent. Otherwise it’s like playing occasional mid-week tennis and expecting to play in the big league!”
“I look back and think how naïve we were and how little we knew. We’d make a bunch of products, sell them to retailers but never get re-orders That went on for five or six years.”
The success rate on re-orders has since climbed to around 85 percent, he says, so things have vastly improved.
Which leads to Nick’s next piece of advice, which is to think through the entire sales process from A to Z – making the product totally relevant, while solving the retailer’s problems.
Before you enter a market, or “go in to fight”, look at it from every angle and prepare every path so you can figure out how to win, explains Nick. “Then you’ve already won the fight before you go into it.
“There’s a great Sun Tzu saying that goes – the victorious strategist has one battle before he enters the fight. The losing strategist fights first and looks for victory later.
“That’s a big thing I do – I figure out how I can win before I even enter the arena.”
On management and leadership, Nick follows the principle that business management is about managing complexity and leadership is about creating simplicity. The goal is to streamline everything to make the business and people’s jobs simpler, and therefore achieve more buy-in.
“Leadership is really about setting a simple vision and then empowering people to execute against that vision.”
On the subject of people, Nick says he’s a “deep believer” in meritocracy, and a management style model known as the ‘3G Way’[i].
“It’s identifying young, smart talent with a deep desire to get ahead. Giving them a path to succeed and rewarding them when they achieve,” he explains.
“Super-smart, super ambitious high-achievers” are well-represented in Zuru’s New Zealand office, he says, where the average age is around 21 or 22 – the result of extensive head-hunting exercises involving local universities, the Young Enterprise Scheme and Zuru-sponsored business case competitions.
“It’s about identifying talent early – just as you would do for a sports team,” says Nick.
“So we’ve got the ideas, we know how to execute, but we need great talent to do it, and we reward them for it.”
One fact that’s obvious after spending time with Nick Mowbray is that he hates losing. Business is all about the win. So it’s hardly surprising when he explains that the single most important attribute to being successful in business is being competitive.
“The losses always hurt ten times more than the wins feel good. You got to keep redefining a strategy over and over again until you find a way to make it work.”
He admits to personally drawing inspiration from Jeff Bezos, the American technology entrepreneur, investor, and philanthropist who founded Amazon.
He also admires persistence in young people, because that’s how he and Mat managed to get their toes in the market. “I would literally stalk people with our samples,” he recalls. “Often it meant calling and calling people up until one in the morning, China time, just to catch a buyer in the US.”
He has so many stories from the early days etched in his memory – some that prove persistence pays; some funny; some that reduced him to tears. Faking their Hong Kong office; living in cramped hostels; sleeping under their showroom table; and the embarrassing day a buyer arrived for a 9am meeting, only Nick thought it was for 10am and was still asleep under the table.
He waited until she left and later rescheduled the meeting with an apology.
Today Nick’s still very much on the frontline – in contact with buyers and the CEOs of major retailers. And he’s still living up to one of his favourite expressions, which is “keep it simple”.
“Doing simple well, is hard,” he admits. “Complexity always creeps into a business. So the goal is to eliminate complexity, to maximise the return on your time and the return on your investment.
“Remember, if it doesn’t shift the needle, then don’t do it.”
And on that note, it’s time for me to make a shift.
[i] The management style developed by three Brazilian entrepreneurs who took over some of the main icons of American capitalism: Anheuser Busch, Heinz and Burger King.
Zuru’s vital statistics
- Approximately 5500 employees.
- 18 global offices.
- 54 acres of factory space.
- Around half of production output outsourced.
- Sales in 120 countries.
- Products stocked by every major toy retailer.
Article by NZBusiness editor Glenn Baker. First published in the May 2019 edition of NZBusiness.