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Damien Mahoney from Stackla

May 25, 2021 | Founder, Hunter Central Coast, Male Founders, New South Wales, Newcastle, Podcasts

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Hi, and welcome to day one, the podcast for regional startups and the organisations that support Australian entrepreneurship. Welcome to day one is brought to you by the city of Newcastle and Newihub. Newihub is a growing and vibrant community of Newcastle’s startups & founders. It’s a central hub where you can learn about what’s going on in our ecosystem, with events, available jobs and other resources. I’ll tell you more about Newihub later in the episode, but for now, let’s jump into the story of Damien Mahoney.

Today, Stackla is a global company with dozens of employees and offices in the US and UK. Many of their clients are household names: McDonald’s, Nintendo, Toyota, and Sony just to name a few. But the growth of the company has not always been smooth sailing, and in recent years they’ve weathered two major storms: the pandemic, which all but wiped out many of their key clients, and a legal battle with Facebook which required Damien to make an incredibly difficult decision to keep the company afloat.

But before we hear about how Stackla has been able to emerge from multiple catastrophes, first we need to go back to day one, and hear the story of how a part-time job in radio that was too good to pass up would ultimately lead Damien to become the CEO of a global technology startup.

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Damien: I don’t know whether it’s good or bad, but I think everybody that starts the startup journey has a level of naivety in that they don’t know what’s going to come. But once you get in it and you’re on that journey, you learn a lot about yourself, you become more resilient, you actually can take on more than what mentally you thought you could. I think there’s that level of naivety which is probably a good thing that you don’t know everything that’s going to happen to you, because maybe you wouldn’t do it if you did.

Adam: Hi, and welcome to day one, the podcast for regional startups and the organisations that support Australian entrepreneurship. Welcome to day one is brought to you by the city of Newcastle and Newihub. Newihub is a growing and vibrant community of Newcastle’s startups & founders. It’s a central hub where you can learn about what’s going on in our ecosystem, with events, available jobs and other resources. I’ll tell you more about Newihub later in the episode, but for now, let’s jump into the story of Damien Mahoney.

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Damien: Good day, everyone. My name is Damien Mahoney. I am the CEO of Stackla. A little bit of background on Stackla. It’s what we refer to as a visual content marketing platform. So essentially, what we do is we work with big businesses who have big customer bases, and generally who have a lot of those customers posting about their products or services or experiences on social media. And then what our software does, it collects that customer-generated content, it puts it into a, effectively a library that our customers can sift through and find really cool pieces of content or, we would like to refer to them as customer stories, and then use that content, which is effectively a picture or a video in their own marketing activity.

Adam: Today, Stackla is a global company with dozens of employees and offices in the US and UK. Many of their clients are household names: Macdonalds, Nintendo, Toyota, and Sony just to name a few. But the growth of the company has not always been smooth sailing, and in recent years they’ve weathered two major storms: the pandemic, which all but wiped out many of their key clients, and a legal battle with Facebook which required Damien to make an incredibly difficult decision to keep the company afloat.

Damien: We had to let half of our team go… Having just let 30 people go in one day was an incredibly tough thing. Pulling down the building blocks of something that you’d been working on for six or seven years was tough. And knowing that all those people who trusted you and came along for the ride with you were working out the door without a job.

Adam: But before we hear about how Stackla has been able to emerge from multiple catastrophes, first we need to go back to day one, and hear the story of how a part-time job in radio that was too good to pass up would ultimately lead Damien to become the CEO of a global technology startup.

Damien: Yeah. The scenario that I was in, looking back it was sort of a little bit cavalier in a way, I’d been working in professional sports for quite a while and I had a job offer with the NRL. It was a good job, it would’ve provided me with good security and it was something that I was going to be comfortable doing. But also at the same time, … I was also doing some broadcasting on the side with various networks mainly in Melbourne. It was always my dream job to broadcast with MMM. Always listened to it when I was in Melbourne and I just loved the whole style of their production. I got this offer to go on broadcast with them, and I was super excited by it. And it was actually the second time I’d been given the offer. The first time I had to knock it back because I was working at a competitor radio station so I had to knock it back, which was devastating. But I had to swallow that one.

The second time it came around I was very reluctant to give it up. I did tell the guys at the NRL, I said, “Look I would like to also broadcast on the side as well as working here.” And they were not keen on that idea at all. I made the decision to accept the job with MMM, which really was just a part-time job on the weekends, it was never going to pay the mortgage or pay the bills. And that was the catalyst to get out and get out of the security of a nine to five job and start to do whatever work I could as a consultant. Ultimately that lead to me starting the agency…

Peter Cassidy is my co-founder. We actually started working together at the McCrory Radio Network, where we worked together on a number of digital products there. We continued working association when I moved to the NRL, he was working with Telstra, the digital rights holder for the NRL. And we came together post those roles to form an agency. That was called Pillar Sports, so we started that. It was probably through Peter’s product vision around this concept that we had around user-generated content that enabled us to get the company off the ground. Pete is a product guy, he’s a wonderful evangelist and he’s also one of those guys that you want to be in the trenches with. He’s fought hard through all of the tough times that we’ve had. Yeah, so I was running a digital agency at the time. And that agency had a fairly significant relationship with the National Rugby League. And we had a team of producers and journalists who were pumping out content for the websites of all the 16 clubs in the NRL. And as you can imagine it’s long-form content, it’s match reports, game reports, as general news, photos. It all needs to be edited, sub-edited, then published. And we found that that was just a very traditional way to create content, and then publish it. And at that particular time, social media was just rising up, to become this sort of really significant part of the landscape,

Adam: What year are we talking about?

Damien: This is 2011/2012. And all of a sudden Facebook was already massive, Twitter was quite prominent, Instagram had just been bought by Facebook. So it was this really sort of interesting trend that was occurring. I think that combined with the fact that smartphones were starting to proliferate around. We talk about the democratization of content creation. Previously, it was really the media and agencies that would create content. But now everybody had a phone, and they had a platform to publish that content on, being the social network. So it was this revolution in content creation, we thought, there’s got to be a great way or it’s got to be a way for our customers, which at the time, were sporting clubs, to be able to tap into this rich source of content. And it was authentic, it was created by their fans, it was created by their players, even the media. And it was this constant flow of content, it wasn’t just a one-off pieces of content you might create write one news article a day, there’d be 1000s of photos or videos taken every day by people who were associated with that brand or that club.

And that was the idea for it. And then we thought, okay, we’re going to build this technology that can just suck all this in, make sense of it, tag it and then allow the brand or the club that’s found this content to be able to publish in some way.

Adam: Did that replace the content that the clubs were creating themselves in-house like, did that just stop and they adopted this to replace it or did they work in tandem?

Damien: No. It’s more just to complement it. I think this is really to provide the perspective of fans, more so than anything…

A company like Ford, somebody may post a cool photo of their pickup truck whilst they are on a beach, that’ll be posted on Instagram, our software will find it and then Ford can reach out to that content creator. They can gain permission to utilize that content. And then once they have that permission, they might put it on Ford.com or they may put it on a Facebook ad or Instagram ad, or utilizing any sort of other marketing activity they’ll do.

Adam: Do they have to reach out directly? Like Ford. They find the content, they liked the content? Do I have to reach out directly to the…

Damien: Yes they do. So that’s one of the cool I guess efficiencies of the platform is that you can identify the content creator and send them a bespoke message. And then they’ll generally respond. And that’s all logged in our platform. And it’s a very sort of simple, simplified workflow that our customers use.

Adam: Does the personalized message, does that go to the content creator via the platform that the content was discovered on?

Damien: That’s correct, yes. So it will appear as a comment on Instagram as an example or a comment on YouTube. And it’ll be from Ford and it will say, “Hey, Adam, we love this picture. We’d like to use it on Ford.com. #Yes, to give us permission.”

Adam: And most people are probably pretty thrilled about that.

Damien: Absolutely. They’re pretty excited that somebody reached out to them, particularly the brand that they’re passionate about, and they’re a customer of, to utilize that content. I would say 95% of requests are fulfilled by the customer.

Adam: Damien and his cofounders were onto something big: by harnessing the photos and videos that everyday members of the public were uploading to social media, brands were able to access a new kind of marketing content that was authentic and personal in a way that typical ads never could be. Before the new venture had a name or even a complete product, they won their first client, and it was a big one: providing user-generated content to the Australian broadcaster SBS for their Tour de France tv coverage.

Damien: Yeah I think that particularly early days we were selling the dream a little bit. You had the classic stories that I went out and sold our first deal and the product wasn’t ready. And we had our deadline which was day one of the Tour de France. Our customer was SBS, and we were supplementing their broadcast with Stackla, so we had to get it ready. We didn’t even have a name for the company and so there was a lot of bespoke engineering that went into getting that first instance of the product up. But we had our CPO and co-founder working with us, we had another developer and we had the trust, most importantly of our customer, to deliver. And we got it up and running and it was an absolutely fantastic debut for the product, with great success and a lot of industry plateaus.

Adam: SBS. That’s a pretty cool first customer.

Damien: It was amazing, yeah.

Adam: Was that a relationship you had developed through your previous career?

Damien: Yeah it was purely through network. It was an introduction from a person who we knew quite well, again who worked in the sporting space. They introduced us to Toby at SBS. Toby loved the concept. He’s an innovator who’s always trying to push the boundaries with what they were doing from a digital perspective. He was almost in from the first meeting.

Adam: Do you find in getting that first customer on and the brand equity that they have in the marketplace helped with additional sales?

Damien: Absolutely. I think that being able to hold up SBS as a logo and the Tour de France, and quickly following that we worked on the World Cup as well. I think that one of the great strengths of the company from day one was our ability just to hold up a customer portfolio of just household logos… we still work with the International Olympic Committee, we work with World Rugby, we work with ICC and a host of other sporting organizations throughout the world. It makes us extremely proud that we’ve worked with all those organizations.

The first rough spot we hit was after six or seven months. We’d done a wonderful job of selling our product into our own network, which was sports and media organizations. And we got an initial cohort of customers, but then things started to dry up over Christmas and January was quiet, so many people on holiday, so on and so forth. Obviously, the operational costs of the business don’t stop during that time so we were starting to run low on cash. But we had sold a deal prior to Christmas, to an agency, and they ran this really cool, interesting campaign for an energy company. That campaign got a lot of trade press amongst the advertising agency space and quite amazingly, probably a week or so after that article was published, the phones started to ring. And it was agencies wanting to find out more about our software, coming up to us with campaign ideas that they wanted us to help them execute upon.

And that honestly took our revenue from $30,000/$40,000 a month, up to well over 100. And it solved the cash problem straight away. It solved us having to get external capital into the business, and allowed us to sustain ourselves for another 18 months until we were ready to take the business global and that’s when we took some actual investment.

We started to work with a person who was interested in the business, interested in investing. And as we continued to talk about what our goals were for the business with that individual, it became pretty obvious that we wanted to take the business overseas because that was the next step. Australia is a great market to test a product in, and we’re still really strong here, got a ton of customers and it’s really important to our overall strategy as a company, but there were obviously bigger opportunities overseas. And we started to see customers in bounding us from the US and the UK. We had a reseller in the UK and he was getting some good traction early. We brought on a couple of EPL franchises, which was just wonderful, including Manchester United.

That was the catalyst for us to say, “Yeah this is a fertile opportunity for the company, but we’re going to need cash to set up an office or set up multiple offices overseas.” And that’s when we decided to take it. That was late 2014, we took that money.

It wasn’t until we took venture capital that we actually invested quite heavily and we really added a lot of team members. We opened up our US and UK offices. The monthly operational costs of the business tripled pretty quickly. And the lag, when you invest in salespeople, there’s a lag until that salesperson starts to generate revenue for you. It’s usually a rant period where they learn the product, they need to be trained, and then you let them loose after two or three months on a real-life sales situation. The payback period can take quite a while. And then some of those salespeople may not work out so they’re not actually generating any money for you, and they’ve cost you $50,000/$60,000.

And those sorts of things happened with us. And that’s not atypical at all. There were times where we probably were overoptimistic about how much money our salespeople could generate and how quickly, and that’s where we ran into problems with cash.

I think some of the most stressful times that we had was where then not only my livelihood and my family’s livelihood was at stake, but that of our workers as well. There was a couple of times like that where cash became tight and we had to really work hard to rectify the situation, which luckily we did. Yeah, I think that number one, identifying that, doing something about it and then learning from it and making sure that it doesn’t happen again is important. That took a while. I think there certainly would’ve been times when I made the same mistake twice. But hopefully, yeah I don’t think I’ve made the mistake a third time.

Adam As Stackla grew and went international, the focus of the company began to shift. Initially, they had tapped into their existing networks to work primarily with professional sports organisations, but over time they would identify other types of clients to pursue.

Damien: We found that sports clubs weren’t great repeat customers, when you’re building a software business, you need repeat business. Generally, they would be excited initially, and be one of those things that, due to resourcing usually, they weren’t able to provide enough attention to, and then we’ll make a decision after two or three years to maybe end their relationship with us. So we needed to find customers who were going to be with us for the long term. And what we mean by that is like in six-plus years is the ideal sort of customer relationship, or in fact, I guess a relationship with a customer that goes on forever.

We went from, as I mentioned, being sport and agency focus, and our sweet spot now is travel. So you think about travel, and what people do when they’re on holidays, they take photos, and they put those photos on a social network, it seems to have become almost like an intrinsic part of anybody’s travel experience. So that type of customer for us was a no brainer. It took a while for that to evolve. It probably wasn’t until years two and three or four in the business that became really obvious when we then focused a lot of our product development, a lot of our marketing and value prop towards that type of customer.

We undertook a fairly significant exercise in 2017, to just look at all of our customers that we had over the lifetime of the business, how long they stayed with us for how much they spent, the time it takes to sell to those customers, and a range of other factors. And that’s when we settled on travels as being the main one. But we also threw in verticals like automotive, and education and consumer packaged goods or FMCG.

Adam: And this is just based purely on the fact that you analyzed all your customers, and these are the ones that were sticking around?

Damien: They were sticking around paying the most money. They were getting the most value out of the products, they were in the product a lot, utilizing it ideally on a daily basis. And then we also took a bit of a gamble on some other categories that we thought would mature and adopt the technology. So it was a little bit of data-driven decision making, but also there were some bets made as well.

I think that when people are on a travel experience or they’re having a travel experience or they’ve just bought a motorcar, they’re passionate about it, they want to enjoy it and I think they want to share that with people…

Adam: Yeah there seems to be a link to lifestyle, anything to do with lifestyle that you can show that you’ve got a great lifestyle and you want to share pictures about it…

Damien: Yeah I think that’s right. I think just where it can generate passion in people. And I think travel does that. I think people get excited about new places and they do want to share it with their friends. People definitely get excited about a new car. They may get excited about new apparel that they buy, new shoes, so on and so forth. They’re the types of customers that we feel will actively generate content and therefore the brands that sell to those customers are the types of customers that we target.

Adam: A broader range of potential clients meant more room for Stackla to grow, and at the start of 2019 the company was riding high on success after success. But 2019 had a surprise in store for the company which would threaten the foundations of their entire business model.

Damien: 2019 was a pretty interesting year. It was probably the toughest one of my life. There was a total upending of my personal situation, but the one thing that was going great was the company. We were growing at 25% plus, we just invested a whole heap of money in new people, the team in the US was quite big, a lot of new salespeople, just things to help run the business more efficiently in the back office. And we just had this amazing sales kick off in Vegas, where all the team gathered, really great bonding experience…

I was never a big fan of Vegas. I’ve been to a ton of conferences there and just laboured through all of them and didn’t really enjoy it. But this one was completely different because it was our own. It was our people. And whilst we played hard, we also worked really hard while we were there and it was a fantastic experience for everybody from flying people in from London, Sydney, San Francisco, Austen, New York, and all gathering in the one place was great.

And everybody walked out of that extremely confident and excited about the ensuring 12 months.

Adam: Yeah. Riding high, things were going great.

Damien: Yeah. Absolutely.

Adam: How soon after that did the doom-

Damien: Yeah, the huge body blow which came in the form of Facebook and the legal battle that we had with them came at the end of August…

Adam: In July 2019, Facebook were fined five billion dollars for privacy violations. Cambridge Analytica, a British consulting firm, harvested the data of up to eighty-seven million Facebook profiles, and used the data, without permission, to help the twenty sixteen presidential campaigns of Ted Cruz and Donald Trump. In wake of the scandal, Facebook banned thousands of apps that were collecting content from Facebook and Instagram, including Stackla.

The ban was devastating for Stackla –  Facebook and Instagram dominate social media, and so a huge percentage of Stackla’s user-generated content was taken from the two platforms. Without access, Stackla couldn’t survive.

Unlike Cambridge Analytica, Stackla had always gained permission from the creator of the content before brands could share it themselves, and they only accessed content that had been shared with the public. They felt that Facebook was unfairly denying them access to their platform, and took them to court in the hopes of saving their business model.

Damien: Yeah, the huge body blow which came in the form of Facebook and the legal battle that we had with them came at the end of August. It ran for a six week period until our access was restored. But during that time it was pretty tough going for us. We had to let half of our team go. We weren’t too sure when we were going to be put back on and it was such a critical component of how our product functioned. So not knowing that and having a finite cash resource lead us to make that decision, and it was the right decision to make despite the difficulty of it. Having just let 30 people go in one day was an incredibly tough thing. Pulling down the building blocks of something that you’d been working on for six or seven years was tough. And knowing that all those people who trusted you and came along for the ride with you were working out the door without a job.

Adam: But you won that right?

Damien: Well yeah. The case was settled and we were allowed back on the platform and then so we were allowed to continue on and start to service our customers again and then rebuild from there.

Adam: What was the biggest learning out of that period for you that you took away from that?

Damien: The biggest learning is that you can’t always prepare for things. This was completely left field. And never get too comfortable and never think that your business is bulletproof. Yeah, this was a great lesson or a great example of you can be totally sideswiped and not see it coming.

Adam: But you got through that. Did things start going back to normal after that for a little while before 2020 hit?

Damien: I think that we sustained a lot of damage from that period and it was ongoing. The wounds that we suffered continued to bleed for probably six months after and almost to the day, six months after COVID hit. That was the next severe body blow that we sustained as a business. We’ve got a huge customer base in the travel sector, so almost all of our customers were shut down, unable to operate. Again, that put enormous pressure on our business. We tried to work with them as best we could, but some of them simply just couldn’t, they couldn’t afford to keep on software subscriptions like ours, they just went into hiatus and pretty much ceased all operations.

I think that when you’ve had to encounter a moment like Facebook, that was an existential threat, there was a cliff that we were speeding towards, we would’ve had to close the doors to the business, turn the lights off. We got through it. It was incredibly tough, just a tough time. The stress, sleepless nights, meltdowns, just this constant burden that we all carried around with us. It was just me and my co-founder, it was everybody in the business. Everybody carried it around with them. It built up resilience in the team. When COVID hit it was like, okay we’ll deal with this. We’ve got through worse. It’s just another crisis. And whilst it was tough, it certainly didn’t generate the amount of concern and worry and stress that the previous episode did.

I think probably the number one thing is resilience. Because as I mentioned before, you’re going to encounter tough times and you just need to be able to take that on and get around it, get over it or smash through it, whatever direction you decide to take. I think the last two years have really underpinned the importance of being able to get up and go again. It is hard, it can be incredibly deflating when you encounter certain challenges in business, and you question everything that you’ve put into it and why you’ve chosen that path. But then you’ve just got to wake up the next day or the day after or the one after that and say, “Right, I’m going to attack it again.” And then start to look at the things that you’ve achieved and realize you’ve actually got something that’s great here. You’ve built it, it’s yours and you want it to continue on and make it the best you can.

Adam: What would you do differently if you were to start all over again?

Damien: Doing things differently, I think that probably going back to the things I spoke about being more conservative in forecasting our success. We were very bullish and we certainly needed to be a bit more conservative. And that only comes through learning. I think that you, unfortunately, have to sometimes learn the hard way and we did on a few of those things.

I think the timing of what we did was right. It was early enough. I think that there were enough market tailwinds to support the journey that we were on. We were tapping into a growing trend, it’s still growing. I honestly still think that our software and our technology and it as a marketing tactic still hasn’t reached full maturity yet. I think it will continue to grow, which I think is exciting…

I think the future of Stackla is that we are seeing trends in the market, which have probably been very directly attributed to what’s happened with COVID. We’re seeing people diverting their spending online, away from bricks and mortar, because they simply weren’t able to go into a retail environment and spend their money. That bodes well for us. We’re very heavily invested in the retail and eCommerce space. So we see that segment continuing to grow and therefore the need for products like ours to grow as well. We still think that we’ve got a fantastic product, a very committed and devoted team. We’re quite excited about the year ahead and particular beyond that, particular as the economy starts to recover and our buyers and people who serve, gain more confidence and continue to invest in products like ours.

Adam: Is there anything that we’ve missed in this story of Stackla that is important to cover?

Damien: I think that one of the things that I didn’t talk about too much was the importance of people and hiring and hiring the right people. And that’s not just from a skillset perspective but a cultural perspective. We just really highly value people who are ingenuitive, who can make decisions for themselves and bring something to the table that we don’t know. I think a lot of times when employees come into a business, they’re waiting to be told what to do. We try and hire people that will tell us what to do. “You’re doing this wrong. This could be better.” We really lookout for people who bring special expertise and experience to our company. And I think that you live and die by everybody you hire.

I think being just an employer of people is a great privilege I think. To provide someone with a livelihood, a purpose, to allow them to experience good things in life. I do remember seeing, one of our team members was married, he was married… It was actually a couple that met through Stackla. They got married in Australia. He was American, she was Australian. And then they went on a honeymoon of sorts, and then other people from Stackla flew to meet them at the holiday destination. And seeing those pictures on Instagram, it was incredibly gratifying to see that those people for us and we gave them the opportunity to meet each other and I guess the means to be able to travel and do all those things.

That was a really nice moment to see that.

Adam: Did any of their travel or wedding photos get pulled for any brands to use?

Damien: I think they were at a customers resort at Hamilton Islands.

Adam: Thanks for listening to the story of Stackla, and a huge thanks to Damien Mahoney for taking the time to speak with me. These founder stories are made possible by our supporters. We can’t do it without them, and I’m just incredibly grateful for their commitment to our local startup community and in helping us spotlight these amazing founders who inspire me and I hope who inspire you too.

The City of Newcastle’s Newihub is our major sponsor and I’d just like to take a second to express my gratitude for their support. Newihub is a great new initiative from the team at the City of Newcastle. It’s an online community to keep up to date with what’s happening in our region from an innovation perspective and a hub of great resources. I encourage you to check it out and sign up to be a member.

You can learn more by clicking the link in today’s episode notes at welcometodayone.com or by going to newihub.com. This episode was produced by me, Adam Spencer, with scripting and audio editing by Andy Jones. Information about everything mentioned in this episode can be found on the show notes page at welcome to day one dot com. Music by Lee Rosevere, full attribution on the welcome to day one website. If you’d like to support this show, please consider leaving us a review or supporting us on Patreon. I’m Adam Spencer, thanks for listening.

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