The story behind the NAB and Telstra backed online marketplace where small businesses can swap services
Proquo, a new digital marketplace backed by NAB and Telstra, aims to be a hub for small businesses to trade services and form relationships. Co-founders and co-CEOs Ricky Lam and Carl Spurling tell us how it came about and why it makes sense for the two corporates.
A new online marketplace is inviting Australia’s small business community and experts in the marketing industry to get ahead via its buy, sell or swap online platform. Proquo offers small business owners and marketing expert’s access to a range of services from other providers. Users can create briefs for the work they need, provide quotes, manage payments and publish reviews, all on the one platform.
Members also have the option to buy, sell or pay the difference should a trade-off not match the cost of a service – under the marketing umbrella, some of those services include brand strategy, SEM, SEO, public relations and social media marketing. When registering, members create their own profile, which includes ABN validation to ensure only Australian businesses can transact, as well as to outline their experience, qualifications and previous work. A dedicated team and robust briefing and quoting process is in place to make sure members have the right person for the job and both parties are on the same page about what’s being delivered.
Proquo says these steps, and a rigorous rating and review feature, helps members make informed decisions on who to collaborate with. When a payment is involved, Proquo holds a 50% deposit in its ‘vault’, assuring members their money will only be released when the job is delivered successfully. It’s free to join and has no subscription fees. A 10% fee will apply to paid transactions charged to the service provider, the lowest fees of any services marketplace in Australia. In straight swaps, where no money is involved in a transaction, there is no fee.
Born during a hackathon, Proquo is run by co-CEOs with careers at the company’s two major corporate backers. Carl Spurling held GM positions in strategy and innovation at NAB after a consulting and management career at Accenture and EY. Ricky Lam is a McKinsey alum who has held ecommerce and retail strategy GM roles at Telstra for the last few years. The pair represents a subset of start-up founders bringing extensive corporate experience to brand-new businesses.
Spurling says the seeds for Proquo began as a part of NAB’s innovation centre, NAB Labs, in which one experiment was ‘the digital village’. “It was about taking some of the activity that goes on in these coworking spaces, one of which is NAB’s Village, and putting it onto a digital platform,” he tells Marketing.
“The idea was to look at the way in which small businesses interact with each other, the way that they swap with services, sometimes trade the services, often in small parcels, and create the digital workflow to enable that on a platform.”
At the same time, Telstra was looking at something similar – its own version of a small business marketplace – but was coming at it from a slightly different angle. Where NAB had approached from a community point of view, Telstra’s perspective was that of an ecommerce marketplace to add to its portfolio of solutions in market that help small businesses get online and sell.
Marketing: How did a pair of corporate execs end up cofounding a startup?
Carl Spurling: In late 2015 we jointly went to the Telstra and NAB executive teams and pitched this idea of creating this company, which is now called Proquo. It’s a start-up company, funded out of both of the corporates. Earlier this year we started working on it more full time, and officially launched it in May. But we worked on it for many months up until that actual point.
Ricky Lam: The agreement between NAB and Telstra finalised in May. Our product’s been in market since 30 June. So it’s still relatively new in the market. Both companies have been incredibly supportive. And continue to be. We report to a board, and for our board structure we have two NAB executives, two Telstra executives and an indepentent chairman, who we’re still finalising the recruitment of.
Both NAB and Telstra have recognised the value of running Proquo as an independent company. Carl and I have been given a lot of freedom, and the board is as much there to support us as it is to telling us what to do.
M: What stage is it at, and who are you building for?
CS: It is genuinely still a start-up company. As Ricky said, we’ve really only been in the market for about three months. We’ve already got about 1000 customers who’ve signed up. To give you the funnel numbers, we’ve had about 10,000 unique visitors to the platform, about 1000 have signed up, and we’re starting to get that transactional flow going through.
Right now there may be several hundred strangers on the platform talking about doing work with each other. Those sort of things might include, for example, we had a lawyer purchasing some social media marketing services via the platform. But you can either purchase on the platform or do a swap, or a combination of the two. One of the others we had was a person providing some guidance on some property consultation, from their business, in exchange for a business plan for somebody who was on the outside trying to buy property and required a business plan.
RL: We actually had somebody who’s opening up a new dental company and offered to provide dental services in the workplace. They were about to launch, and they swapped dental services with a dance studio in return for putting on a dance performance at the launch party. People are finding really creative ways to leverage skills in their community on the platform.
M: Do you see it being primarily used for services?
CS: At this stage, yes. The main focus is what you’d call ‘broad business services.’ It’s accounting, legal, design, strategy, marketing and mentoring, those sort of things. That’s what we created it for in the first instance. But we’re finding that when people go onto the platform, probably more typically as buyers of those services – like someone setting up a dental service or something – to buy those services, there’s been a few instances where they’ve become the seller in that place.
What we always think is you put it out there with the functionality, then people find a different way to use it. That’s the whole point of a start-up. You experiment. It’s partly about things that we try to drive but, more typically, it’s being attuned to what the customers are doing. Exactly right. You’re creating a platform or a network that enables people.
RL: We didn’t want to have too strong a point of view in terms of what features would resonate, or what type of services people would be open to swapping on an online platform. So, as CS mentioned, we really picked broad service categories that frankly would be relevant to pretty much all small businesses at some point in their current lifecycle.
M: How will you start pushing it and getting more signups?
CS: At the moment it’s happening organically. We’ve got some PR going on, we’ve got some SEM activity going on. We get sign-ups every day, hopefully five, 10 or 20. We’ve never really had a real dip in that regard, it’s just building up.
What we’re also doing now is working with some of the established business networks in Melbourne and starting to think about how we can service their members as a block. We haven’t finalised any of those sorts of plans but it’s a different way of building up the network.
RM: I would add that we are really hoping to see a lot of organic growth. If you’re somebody who likes the platform, who wants to buy on the platform, then you might encourage your suppliers to go onto the platform. There can be a sort of daisy chain effect with this sort of marketplace. That, I think will be a big part of getting traction. Those [first] people are the early adopters, and the strong advocates of the platform. They’re going to be bringing their networks onto the platform.
M: Is there a goal or a number that you’re aiming to get to? How will you know if this is a long-term, viable thing?
RL: Aside from the numbers, what we’re really aiming for is a thriving community on the platform. There’s at least two elements to that. You do need a critical mass of people on the platform. By the end of this financial year we hope to have somewhere in the range of 5000 to 10,000 users. We think that will be a good critical mass for a community like Melbourne.
In addition to that, you have to create a product that people want to use and where there’s a lot of activity on the platform. We working really hard to get feedback from early adopters to make sure we evolve the product in a way people actually want to use.
M: Is it just Melbourne at the moment?
CS: It’s Australia-wide, but because we’re building in that organic way, it’s got a local component. We’re starting with Melbourne. Some of the networks we’re talking about are the Melbourne business networks. When we get a good sense of that, and we feel we understand that and we can replicate it, the business development will go to Sydney and the other major cities. Right now anyone within Australia can sign up.
M: That’s the good thing about services – it can go wherever.
RL: Interesting on that point though, why we saw a value proposition for Proquo is that, when we talk to these small businesses, they really value the ability to build a connection with somebody. If you’re a small business and you’ve got somebody running your social media, you really want to sit down with them, have them visit your shop, have them understand your business and build a relationship with them.
It’s a little bit of both. There are some services that small businesses are comfortable with doing at arm’s length, and there are others where they want a deeper, more local provider, where they can build that relationship.
CS: We do want to get as many people on the platform as we can, that’s definitely one metric. The better metric for us is how many of our members start off at a small size and grow to a much bigger company. We would be more proud if we created 100 medium sized companies out of our small companies. That’s our ultimate measure. If we were to talk to you in three years time, from a marketing point of view, instead of saying ‘We’ve got 100,000 users’, we’d much rather say, ‘We’ve got 1000 companies who’ve grown to be $10 million companies – Proquo companies’.
When you look at the competitors, mainly what you hear about is how many people have signed up on the platform. You never hear about successes off the platform. They’re there to do transactions, but they’re not really there to build the local entrepreneurial community. We have a vision of ourselves as an enabler for that community.
M: So as start-up founders you’re not about achieving a critical mass through funding and then selling?
CS: That’s really not the intent. And it’s not why we started in the first place. That’s really not what NAB and Telstra are about either.
RL: For both NAB and Telstra it’s very much about how they can be involved in companies that add value to small businesses beyond the core banking and telco services that they sell. That’s where they see the value in investing in a company like this. To add to what Carl said about helping our businesses be successful, it’s a really good point. You can see how a marketplace would do that, because if you’re starting out as a small business, one of the hardest things is building that network, building a number of people that are trusted suppliers for you, and that’s a big part of the proposition. If you happen to be a services company, like any other small business, one of your other big challenges is actually finding new channels to market and access new customers. A marketplace allows you to do that as well.
M: One of the big things with online marketplaces is the topic of trust online. For a marketplace like this, it’s critical. How do you tackle that?
RL: There’s a number of elements. We have ratings and we think that the competitive dynamics of the marketplace will naturally make the better providers rise to the top. More important than that, what we’re trying to do on the platform is mimic what people do in real life, which is think through, for example, if you’re starting out, and you need somebody to develop your website, what do you do? You access your network.
We’re going to develop on the platform this notion that we’re going to call an ‘inner circle’, which is your trusted network of supporters and advisors. It’s a very simple idea. You can imagine implementing that in a different context. So, if you’re going on the platform and you want to find a web developer, you can talk to your inner circle and ask, ‘Have any of you worked with a web developer that you would recommend?’
If you are selling on the platform, your inner circle could be people that are willing to vouch for the quality of your service. We really want to leverage that networking element to create trust on the platform.
CS: To get to that, it goes back to our earliest points about how we started the platform, which was by looking at the behaviour. We do a lot of human-centred design. We looked at the behaviour of how people work in those coworking spaces, then we tried to get an understanding of how they go about recommending people, endorsing people, and so on. That’s what we tried to replicate on the platform. It’s a digital version of an existing activity.
RL: We as Proquo have gone through that same journey in starting our company. To start our company we’ve had to find a small business accountant, a lawyer, a PR firm, a marketing team, somebody to do our SEO and SEM. We’ve done it in exactly the same way, where these are people that we’ve maybe worked with in the past or maybe we had a recommendation from somebody that we know. So we’ve gone exactly through that process and we think having a platform like Proquo could simplify that significantly and also allow users access to a much broader list of suppliers.
You might find that someone who’s a legal advisor in our inner circle, who does three hours a week for us, and we rate them very highly, is also in three other inner circles, that they all rate highly. All of a sudden, you’ve got this person with three inner circles, and think, ‘Wow, three inner circles on Proquo, that’s a pretty good inner circle rate.’
M: How visible is it when two companies engage?
CS: They do all that privately. But then there’s a stream with recent transactions where we can provide some information about what’s happened.
RL: The platform’s flexible enough that if you wanted to get one quote from one provider, or if you wanted to access 10 providers, you can do that. We deliberately make it flexible in terms of how people want to interact.
M: One of the issues crowdsourcing websites come against is that it constantly just drives prices down. Is that a concern?
RL: Here’s a roundabout way of answering your question: one thing we try to do very explicitly is make it a true marketplace, where both sides can interact, and both sides can lead that engagement. On a lot of those platforms you’re talking about, it’s led by one side of the market. I post a particular job and I’ve got a thousand people bidding for that particular job. That’s not the case on our platform.
To give a tactical example of that. You could do that: if I’m purchasing a service on the platform, I can write a brief and send it to 10 different people. Conversely, if I’m selling something on the platform, I can actually search on the platform to see who needs the service that I can offer and I can proactively reach out to them with an offer.
But we let both sides of the market drive that transaction, so that not one side of the market is entirely dependent on the other side in terms of driving the competitive nature of the platform.
CS: That is the focus of a lot of those sites, to say you can get the cheapest design work or whatever it might be, and if you can’t get it in Australia you can go offshore and that’s the whole basis of those models. We’re not really trying to compete directly with those models. Again, we’ve still got work to do on the build, but it’s really very much these network components that we’re more focussing on, rather than the purely transactional component.
RL: The other part of this is we do have a price proposition on the platform, but it’s not done in the way of finding the cheapest provider, it’s done through the swap. For example, if I come to you to develop a website and you quote me $3000 to develop that website and I happen to be a logo designer, I can come back to you and say, ‘I looked at your logo and it’s really great, but it looks like it could do with a bit of a refresh. Can I help you with that piece of work in return for 20% off the website?’
It’s a way that start-ups and small businesses can make their dollar go a little bit further, but through the swap rather than trying to find the cheapest provider out there. In doing that, we’re building a relationship and a connection on the platform.
M: How does Proquo make money?
CS: This part of the model is similar to the competitors. On the financial component of the transaction, we take a 10% clip of the ticket. But if someone does a pure swap, we actually don’t make any money off that. If they do a swap plus cash, we make a component of the cash. If it’s just a pure purchase on the platform, we make a component of that cash.
RL: It’s charged to the seller. The platform is free to join, and it’s free to buy on the platform, but if you sell on the platform, we do take 10%. When we talk to small businesses, if we’re able to drive incremental business, that’s actually a really fair cost of acquisition for them in terms of acquiring new business. The feedback we’ve gotten is they actually quite like that model.