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James Posnett
ASX
Tony Nash, CEO, Managing Director & Founder, Booktopia Group, sits down with James Posnett, ASX, to share some of his observations on going public on ASX.
Booktopia Group (ASX: BKG) successfully listed on ASX on the 4 December 2020, with a $316 million market capitalization on IPO and $43 million capital raised. Booktopia is Australia’s largest online bookstore, with over 150k items in stock and access to more than 6 million titles. Booktopia is a true Australian success story and has developed into a highly-awarded and well regarded ecommerce business in the Australian corporate space.
Booktopia was started on a $10 a day budget back in 2004. There was no plan or vision light bulb moment to say, "This is what's going to happen." It was one thing led to another. And we focused on one question every single day, "What do our customers want?" We ended up listing on the Exchange. We're an online retailer - books is our vertical. And in the last number of years, probably five or six years now, we've gotten into distribution. And then in the last couple of years we've gotten into publishing as well. So we've gone deep into our vertical to be able to extract as much of the margin as we can from the author right through to the customer - and not everyone has done that. And that's one of the things that we're focused on.
Very simple, very simple. 30% growth year on year is what I focused on. I know that might sound a bit of a stretch for some, but when you focus on something, you may come up short but you may also exceed it, and that's been our goal. And I think from 2008, so FY 08 to FY 20 we went from 4 million in revenue to 165 million in revenue. That was a compound annual growth rate of around 35% per year. Over the last few years from the prospectus FYI 18 through the FYI 20, it was 25% growth. So to me, how do I do that? I have a horizon point, I focus on that. And then by focusing on the horizon point, you then start to challenge yourself by coming out with questions like, "Well, how am I going to get there? What do we need to create to get to that level?"
So over the last 17 years, we're focused on revenue growth. We did try and list on the ASX in 2016 and that didn't work out so well. We were going to market at a time that was like going to Bondi Beach and trying to sell ice creams on a midwinter's day at eight degrees with a southerly coming in from the Antarctic. Temple & Webster we're trading at 15 cents, they're now $10 or something like that. Kogan had flat-lined since they had listed six months earlier, Redbubble had gone down, SurfStitch was actually going off the market. And it was really a tough time to list and talk to fund managers about investing in our companies.
And at that time, the reason why I introduced that idea to you of what happened back then versus now where e-commerce is front and centre, was that I decided then not only to focus on growth of revenue, but also growth of profitability. And that was really important to be able to create a sustainable business that we were growing in revenue and profitability. Should we get capital investment or not didn't matter because we were masters of our own destiny. We could grow whether we got listed or not. It didn't matter. And that was quite a strategic shift back in 2016.
When I started Booktopia back in 2004 people said to me, "What do you want to start an online bookstore for? There's Borders, there's Angus & Robertson, there's Dymocks, there's Amazon -you're too late." Now people say to me, "Oh, it's lucky you got in early." So there's many people who are saying many things, and I can assure you, there were many people saying, "What do you want to list for? There's all this extra reporting, there's extra governance, and you’re answerable to the market." But to me, Booktopia is owned by its customers. The people that are buying books from us. And it's an opportunity for those people, let alone the institutional community as well, of course, to invest and own a piece of Booktopia - and that felt right. And when you're in retail and you're listed, people are talking about you often. There's journalists actually interviewing you, or they're asking questions about what's going on in the market - it actually helps - it’s free marketing.
From my perspective of being a retailer, it's actually a good thing to be on the market. There is more governance, there is more reporting, but I like that. It means you're accountable, it means that everything needs to have good systems. Everything about being listed adds to, from my perspective, creating structure and good guidance to the rest of the business to run your company.
Yes it is important. We raised some money before the IPO and that was $8 million, and we had got from zero or from the original $10 to 150 million in revenue without any capital. We had tried to get it in the past. So we had to continue to prove to the investors that we were as good as we said we were going to be, and in time we did get that. So once you're listed, you can get access to capital a lot easier.
Pretty straight forward, actually. It's one of those things that, for us, when we ran our company prior to listing, we were very rigorous. When we hit that threshold where ASIC require you to be audited - and I think at the time it was 25 million in revenue and 50 employees - and the option was just to go to a small auditor or a mid-tier or one of the big four - we went to PWC because I wanted to have on our financial statements every year that PWC were auditing our accounts. And so having done that for eight or nine years and dealing with a large auditing firm, we had already got into the rhythm of it. And therefore it was pretty straightforward. I have a very, very good team. So for me personally, it was no different. For the finance team, maybe there's a little bit more, but not much more, I didn't think.
The one thing I will say having witnessed many IPOs before, this is the way that I saw our IPO. And that is that on the day when we listed, it wasn't like getting to the checkered flag and going, "We're done." It actually felt more like it's the Tour de France and it's the 10th stage, and you've just gone through the 40-kilometers-to-go banner and you've got another 40 kilometres to go to the top of the mountain where you finish the 10th stage. And then after that, you've got 11 more stages until you get to the Champs-Elysées where you've got the opportunity to drink champagne with your friends hug and get to the finish line. So the IPO and getting listed is very much just a milestone on the journey to get where you're heading. And the more that you focus on that, and you think that you've made it and you go, "Oh my God, we're listed we’re on the ASX", it’s a distraction about where your business is actually heading. And that's a really important thing to understand that you want in your rear vision mirror as soon as possible.
I'm enjoying it. They're trying to understand businesses, and so they can represent the companies that they work for to be able to go to their customer base and tell them about businesses. And because e-commerce is so hot right now it's just a great conversation because it's something that they get, they understand, they want to know you a little better. And so I've found the analysts and talking to funds actually quite invigorating. Because it's a story that's interesting and they know that this Aussie company has taken on Amazon, one of the biggest companies in the world, in a category that they were founded on, and we've done extremely well. So its storytelling and it's introducing them to your business in a more intimate way that actually appeals to me.
It gave the team a great sense of self-worth and feeling that, "Hey, we're working for a company that's on track and that the rest of the world, the rest of the market, love what we're doing." And so there's a great level of pride and they were individually being acknowledged for the IPO. And that was a great thing. So that was a shift. Didn't change a lot in terms of the way that we did things. The only other thing I can say categorically from our experience is our suppliers who we've been buying from for many years, upped their level of engagement or support. In the book industry, we have credit limits on our accounts. So suppliers can limit the amount of books that you can buy. Once listed, credit limits increased because suppliers sensed "Wow, you're listed." And therefore the way that our relationships between us and our suppliers transitioned to a much more strategic level.
My goal is to continue to have those horizon points. So to get to a hundred million, I remember being at 20 million saying, "I want to get to a hundred million." A hundred million was to 200, which we've gone past or about to go past this financial year. And so therefore I'm already thinking 300 and beyond. So my goal is to increase the revenue. I think in Australia, we can get to 500 million in revenue. Don't ask me a specific date. When I meet with fund managers, they asked me, "What date would that be?" And of course, I can't give them that date, but I know that I feel comfortable that Booktopia can get to that level then to continue to increase our profitability.
Absolutely. And by all means, if anyone is listening, they can always reach out to me on LinkedIn. Tony Nash, Booktopia LinkedIn do a search on Google, ask me any questions. I'm always happy to respond and give people the encouragement to look at it, to either do a go/no-go. So either list on the ASX or not list for the various reasons, I'm always there to help.
About the author
James Posnett, ASX
James Posnett is Senior Manager, Listings Business Development at ASX in Sydney. He has over 15 years’ experience in financial markets in Australia and internationally. Since joining ASX in 2012 he has been responsible for the development of the listings and capital raising business, both domestically and globally. He works with companies from a broad range of industry sectors, including technology, healthcare and resources.
Special thanks to Tony Nash, (CEO, Managing Director & Founder), Booktopia Group