Catch Me if You Can

Gabby Leibovich, co-founder and director of Australia’s biggest online shopping business Catch of the Day, has grown from a minnow to Jaws, snatching a sale every two seconds. ByLeon Gettler

Unlike many business owners and managers, Gabby Leibovich embraces change. He relishes it.

Life is about change, he says. It brings new opportunities. Certainly Leibovich, co-founder and director of Australia’s largest e-commerce site, Catch of the Day, has the track record to prove it.

The Catch Group is Australia’s No.1 online shopping business. At the moment, it comprises five online stores: catchoftheday.com.au, scoopon.com.au, groceryrun.com.au, mumgo.com.au and eatnow.com.au. There are plans for more.

The business started in October 2006. Group revenues in 2012-13 were $350 million. The Catch Group has about three million unique members. Each week, more than 15,000 Australians register as new members. On average, an item is sold across the group every two seconds. The Catch Group receives about 12,000 orders for products and services a day.

Catch of the Day is a phenomenal growth story. The company started out with six employees including Leibovich and his brother Hezi. It now has more than 450 on the payroll. It has been growing so fast it’s had to move five times in five years. Its revenue in year one was $7 million, in year two it was $18 million, $36 million in year three and in year four it was $60 million.

Leibovich does not expect its turnover to keep increasing by 100 per cent a year, but he says the company is having an impact on the  market.

“We’re becoming a major force in Australian retail,” he says. “We’re going to reach $500 million in revenue in the near future and the road to $1 billion is not long from there.”

Leibovich says his entrepreneurial streak came from his father, who ran an electronics store. Leibovich spent years working in the family business and remembers the daily conversations. “All my life, all we were talking about around the dinner table was business. We never spoke about sport or anything along those lines. It was always about business, in one form or another.”

Such was his passion for business that when he was at Monash University studying computer science (in 1988, in the days before the Internet), he ran a small retail outlet at Wantirna market outside of Melbourne selling apparel.

He was picking up damaged goods and seconds for about $2 a pop and selling them for $5. He worked about four hours a week and made $500, which at the time was just over the average Australian wage. For many years, he worked out of the family garage selling goods on eBay.

In June 2006, he, Hezi and four others set up a business in a Moorabbin warehouse called Daily Deals.

“We ran a very small department store, we didn’t have much money behind us or much stock,’’ he says. “It was selling anything we could source. I was the buyer at the time. I was driving a van around Moorabbin, knocking on suppliers’ doors and looking for goods.

“From the beginning, we decided the only way we could compete was for us to be discounters. We are not anything else, we are very proud of it and we do it in a big way today. It was always about finding something you could sell at a low price.

“Daily Deals was a department store that had a limited amount of products. We were probably selling a range of 60 to 100 products. Even at the time, we found it very hard to compete because we didn’t have any money behind us, we really started the business on personal cash of $100,000 between me and my brother and we had to compete against companies like Deals Direct which had thousands of SKUs [stock keeping units] not to mention other department stores. We found we just couldn’t compete.”

So in October that year, they set up Catch of the Day, based on an American web site, Woot.com. Catch of the Day has a simple model: items for sale are listed at noon, 4pm and 8pm. The items are listed for sale for between 24 and 72 hours. “Customers that come to Catch of the Day know that the product is at an unbelievable price, probably the best price in Australia for today and they know if they don’t jump at the opportunity, it won’t be there tomorrow or may even sell out today,’’ he says.

The company made $1 million an hour on Samsung LCD TVs. It sold 4300 Toshiba laptops in three hours and 220,000 units of Ferrero Rocher chocolates were sold in eight hours. About 675,000 Hungry Jack’s meal deal vouchers were sold in 48 hours while 20,000 pillows, 16,000 portable barbecues, 10,000 pairs of sports shoes, 10,000 Levi jeans, 2000 flights from Melbourne to Phuket and 15,000 Sennheiser headphones were gone in 24 hours.

“The urgency is what really drives the business, in combination with the strength of the deals,’’ he says. “People ask why we succeed when others fail. My answer is always the same – we are better buyers than everyone else out there. This is our skill, we buy well. If you buy it at the right price, selling it would be a very easy task. We are very good at buying.”

Much of this is also being driven by mobile. He says 60 to 70 per cent of sales are now coming from smart phones (last year, it was 30 per cent). The Catch Group has apps for each of its businesses sending out push notifications to customers. “Our store is always open, and it’s always in your pocket,’’ he says.

“You can see how mobile is disrupting every business out there, no matter what it is, mobile and digital will disrupt it like it never did before. It’s an opportunity.”

The key to success, he says, is the company’s culture and management. Walk around the 5000m2 headquarters in Mulgrave, Victoria, (located in the old Adidas building) and one is struck that it’s like Silicon Valley – a bit of Palo Alto in Melbourne. There is a gym, a games room, vending machines and lots of spaces for people to meet, chat and discuss ideas. It’s all part of a deliberate strategy.

“We believe that the more you give employees, the more you get back,’’ he says. “You put a good bunch of smart people around the table and that’s when we beat the big guys. We make decisions very quickly and the management here is very small. We make million-dollar decisions every day. Most of us wear shorts and thongs all day, it’s all very relaxed. There’s a no bullshit attitude and it seems to be working. I’m not sure what the formula is.

“A lot of people might find the way we work different or unusual and, looking at it from the other end, we would not be able to work with certain types of individuals. I believe culture here is one of our biggest strengths.”

Managing what he calls the “growing pains” has been an issue. “My personality is not to cry about spilt milk,’’ he says. “If it’s a problem, you roll up your sleeves and just do it. You can ignore the problem, you can push it to someone else or say ‘how do we solve it?’.”

The management team, he says, is like a big family. “We have 20 managers that drive the 400 people and the reason they do it is because they really understand the direction that we’ve taken and also have the same work ethic and attitude, both in life and in business.

“These are people you spend so much time with. We have lunches every day and dinners, we go on overseas trips together. These are people you want to spend time with. We’re all in the same boat and heading in the same direction. We enjoy spending time together and we enjoy disrupting the market.”

The company mainly recruits young people. Many of them approach the Catch Group on LinkedIn, the rest are picked up from Seek.com. No one leaves of their own accord. And, he says, it’s a very specialised workforce.

“There are very few roles here that don’t require some form of expertise. With the type of business we have created, we really need expertise within certain areas, whether it’s in IT or social media or buying. We are in a position where we don’t expect mediocrity anymore and we want the best people within the space to work for us. It certainly creates that culture.”

Such has been the phenomenal growth that in June 2011, the group secured $80 million in funding for a 40 per cent share of the business from a consortium of investors including James Packer’s Consolidated Press Holdings, Tiger Global and Andrew Basset from Seek.

There has even been talk about a float, though Leibovich is ambivalent about this because it could threaten the culture.

“It’s something we need to look at and consider as something that may happen,’’ he says.

“It becomes normal when you reach our size. It is quite daunting for someone like me who enjoys the culture of doing whatever you want, whenever you want and dictating your own set of rules because when you’re on the ASX, the set of rules is being dictated by someone else.

“Having said that, all companies start in the garage somewhere and all companies evolve to where they are and in my case the direction could be an IPO.”

Maintaining the company’s unique culture and management ethos in the event of an IPO will be the big challenge, he says, but managers have to welcome change.

“We are going through very turbulent age in regards to change. The world is changing,’’ he says. “I look at it as exciting opportunities.

“Of course, it’s a sad time for a lot of people. Ford is going to close down, Holden will close. Things are changing.

“But you need to stay competitive and people are looking for better, quicker solutions on how to produce and deliver services and products to the consumer in better ways. So it’s very much a scenario of the quick and the dead.”

This article appeared in the March 2014 edition of Management Today, AIM’s national monthly magazine.