One Question Quiz
Vend founder Vaughan Rowsell (photo: supplied)
Vend founder Vaughan Rowsell (photo: supplied)

InterviewsMarch 8, 2016

“What we do here is not normal” – Vaughan Rowsell on tech’s bro culture, tax and stepping down as CEO

Vend founder Vaughan Rowsell (photo: supplied)
Vend founder Vaughan Rowsell (photo: supplied)

Duncan Greive interviews Vend’s Vaughan Rowsell, a tech titan trying to reset his industry’s notoriously problematic agenda.

News broke a couple of weeks back that Vaughn Rowsell, the extravagantly moustached CEO of retail solutions startup Vend, was stepping aside as CEO to focus on the product side of the business. I thought the decision was interesting, and the way it was transmitted even more so. He wrote a piece for his own blog about it, and announced it to staff at a meeting. It seemed very unmediated, very honest, and in the spirit of the ethos with which he has run the startup. He spoke of his role as CEO as a hat had grown heavy on his head.

“At Vend I have continued to shuffle a few hats I passionately care about. The CEO hat, the founder hat, and product visionary hat but the CEO has to consider everyone’s hat fit, even their own. I realised I don’t have enough time to keep wearing all these hats, and so I should hand one on to someone else. I realised my tour with the CEO hat is done and I want to focus on the vision of the product. Both are fucking huge hats. But being CEO of a 200 odd person company growing fast has kept me away from the product vision, which is honestly what I love and why I started Vend.”

Vend, which creates cloud-based retail sales services, is in some ways a counterweight to many of the prevailing winds circulating in parts of tech. The bro culture, the difficulties faced by women and certain ethnicities, the indifference toward humanity beyond its small world. Rowsell’s stepping aside as CEO seemed anathema to Silicon Valley culture too, which positions founders as gods within their businesses. The idea that a founding CEO would voluntarily step aside, citing an inability to personally keep pace with a company’s growth, would be viewed dimly by the more macho and ascetic end of the culture.

But Rowsell has always positioned himself differently within tech. He frequently talks of the role of his paraplegic mother in taking out a bank loan to buy his first computer, and goes out of his way to involve women in the industry, both on panels, and through OMG Tech!, the educational charity founded by he and Michelle ‘Nanogirl’ Dickinson. I thought he seemed a good bugger, and requested an interview to talk through gender, the ecosystem to support startups in New Zealand, the ever-thorny issue of tax, and whether New Zealand’s educational system was turning fast enough to face the future. This interview has been condensed and edited for clarity and length.

Vend founder Vaughan Rowsell (photo: supplied)

What are some changes you have seen, looking back at the evolution of the New Zealand tech sector?

When you’re in a high-growth startup, it tends to be all consuming. In the early stages there was a lot of looking out the window at what everybody else was doing. You’re trying to borrow inspiration. Because you don’t know what the hell you’re doing.

So I guess one observation was right back at the beginning there weren’t many other people doing it. I found myself trying to take pages out of Rod Drury’s playbook of what they were doing at Xero and places like that. There were very few data points. But at the same time there was all these people doing really interesting stuff. They were just kind of hidden. You had the big high profile stories like TradeMe and Xero and before that, Aftermail.

But they were kind of silent successes, a lot of them. I think the thing that’s changed the most is – and I’d like to think that Vend’s success and Xero’s success and others have actually played a part in that – is actually making it okay to talk about what you’re doing and the success that you’re having. You can see it in the NZX, you know, the number of listings of the last few years in the tech sector. So it feels like the New Zealand tech sector is feeling very healthy from an ideas point of view and people actually doing stuff.

If you were to rank the challenges facing the New Zealand tech sector, would the need for more talent or skilled people be at or near the top?

It’s pretty high up there. I don’t know if it would be at the top.

What would?

Perhaps access to funding – because you need to have money to hire people, so it’s kind of a chicken or the egg.

In terms of the ecosystem, do you think the funding – the investment side – isn’t quite there to match the number of startups?

I don’t for a second profess to be an expert around the different stages of funding here in New Zealand because we’ve only got one data point which is really our story and we’ve raised $49 mil at a variety of different stages. Early stage, seed funding all the way up to VC funding. Not that that’s easy. It’s always been quite challenging raising that money. So the position I always fall back to is – I can’t quantify how much funding is out there. It feels like there’s money there if you’ve got a great business for them to put their money into. The only way to tell if you’ve got a great business is to raise your profile and as you get other people interested in what you’re doing.

(Photo via 8degrees)

What about the tertiary education side? I talked to [Spark CEO] Simon Moutter a little while ago and he was adamant that one of Spark’s big challenges is that there’s just not enough graduates in the STEM subjects.

Over the last ten years I think we’ve been fortunate in that in the tech sector it’s predominantly been the growth of the internet – and that was just never a subject that was taught at university. You didn’t go to varsity to learn how to programme the internet. I’m sure there were programming papers, but the skills you needed to know in order to build a high tech, internet-based business, nobody taught. The best way to learn was to just go and do it.

But now the next wave of technology seems to be going back to a classical STEM, which is science and engineering. The internet of things and robotics and drones. We’re finding that the next wave of technology is all physical. In order to have highly skilled people who can build robots and hoverboards, we’ve gotta get kids interested in science and engineering, math, all those subjects. Because access to computers and code has been relatively easy for people to have access to and that’s the biggest barrier, the barrier of access.

A year or two ago, Steven Joyce had a rather testy exchange with the University of Auckland about the proportion of resources going into engineering versus other areas. Do you think that tertiary institutions are sympathetic to the way that you and other startups might perceive their role in the ecosystem?

To answer your first question, I don’t have a lot of conversations with people but I think it’s a very sensitive subject for universities, where you’ve seen over the last ten years that people are able to bypass the university and go and self-teach. If you want to get into technology, because the institutions couldn’t actually teach you anything, you had to go and self-teach.

But now because we’re coming back to more classical forms of engineering and electronics, there is a really big role again. I think the model is changing for how people learn and I think that’s what the universities are sensitive to because in five years time it probably will seem crazy to sit in a lecture theatre to learn when you can learn most stuff at your own pace at home as long as you’ve got access to a device. But having a lab where you can take things apart and build circuit boards and particle accelerators – that’s the stuff that’s not very easily accessible to kids at home.

I went to the launch of OMG Tech and I thought it was very impressive the way it articulated what it is you guys are trying to do. It doesn’t feel to me like there’s been much of a culture of that form of philanthropy in New Zealand. Who was your target and how do you think they received it?

Essentially our target is kids. Getting them inspired.

I’m more talking about the funders.

The other audience was the funders, people who want to help put money into it. Most of those have been corporates, and they’ve come from the angle that they too see the problem. It’s a ten year problem. So people like Spark and Huawei and Microsoft wanna make sure that there’s a deep talent pool here in New Zealand for whatever the future of technology is going to be. So the young adults that they’re going to employ in ten years time are the ten year olds today at school. So for them it’s about making sure that pipeline is full of inspired kids who really want to get into this stuff.

The other audience is the educators. We set our goal initially to be primarily a role of inspiration. Prove that kids wanna do this. Prove that kids want to pursue these careers into science and technology and build robots and things. And so then we can prove it to the educators. And also prove to them that kids learn this stuff really easy and the biggest barrier is having access to the tools, the particle accelerators and robots. The actual learning is the easy bit. It’s all the same stuff, it’s problem solving, learning to work with people, a lot of it iss coding. So getting the educators less afraid of it because one of their biggest fears is that technology is changing so fast and the system isn’t designed in a way that can keep up.

We’re starting to get a lot of traction there. We’ve got a list so long that we just can’t keep up with. Almost 50% of the schools in New Zealand have expressed an interest that this is something that they want to do. They just don’t know how to do it.

Do you feel that the education system is well geared up to handle something as epoch-defining as the impact of technology? I’ve got young kids at school and it seems like they are being taught largely the same subjects in largely the same way as when I was in school 20, 30 years ago. 

It’s happening very slowly. My oldest daughter has just started intermediate and not only is she going to my old school, she’s in the same classroom, learning the same subjects – the exact same subjects – that I learnt thirty years ago. But part of the school is going digital so they’re actually starting to use devices but. I don’t know if that’s just schools having to keep up with kids because are so, a lot of the kids are digital natives. They learn better with devices. But they’re still learning the same things and subjects. It’s a completely different delivery mechanism. But if the school wanted to teach kids how to programme robots or work 3D printers, that’s a considerable cost for a school.

Turning to Vend, over the past five or six years, it’s not only starting a business but being focused on growth and having to care about capital raising and all kinds of things. What are some of the things that you have learned as a result that you didn’t understand?

Lots. Because you normalise to it, you’re in the almost glamourised ‘startup life’ of ‘startups are so cool’ – startups are cool, they’re fun. But shit it’s hard work. And I’m constantly having to remind myself – everybody here is constantly having to remind themselves – that what we do here is not normal, the pace we move at. People always ask me ‘what are the biggest mistakes you made’ or ‘what are the biggest lessons you learned’ and there are so many of them. Literally every month is a new big mistake, a new big lesson, and a new big success.

Because in five years we’ve grown from one person to a couple hundred people across five different offices around the world. Literally every month we were having to solve a big problem. So like, how do we open an office in Canada? I dunno, we’ve never done that before.

Do you think that you have attracted people who are naturally seeking out that kind of dynamic working experience? Or is there a cultural adjustment that’s needed to happen – because it didn’t really exist.

Yeah. I think we’ve always had a big focus around culture. Doing this is hard work and we want to make sure that we’re having a good time all time. Not having parties every day, but making sure that we’re surrounded by people we like and we enjoy each other’s company. Because otherwise how are we going to be in the building with each other for 10-12 hours a day? Because we’re so fun loving and we’re really passionate about what we do, that attracts a lot of people. It attracts a lot of younger people. So for a lot of people this is their first or second job.

I guess a lot of them don’t realise how unusual this sort of environment is. This is not your typical work environment. Things are moving really quickly and, like everybody, they have to normalise to it, the constant fast pace and change, or they just can’t cope. Then they have to leave and go get a more stable job where maybe things don’t move as fast.

We’ve been through a huge change over the last twelve months. We grew rapidly and then we contracted rapidly. We grew our headcount to be well over two hundred then we had to scale back because we made some bad calls. We opened a support centre in Berlin and grew that team rapidly then realised that actually it was really hard doing business out of a Berlin base so we had to back out of that. That created a lot of change here.

Also when you’re five years in, because everything’s moving so fast, everybody’s jobs, especially at the upper level, you’re kind of having to level up five levels every year. At some point you reach your maximum level because you can’t level fast enough to keep up with the demands of where the company needs to go.

Tell me about the decision to step away from the CEO role.

I’ve found myself in that exact same space. Because I could level up another five or ten levels in the CEO role, but I figured there’s probably somebody out there who’s already mastered those levels. They don’t have to learn it on the job. And to be honest, that frees me up to go and level up in things where my passion is. That was a big call to make but logically it was the right thing to do. It was like ‘yeah, why wouldn’t I bring in a more seasoned CEO who’s got a lot more experience than me.’ Who’s got that experience now.

The traditional model is you found a company, you grow with it, you remain in the big chair until you retire or can sell the company or you’ve decided that it’s time to move on. So most people assume that I’m leaving the company because I’m stepping out of the CEO chair. No way, I wouldn’t want to go anywhere, we’re having such a great time.

Auckland Mayor Len Brown and Rowsell at the Vend's Newmarket headquarters in October 2013 (photo: supplied)
Auckland Mayor Len Brown and Rowsell at the Vend’s Newmarket headquarters in October 2013 (photo: supplied)

You talked about the struggles the company experienced, the growing pains of last year. Did some of that feed into your decision and how did you respond emotionally to be able to make that decision for yourself?

Yeah. I think I’d be slightly hypocritical to say that a lot of the lessons I learnt over the past two years didn’t play a part or didn’t highlight the fact that this is the sort of role that you are learning on the job. With each level of scale that you go through, the potential risks of the mistakes that you make also compound. We’ve got two hundred people who are here. If we make a decision which means the company runs out of cash then that’s kind of disastrous. So we are now in the position where we are considered, in the industry, to be one of the leading players. We’ve got our eyes set on the number one position and we wanna be the number on solution for retail technology worldwide. I want to minimise the mistakes that we make. By putting somebody in the role who’s got a lot more experience – not to say that we won’t make mistakes, that she or he won’t make a mistake – but if we can avoid the stupid mistakes then that gets us a lot further.

You said ‘she or he’ there, and you refuse to work on a panel where it’s just men speaking. Tech has historically been a boys club, it’s been quite exclusionary to women and to certain ethnicities. How important is it to try to counter that and how difficult has that been? 

Yes. It’s really important, it’s really hard to solve, and again it’s not something you can solve overnight. Just little things, by the words you use. That’s part of the reason I did OMG Tech! as well, not only to make sure that there’s a good pool of future talent. We make sure that half of the kids that go through the programme are girls and half of the kids that go through the programme are from lower socio-economic areas to try and level the playing field. Technology isn’t something that’s inherently more attractive to guys than it is to girls; it’s just that kids make their mind up really early on, as they go through the education system, that they’re gonna be a doctor or a nurse or a teacher or an accountant. I don’t think it’s something we can change overnight. To be honest, especially in senior leadership roles, it’s really hard to find women to put into those roles. Not because there aren’t talented people out there – there just aren’t as many of them.

I don’t know that I have all the answers but if everybody makes a small effort, like I refuse to speak on a panel that’s just filled with guys because I kinda like the company of women, you know? And it makes it more interesting. I can’t think of how many panels I’ve sat on which are just four or five guys – more often white, more often middle-aged – who kind of all agree with each other. It’s not just a gender diversity thing – it’s just a diversity of views and opinions as well.

Tech sort of has these two elements to how it’s perceived. One is that it’s this amazing force for good, that it makes things much easier for consumers and all the rest of it. The second is this side, that rapacious lust for growth at almost any cost can lead to behaviour that – I’m thinking in particular of Uber recently, taking 15% off its already fairly low paid drivers’ wages – seems generally terrible. Do you feel like the industry as a whole is thinking about people as much as you are or as it should?

I don’t know.

I’m thinking also about the base erosion and profit shifting, which isn’t confined exclusively to tech – but tech is one of its major innovators, if you can use that term. Structuring their taxes in a way that can suck as much profit out of an entity without paying any tax in a jurosdiction. And often so they’re not only disrupting an industry that might have been very labour-intensive, in reducing the jobs, but they’re not replacing that revenue on the corporate tax end. Do you think about that kind of thing? Does it give you pause, in terms of how we actually fund our society?

Okay I’ll tell you the stuff I do think about. In business, without specifically commenting on Uber or those sorts of disruptive workforce-type technology players, it’s that balance between the two competing forces of profit: the business, which if you put on your pure business hat, you don’t think about the people you think about the best interests of the company and what will make the company more successful, and thus more revenue.

Then at the other end of the scale it’s all about the people. If you don’t have the people then you don’t have a business and you don’t have profits. I’m somewhere to the left hand side of the scale – which is it’s all about the people. I was raised by my mother who taught me that you treat people well and, whether it’s karma or whatever, what goes around comes around. So that’s very much guided me. I’m not a ruthless businessman, don’t tell my shareholders, but I will more often err on the side of looking after my people.

We went through some hard times last year and if the team didn’t have the trust in the leadership and if we didn’t have an amazing team of people out here then we probably would’ve lost everyone. Going through a big change in business can be pretty frightening, especially for young people who this is their first or second job in the industry. It’s being able to weather those storms through a strong culture where everybody trusts you, you’re honest and you’re up front with people about your motivations. Then that, I believe, enables you to go on and build and amazing successful company that generates a truckload of profit.

Sorry to harp on the tax thing, but it’s a bit of an obsession of mine. It doesn’t feel like the sector pays its share. I understand that because there’s a slice for growth and every dollar you can avoid paying in tax you can use to supercharge your company – but ultimately the hospitals and the roads and all the rest still need to run.

It kinda sucks if it’s a direct result, you know, high tech companies can avoid paying tax and then they reach a liquidity event and then you get lots of off shore investors who benefit from that and that money doesn’t find its way back into the system. So I think that sucks.

My philosophical view is that everybody should pay their way. We don’t have anybody within Vend whose job is to avoid paying taxes. On one hand, though, here in New Zealand we’ve got over a hundred highly skilled jobs that we’ve created. Everybody here pays PAYE, so as long as we’re increasing the pool of highly talented people who pay tax then there is that input back into the system.

I guess I’m thinking less about NZ headquartered companies, than say, Facebook. Which has had this extraordinary impact on any number of different sectors yet is still a tiny workforce and its NZ tax bill is still well under six figures. Do you think that the industry as a whole could stand to think harder about how it contributes to society?

Yeah. But I think that can be done through indirect means as well, it doesn’t have to be through taxes. I like seeing tech companies who give back in other ways as well, whether it’s through philanthropy or whatever, but coming back –

It’s nice when they do that – but we don’t want to be relying on the kindness of strangers to run a country.

No, that’s right. It’s kind of a trust thing. I don’t know what it is about American companies – whether it’s an American ethos – but they just don’t like paying tax. And any way they can avoid paying tax. That’s my view as an outsider. They don’t see the value of it, it’s somebody else’s problem to make sure that there’s an infrastructure and facilities.

Do you feel like the fact that there are these prominent examples of companies which, whether it’s through their tax structures or the way that they treat employees or the kind of bro culture, give the industry a bad name which makes it harder for companies which are trying to be both extremely high growth and kinder employers.

It does make it harder because quite often I’ll come up against that bro culture where people assume that because we’re a tech company that we embody that culture. It’s something that we work really hard to make sure that we’re different. We’re equal opportunity, it’s not just a bunch of dudes hanging out and goofing off.

It seems to me, and I may be wrong, that there is the sort of coming New Zealand economy – just as there is the global economy – and the going one. Do you feel like at a media and governmental level there’s enough emphasis placed on the new economy?

No but again, I don’t know if it’s a chicken or an egg thing. It feels like there’s enough stories out there, it doesn’t have to be Fonterra all the time in the business papers. There was Diligent last week who had a significant exit, those sorts of stories I think are really interesting. You only hear about the big exit of Diligent but where was the interesting backstory or the commentary in the main media outside of the NBR and very specific media outlets about the story of Xero or Diligent or Vend or others?

There’s probably some really interesting stories about things that tech companies are doing, rather than just reporting on the price of milk. There’s a big risk. You’ve got economies like South America and China. Who’s to say that in ten years time we haven’t lost a milk industry or dairy industry because maybe the supply can be generated closer to home for those bigger markets, and then what are we left with? A lot of grass and some fat cows.

Returning to that decision to step aside, do you recall when the idea first entered your head? Just describe the gestation process and how you feel at the end of that, and how it’s been received.

I can’t remember when I first started thinking about it, probably just before Christmas, as you probably do when you go into the holiday period. It’s like well, end of a year, I wonder what next year is going to hold. It’s been one of those things which sits in the back of your mind.

One of the things we talk about here internally is that you do a tour of duty. Because it’s a fast moving environment, maybe your tour here is only two years. And maybe in that two years maybe you’ve levelled up, you’ve levelled up and you wanna move on and go take your new skills, because you learn a shitload here. You wanna take those skills and apply them somewhere else. Or maybe the job has grown and you’re not the right person in that role anymore, and that’s okay, it’s not a bad thing.

That made me think, well, do I have the right skillset to be able to keep doing that? And do I have the energy to keep doing that? Then I felt that I probably wouldn’t be able to keep up. So I made the call to keep the vision hat and offload the day-to-day running the business hat to somebody else who’s more skilled at it than I am.

How did you make the announcement to staff and how have they received it?

I just stood up in front of the company. I did an all-hands last Thursday and took them through the story of Vend and my decision and why I made it. Everybody took it really well which, I don’t know if that’s a good thing or a bad thing. When I say I mulled over it the last couple of months, it wasn’t mulling over the decision – before Christmas I knew that was the right decision. It was really trying to figure out how to make it happen. How to get investors comfortable with it, how to get the board comfortable with it, how to get the team comfortable with it.

Because if people didn’t accept it then it would be the wrong decision. So yeah, I agonised over that for months. But then in the end I just stood up, was frankly honest with the team as to why I made the decision, and everybody understood it. Because it was the truth.

The Spinoff’s media and society coverage is brought to you MBM – an independent media agency for the digital age.

Keep going!