Building Serko: Global Growth, AI and the Long Game - Darrin Grafton

Transcript is computer-generated and may contain errors.

Paul Spain:
I'm Paul Spain Futurist and Chief Executive at Gorilla Technology – and host of NZ Business Podcast since the beginning in 2013.

Today's guest is Darrin Grafton, co-founder and Chief Executive of Serko, the NZX and ASX-listed travel tech firm helping make business travel easier.

What started as a small software venture developed in Auckland has grown into a global technology business with hundreds of staff across New Zealand, Australia, China, India, and the United States and partnered with some of the world's largest travel brands – such as Booking.com - who use Serko for their corporate travel management platform.

New Zealand Business Podcast is proudly brought to you by One New Zealand alongside Gorilla Technology, making tech enablement and cybersecurity easy – helping small startups through to midsize firms. And by Outrun Global, remote staffing to help your local teams work smarter, not harder.

Paul Spain:
Darrin Grafton, great to have you on the New Zealand Business Podcast. Thanks for joining.

Darrin Grafton:
Thanks, Paul.

Paul Spain:
Really great to, you know, finally sit down and, and, you know, hear about the, the Serko journey and, and your, your backstory too. But I always do like to, to get started right at the beginning. So maybe tell us a little bit about where you were born and where you grew up.

Darrin Grafton:
Yeah, I was born in Waimauku out on a farm. I was— I grew up as a share milker with my dad. I used to help him on the farm, and I think that was one of the backgrounds of that got me into that number 8 wire thinking, because you would be on a farm and there was no Google, there was nothing, and you just had what was in the shed. So when there was a problem— and I remember one of the times one of the major pumps blew on the farm, and we just had to fix it with what we actually had, and otherwise the cows were going to have no water, which meant you couldn't milk them that night. And so it had a financial implication. And so Sure enough, we did that. And I realized then that, you know, you, you just have— every problem has a solution. You just have to kind of think and see what you actually have.

Darrin Grafton:
If not, you go and ask your friends who are up the road to actually help, and not being afraid to do that from time to time as well. And I think that was kind of that whole background was going from, from that kind of farm. And my parents were kind of funny. They never allowed us to use computers. Or calculators. And so it was kind of one of those sort of things where to get into computers was something I really wanted to do. And so, but they only let 15 people in a year into the tech course at the time. So it was a big move to actually kind of then jump in and actually start doing computers.

Paul Spain:
Right. So when you look back, At that upbringing and not having the access to technology, but also having those opportunities to solve, you know, solve real problems in the farming environment. Do you think that that mix actually ended up, you know, reasonably good? And then you got into technology, you know, when you were able?

Darrin Grafton:
I actually really struggled getting into technology coming from— I was really good at maths and I was really good at problem solving. So had that type of brain, I could kind of work it through. But when I started working with computers, I really struggled. In fact, I was like the bottom of the class. And one of the tutors took me aside. His name was Tony Bew. And he took me aside and he sort of said, look, I'm gonna spend some time with you. And he said, you're really clever, but you're not getting it in the way that computers actually think.

Darrin Grafton:
And I wanna work through that. And so he spent a morning with me and I still was really struggling to kind of grab the concept. And then he said, How do you think? And I said, well, this is where I've grown up, on a farm. And so he went in and he showed this thing on arrays, how computers look at arrays, putting stuff in. Then he put it into pigeonholes and he said, this is in 1 by 1, this is how things— and when you add another dimension, it would sit across. And as he went through around the school, he showed different ways that they related to the practical thing. And then suddenly my brain rewired. I went from bottom to top.

Darrin Grafton:
And everything became easy. I realized that computers was just an— it was a technical way of bits and bytes to be broken down into solving actual problems for people, whether it was a problem for a cow, it was a customer having a problem or needed a solution built. And I just needed to be able to build that, break that right down to its practical sense and build it up. And I think that's been so important in how we think about the customer, the human using the technology. and the problem we're trying to solve. So we always go problem. If you're solving the customer problem, you're going to have a great business and they're going to be loyal because you care about them and you're solving that. So the DNA of that was probably what led to Serko's success.

Darrin Grafton:
I just suddenly had this whole passion and computers was a way of actually delivering that passion out. So it was pretty, yeah, it was pretty cool.

Paul Spain:
Yeah. So that was high school that you were first getting your hands on computers?

Darrin Grafton:
No, it was actually Straight into Carrington Polytechnic. It was a course called a New Zealand Certificate in Data Processing, NZCDP, and kind of looks like a typewriting course.

Paul Spain:
Okay, so this was what, mid to late '80s or something?

Darrin Grafton:
Yeah, it was 1986, '87 sort of timeframe. Yeah, so it was kind of, it was very, yeah, it was like you sat an aptitude test to get into it. And it was quite, quite interesting sort of process to get into those sort of things. And you worked on, I remember the first computer I walked on, you walked inside it and you turned a big disk and you carried out 2 megabytes in this thing and you were careful to put it down so that the platters that were inside it didn't touch each other and everything would be game over. And I think it was a DG Avion was the big computer at the time. And it was like, yeah, so it was quite incredible to see how far the technology's sort of come from.

Paul Spain:
Yeah. Wow, that's incredible. And so, you know, what do you think were the big, takeaways from that study and that time that set you up to be able to solve real business problems?

Darrin Grafton:
Yeah, it was the way that I think over universities, Carrington Polytechnic had a real practical way of looking at it. And I think that example of what Tony did by taking me in and doing that, but they also put you in your first job. So they gave you work experience, and that's where I met my co-founder. So basically he was the year before me and he was at the same company, and he kind of was kind of— he was an ex-rugby league player, he was a total extrovert, and we became really close friends and we had a lot of great fun on it. And that kind of— that's, that set up Serko because we always had an aspiration to build businesses. In fact, we've done 8 exits and 9 companies together.

Paul Spain:
So this is, this is you, Bob Shore.

Darrin Grafton:
Yeah, all from Carrington Polytechnic. Both went to the same, um, institute.

Paul Spain:
Yeah,

Darrin Grafton:
a year ahead of each other, behind— I was a year behind, and, and, but became friends all because of that first company we ended up in and kind of built up a passion for travel and travel technology and building businesses around it.

Paul Spain:
Wow. And so how did that come about? How did you find your way into the travel sector?

Darrin Grafton:
Yeah, so the company that we started at was— had a— they had a problem that in Australia, a company called Data3 out of Melbourne had wanted to build an accounting solution for travel, and we, we ended up working on that. So by chance, accounting solutions were the big thing. that software was designed to build. And so we built a travel accounting solution, and then we built the same solution for wholesale travel and other sort of categories of travel. And that led to us rethinking, well, what if we could actually reimagine travel? What if we could solve it slightly differently? And this company with Gullivers and, and that sort of came to us and sort of said, well, what happens if you could actually shift travel. And one of those things was creating those, I think, 5 screens of this product we called Travelog. And we wanted to make it really amazing.

Paul Spain:
So by 5 screens, what do you mean by that?

Darrin Grafton:
We wanted to build a prototype of what a new accounting system for travel could look like. And so we built— I went to my brother who was working for the Kinleith Project for Becca Carter at the time. I said, can you model a world with the Travelogue logo going around it? And I want to put that into the sign-in screen. So we— he did that and then I worked out how to code it because it hadn't been done before at that era. And we built this thing. I must've spent weeks, if not a month, building just the login screen to get people into the system. And then we built 5 screens inside that and we presented it to Gullivers and they signed up all of their group. onto the technology.

Darrin Grafton:
And then suddenly the word of mouth just spread and we'd signed over 2,000 travel agencies onto the technology and we still had to build it.

Paul Spain:
Wow.

Darrin Grafton:
And so, and so we then went about building it and it was late nights. So I think we were working 120-hour days, uh, weeks, weeks. Yeah, it was like I was sleeping 2 to 4 hours a day. Um, it was an incredible time. But that's what really created the basis of what we're doing today.

Paul Spain:
Right, right. And so walk us through those, I guess the early business entities and how those sort of dots joined together because it was a number of years before Serko itself was established. How did those dots join up?

Darrin Grafton:
Yeah, so we started, our first thing was a company called Advanced Software Solutions. And that was really designed around the Travelog technology, that accounting system. And that was our first foray into that. That then became Interactive Technologies. And Interactive Technologies came about when we got the Gullivers deal, that first deal. It all started on a kitchen bench in a mouldy flat underneath. And so we called that the Subterranean Innovation Centre. We then moved to the Heritage Hotel into a hotel room where we took out all the beds and stuff like that.

Darrin Grafton:
And I think most people thought, geez, most people just steal the shampoo, not the beds and everything out of it. But we cleared it all out and we had that as our office. And it was always weird getting employees to come and do their interview. And they're like, going to a hotel room? Is this legit? And you're like, yeah, come up. So our first 2 employees were hired up there. And it was always funny having the bathroom was the conference call room. So it was like, it was a unique time, I would say. And then from there we built that Interactive Technologies and we eventually moved to, you know, Serko House, which was the Saatchi& Saatchi building, into a place down there.

Darrin Grafton:
And we had 5 of us by that stage. And that was the true Interactive Technologies And we had another company that we'd kind of set up with Andrew Bagnall, which was called Access Interactive. And that was the marketing division of— and that did the selling for our technology. So we would concentrate on building the technology and then the other division would then sell it. And then we merged those 2 together and that all came under Interactive Technologies. And then that formed one of those 4 companies that listed under the Gullivers Travel Group.

Paul Spain:
Right.

Darrin Grafton:
That became the public company in 2004. That business kept growing through to 2007 and we picked up that the GFC was coming and we were like, geez, this is— so we listened to Dr. Alan Greenspan. We were partnered with a company with ResEx that had him in to speak and we were up there at the time and we listened to this conversation about how the markets and the mortgage rates were happening and we went, geez, the person that's just bought us is a finance company. I think we can buy back the assets right now. They're going to be out if they're— if this is happening, they're going to be under real pressure and there's going to be a— it looks like there is going to be a crisis. So we went in and, and bought the assets back off them and, and took what we needed to create Serko at the time.

Paul Spain:
Wow.

Darrin Grafton:
And so we did that in 2007, May the 23rd, 2007. So next year will be our 20 year anniversary. But, but yeah, we took that opportunity.

Paul Spain:
So that, that was a great insight then that, that allowed you to really change the, the trajectory of your futures and, and the business future there.

Darrin Grafton:
Yeah, and it's— there's always been those little insights, you know. So whether it's like the light bulb opportunity of understanding how to build software and understand how people connect to it just through tutors, and then you have being able to listen and hear things and see patterns that could occur. And you're sitting there going, if he's right and when it hits, it's at 1.2 million mortgages, when it hits 1.5, the whole market's going to implode. And when we sat afterwards with him, he said, it's going to carry on. We're like, right, this is a trigger. But we weren't afraid. We actually, I think the difference was we saw the opportunity in what was going to be a world crisis. of we could actually buy this and fund it ourselves now because we'd already sold out of these other businesses.

Darrin Grafton:
We can actually do this. And so that was a real cool opportunity.

Paul Spain:
So what did that look like? You know, what was the investment sort of scale to be able to, you know, acquire the assets that you needed?

Darrin Grafton:
I think MFS sold the whole group. I think when it combined, they bought it was about $900 and between $800 and $900 million. I think we bought the assets back for $250K at the time. That's how distressed it was.

Paul Spain:
The same assets?

Darrin Grafton:
Same assets that we needed. Wow. And then we had to fund the ability to run that 'cause they had switched it from a profitable business into a loss business. And so we then bankrolled it out of that and into the new area. In fact, where all the revenue came from was from the accounting software that we had built previously and we end-of-lifed all that and just went with the online software, which had the lowest revenue, but we figured that was going to be the future and we could fund that.

Paul Spain:
Yeah, so maybe break down the opportunity that you were really looking at at that time and what you saw in the possibility for Serko versus the, I guess, the broader Assets, including their accounting software.

Darrin Grafton:
Yeah, I think what we saw is that there was this real need for online travel. Then we'd been going around a lot of corporate RFPs and listening to companies sort of say, we would like to do a lot of this ourselves. We'd like to book online, we'd like to do this type of thing, we'd like to make bookings, and we'd like to have a way of actually driving that. And we went, we think that's the future. So we'd built that part of that asset, but we could see its real potential hadn't been maximized under the group. And we went, if we could just take that piece and turn it into something that actually drives 90% of the way people actually book and change bookings, that would be an incredible way. We could actually turn travel management companies from doing a million turnover a consultant to $10 to $20 million through the technology actually being driven and the travelers and the EAs actually making the bookings. And so we went, if we could actually do that and really just focus on that, let's— that's the business we want to be in.

Darrin Grafton:
And that meant dropping all of the accounting software. It meant dropping all the rest of the pieces that didn't match that objective. So that's what we did. We kind of just bought that asset back. We then set up the company with 26 people just related to that and started from the ground up taking that concept and driving that through the market with every travel management company rather than just the Gullivers Group. So we kind of then drove that as the storefront where travel management companies would sell that, our technology, and put their storefront of what their customers would see. So for Flight Centre, they might call it Savvy. Today, Booking.com, under that same technology, calls it Booking for Business.

Darrin Grafton:
And so people could generate this and it would use our technology and we would monetize that through into there. So it was a way of actually being— we saw an opportunity with something that we'd started that really hadn't had its full potential unlocked. And we— it was really exciting to do. And so we'd kind of done it with accounting and had got to the market share, and this hadn't. So it was kind of like something that you felt was unfinished business that could be globally, you know, suddenly the internet, the whole way this could be done was going to blow up. And could you, could you do— could you take technology on that journey with you? And so it was— we saw it having the most potential as well.

Paul Spain:
Yeah.

Darrin Grafton:
So some people say, you know, like in businesses, it's made of decisions of what things you're gonna stop and what things you're going to keep. And can you make hard decisions? So, well, everyone thought we were crazy making that decision. Why would you get rid of that revenue line? But we wanted to, we believed we could do it and we needed to be fully focused on this one opportunity. And so I'd say that's, that was the first reinvention of our business that was setting the foundation. Serko's gone on another 2 of those reinventions over its journey. And being able to say, these are the things we'll let go of, and these are the things that we will do differently, and these are the people we'll bring on that journey, have been absolutely critical to that reinvention and that success and that belief.

Paul Spain:
So how did you actually navigate that at the time? Who was involved? Was it just yourself and Bob, or how, you know, how—

Darrin Grafton:
There was 26 of us. Yeah. We were operating inside Gulliver's still and thing. And so we kind of did what was a management buyout at the time. And there was 26 people that we knew were critical for us to build out this new part and this new direction for the business. And some of them had been with us right from the very start. So they're still with us today as well. So those people that were there have been very loyal.

Darrin Grafton:
They understood the markets and they've actually been innovating with us. And so they were quite critical to the success of this coming together. And so we, myself and Bob recognized that and we said, look, it's not about money, it's about us doing this. And so the philosophy of Serko was these 4 guiding principles, but more so was everyone is a shareholder and everyone is in it. So we gave 40% of the company to the staff. So the staff had more of a shareholding collectively than myself and Bob did individually.

Paul Spain:
Yeah.

Darrin Grafton:
And we felt that that balance was a really good way of actually looking at the journey ahead, and that made them all part of it. And we try and do that today where everyone becomes, you know, shareholders of the company. And that sort of meant you win when we win, and you're working towards the same journey. And you kind of think of everybody as shareholders in the same company or founders. And so people call myself and Bob the founders, but actually it was 26. people that all came in with shares, um, and probably took less salary at the time to be shareholders inside the business. And it's, you know, it's paid off.

Paul Spain:
And letting go of, you know, what sounds like it was the, you know, the, the main revenue stream in terms of the accounting software component, how did you, how did you work through that? Were you able to, you know, sell that and get something back, you know, from it? How did that sort of fit together?

Darrin Grafton:
So those exist, there are people that were left behind, kept running that and driving that through while we did the rest.

Paul Spain:
Right, so that was part of your acquisition then, you were able to actually—

Darrin Grafton:
Well, we just took, so we left those assets with the Gullivers Group to run and we took those pieces back and we let them run that out and do that and we kept the assets we needed to run this this new part of the business. So that kind of enabled us to build what we needed for that future as well. So it was kind of, you could say, a carve-out piece from the main group to carve out this piece and then rebuild it. And so there was a lot of software engineering needed to do to bring that together.

Paul Spain:
So from that point, you've got 26 people, What did the revenue opportunity look like at that point in terms of, did you have enough income coming in to make that work? How did you deal with that piece? You've got these excited co-founders, shareholders, an excited team.

Darrin Grafton:
Yeah.

Paul Spain:
But to, you know, to build this thing for the future, takes a lot of blood, sweat, and tears and some dollars too.

Darrin Grafton:
And late nights, yeah. So I think that was one of the things is that we absolutely knew that we were gonna have to tip money in, myself and Bob. And we knew that it was going to be a journey through to actually getting that market share, but we utterly believed in that. And so we set this process of kind of saying, Every customer's our first customer. The care that we're gonna give, whether it's a reseller reselling it, their customer is— initially I gave every CEO my mobile number to call me at any time, and that was the level of engagement, the thing. So we were building this technology, we would listen to them, and if they saw a gap in it, we would fix it and we would do it as fast as we can. And some nights I worked right through the night and didn't sleep for like 48 hours to make sure that we were delivering the technology. So we've been very focused focused on delivering the promise of what the technology can do.

Darrin Grafton:
And technology is not simple, especially in our travel industry. It's a lot of legacy systems, all you're trying to work together, and they don't necessarily have ever been designed to work together. So you're making the plumbing at the same time. But that was really exciting as well. And I think we all had the belief that we could do it. We'd done it before in the industry and in other areas, and we were like, we've got this. And you knew everyone was with you. And I think suddenly the team grew.

Darrin Grafton:
And I remember saying to Bob, we were like, imagine if we do 100,000 bookings this year. And Bob's like, geez, what would it be like? And I was like, yeah, we might get to like 30 staff. And then Bob's like, yeah, okay, let's see if we do that. And we did 100,000. And then the next year, We did 150, then we did 300,000. And now today, one of our customers like Booking.com will do that a month.

Paul Spain:
Wow.

Darrin Grafton:
And so you kind of, just one customer. And so you kind of go, you know, what started out as these little micro steps, you know, suddenly, you know, it becomes a big thing, you know, on the other side, you know. And yeah, it's those little steps. We always, I think every business goes through that sort of thing of going, imagine if we have 50 staff and then you get, to the thing and I'm like, the scary point is getting to 100. And then you imagine 150 and that crossing 150 when you realize you're not gonna know everybody's name potentially, you can't remember that. And then you get to like today where we have 400 staff. It's quite proud that you've actually built a business that can drive a culture and everything through that journey as well. But it's, yeah, I think it all comes down to that belief that you can do it and—

Paul Spain:
Mm-hmm.

Darrin Grafton:
Just putting all those parts together to know that a customer will— I think they buy people when they buy technology. And if they— we have customers today that leave and go to the next company and they take our technology and put it into there. So it's, yeah, it's that kind of philosophy that we've put inside that's been really cool.

Paul Spain:
Yeah. So they love it so much that the next company they turn up at, they're like, hey, we need to get Circo Tech in here. Now, you know, when you started understanding what the need was for, you know, online booking platform, you know, what did your world look like? How much, you know, experience did you have as a traveller that helped, you know, shape your thinking around, you know, why this was really important?

Darrin Grafton:
Yeah, I mean, you're down the bottom of the world. And I think New Zealanders aren't afraid of traveling. You talk to Americans to travel to New Zealand, they're like, oh, that's too far, you know. And to us, traveling to America or traveling to Australia, we just do it. Traveling to Europe, we're not afraid of flying. And I think because of that, you know, we— I was traveling a lot. I was, you know, because you're wanting to connect with customers, you're meeting with the resellers and their customers, and you're running forums to understand going to trade shows, all of these sort of things, but you're experiencing the problems. So you're experiencing the disruptions, you're experiencing all of the things that could be better.

Darrin Grafton:
And so it enables you to imagine that world of what you can actually do to improve it, and you're actually improving it for yourself at the same time. And so heading into COVID, I was doing 120 flights a year.

Paul Spain:
Whoa.

Darrin Grafton:
And so I felt like I was on a plane.

Paul Spain:
Were you ever at home?

Darrin Grafton:
Yeah, it didn't feel like that. And I'd grown, I'd gained, I'd got up to about close to 118 kilos. I was eating on a plane at every airport and then at the customer events. And it just felt like constant sort of thing. And so COVID was quite a good reset to that, but it was also a reset to say, actually, we're not doing it fast enough. And what else could we actually be doing? around this to improve that. But yeah, it came back to travelling a lot to experience what our customers were experiencing and actually then being able to solve some of those. So today with AI, it's just incredible.

Darrin Grafton:
It's like for the first time I feel like we're actually getting very close to being able to deliver that kind of EA in your pocket type of assistant in travel. It's going to be pretty cool.

Paul Spain:
How big is the market and how do you set your ambitions for how much of the market that you should be going after?

Darrin Grafton:
Well, the market is $2 trillion. It's huge.

Paul Spain:
This is just the business travel?

Darrin Grafton:
Just the business travel, yeah. So it's about $1.6 to $2 trillion. It's about, they say between $1.6 to $1.8 By 2030, it'll definitely be $2 trillion. And you kind of, you look at that and my goal, I've always had a moonshot of saying 20% of the world's business travelers will use our technology across the world and in multiple languages and diversity, and Serko will represent that. So our culture and everything is so mixed, full of diversity, because that's the imagine that the world that will use our technology and the people building it should represent that. And so that's what we imagine. So 20% of that would be, you know, $400 billion going through that. Mm-hmm.

Darrin Grafton:
We maybe do 10 to 20 today. So huge opportunity to go. And when you think about that, there's no one player that really takes a lion's chunk of that. It's so diversely pushed out to online travel agencies through to travel management companies, the traditional ones today, to direct suppliers in their airlines and hotels. So huge opportunity to not only disrupt that, but actually automate it way better as well and give people the opportunity. And then you cross over into leisure, and leisure's normally 3 times the size of business travel. So when you think about business travel today, it's moved. COVID shifted everybody from traditional flight, hotel, and home again to flight, hotel, events, us going an extra 2 days, going 2 days later, 2 days earlier, spending a bit of time discovering the city and actually getting an experience.

Darrin Grafton:
Because COVID rewired us to realize when we were locked up, there was more to the world. And so there was more to just work. And so work's become, you know, pleasure, business and leisure combined. And nearly everybody does that. We see that, you know, through all the data, you know, and then remote working has changed everybody. to want to connect as teams. So there's a whole different work way that's actually evolved out of these crises as well.

Paul Spain:
That's fascinating. I guess, yeah, unless you are looking at that whole picture, there's a whole lot that you would miss around the opportunities and how it's actually evolved and changed. And I think, you know, for myself, I don't— technically, I probably don't travel as much as I was prior to COVID. But it's different. And then I've got other team members who are traveling internationally to meet me and so on that wasn't happening prior to COVID. And I guess how the makeup of teams has changed over time.

Darrin Grafton:
And people would say, well, surely meets and teams has actually taken away a lot of that travel. It's probably taken out the travel that wasn't important and bought travel in that's even more important. And that's what you're just talking about, the teams connecting more.

Paul Spain:
Yeah.

Darrin Grafton:
Because your money can be more applied to— I think travel's also got slightly more expensive, so maybe the trips are a lot more focused around that because of the investment. But it's— yeah, it's— it has actually shifted. I remember Bill Gates came out and said it's going to be the end of business travel, it won't come back to more than 50%, and I argued with him and I said, New Zealand got to experience it first, and I was at, I was at Auckland Airport and the— it had just opened. So we had like a, the first wave of COVID and the flights open and you could travel in New Zealand. And I jumped on a plane and I was standing at the airport after coming back and these 2 people there, and one guy goes, what are you doing? And he said, I've just been down to Wellington. And he goes, well, I've just been down to Wellington. They'd both been to each other's customers to try and win them, retain them. They knew face-to-face was important.

Paul Spain:
Yeah.

Darrin Grafton:
And, you know, I knew— and both thought they were first to do it.

Paul Spain:
Yeah.

Darrin Grafton:
Because they wanted to be, you know, there and more than just a phone call, because that's what everybody was doing. So you realize the importance of, of, you know, being there, you know, what, you know, just being in the room and that extra coffee or that lunch. chat can actually mean, but it was really surprising. And that's that tension. If one person's doing it and you're not, you're left behind. So it only takes one person to make the move and it recovers back. And it recovered with a vengeance after that.

Paul Spain:
Now walk us through the international nature of Serko because you're not just in New Zealand today in terms of where your people are. How did that evolve from your team of 26 in Auckland? And I guess prior to that being in the, was it in the garage and then into the hotel room? How has that journey sort of evolved in terms of growing your team to the hundreds of people you've got today in differing locations?

Darrin Grafton:
Yeah, so Australia was the first. It's because we had this mindset that you buy from locals. And so we would support that, but people would always buy from someone from Australia. They would buy from Australia. And so we would portray our brand underneath somebody that fronted it. And so we were less focused on it being a New Zealand company in that we would establish the right type of selling structure and the right models in each country. And so Australia was the first. The next one was China.

Darrin Grafton:
And China, we set up a development hub there. One of my number 2 guys that was developing with me, his wife wanted to move back to China. So we said, well, let's try a China office. And so that was in Xi'an. That's where her family was from. So that's why we have a Xi'an office. And we didn't get it right. So we made We set up the office and we hired, I think it was 7 people, and they weren't really right and we weren't getting the output.

Darrin Grafton:
And so we decided to set up a different process of hiring in China and doing proper coding tests and all of this sort of stuff to see if we could find and set a program that would get the right type of hire into there. And so we had to restructure it and then structure it again. And we didn't give up. We started again, eventually we got that right. So Xi'an's become one of our main centres of excellence for development. They're phenomenal. And then—

Paul Spain:
How painful was that if you launch an operation there in Xi'an and then find actually you're not getting the right sort of people? 'Cause that would have a flow-on across your other people, not just in the region.

Darrin Grafton:
And I think the culture of Serko is that when you recognize something, you make the call and you change, but you also support through that. So it wasn't like a black dot. It was actually, what are we going to learn next? You know, how do we— how could we do it better? What are we— what are we making? What's the mistake that we're making? And it was really, we were probably taking qualifications in China as gospel, and we needed to qualify them through coding tests and other sort of things, which probably meant that when we were hiring in New Zealand, we were hiring a lot of people we knew that wanted to come and work for us and people that knew them. And so we naturally knew where they'd gone to and we could make a phone call, and so we could see whether they were good or bad. In China, you— it showed up that our processes probably weren't strong enough in hiring into a new hub. And we really hadn't hired— we'd done salespeople in Australia, and so we could— we knew through reputation in the markets whether they were good salespeople. But in China, uh, Gerard, who was running that, hadn't ever done that before. He'd been hiring people in New Zealand, but he'd had this high level of trust.

Darrin Grafton:
They'd been saying and could do this because that's the way. But so we had to retrain. We reset that model up. And so It was recognizing that that hard work needed to occur and that we needed to get that right. And we didn't stop. And we actually got it right the next time that we did it. And we would interview not only there, but we would do— we actually did up to 7 interviews. So we would go through and we'd test it out and we'd do a coding exercise.

Darrin Grafton:
And then that same principle followed back into New Zealand. So people used to say it was— Serko was one of the hardest places to get a job into. Because we would interview and interview and interview, because we— and then my job was to interview for culture. And so everyone had interviewed the technology and I'd go, yes, they're a culture fit, and we'd sign it off.

Paul Spain:
Or not.

Darrin Grafton:
Or not, yeah. And in China, they, they have the same culture. They bring their culture with Serko's culture, but it replays in that whole business. It's absolutely incredible. Here you have China set up with about 60 people and they all rep— they do the same tile, they run the vents, they do— they— yeah, it's incredible. And Australia the same, and now the US as well. So it's— and now India as well. So it's kind of each, each of them has been— we've been able to replicate that.

Darrin Grafton:
And then that initial mistake has led to a really, you know, great improvement in processes of how we actually do that.

Paul Spain:
Right. So when, when you moved on from China to launching US and and India, you were taking all those lessons across. It's Eurotic.

Darrin Grafton:
He actually went from Australia and moved to the US, moved to— our first office was in Minneapolis and he did all the initial hiring in there and helped get all of that right as well. So could actually replay that playbook. And then when we moved to India, we actually did that through an acquisition where we gained some staff there. And through the acquisition, we tested out the people more than the technology because we already knew the technology had been around for a long time. Everyone knew what it did, but we were testing out the people and they were testing us out as well. They were like, we don't believe what you're saying. It feels like it's very, very similar. And we went, yeah, it is.

Darrin Grafton:
And so suddenly our team's up there during due diligence and they've got them all dancing and all this sort of thing and they're like, oh my God. It is the same. And then I went up there and it was kind of— and they were like, yeah. So you were able to create this fit with leaders that thought and lead the same way. And so we try and— I think you always buy people more than you buy the technology because you can shape them and technology shifts. So that kind of has helped us actually build out these teams. And now there's over 100 people in India into that hub running under that same leader.

Paul Spain:
Great. So have you, would you say you've landed on a particular approach to how you do your acquisitions? How you pick someone to, you pick a business to acquire and then, you know, you've got a bit of a playbook for that journey?

Darrin Grafton:
Yeah, we haven't done enough really to have a playbook, but we know what we look for. And you're always looking for, businesses that fit your revenue model. So that, you know, can you— is it going to create too many complexities inside your business? So the hardest ones are if you're having to do something that's totally different way of billing than you're actually been billing, because it's going to mean that finance has got to restructure everything they do and have 2 different processes. That overhead can actually kill a business. So you're trying to look for fit in both how it will go and work with your customer base and also how it will work with the teams and can New Zealand support that. We try and now limit the acquisitions to where it would fit into those hubs because every time you add a hub, it adds an overhead as well. So we're, you know, we're really trying to look at where companies are based now around those hubs because we've got 24/7 support through that. So it's got this, it's got quite a good way of actually running now.

Darrin Grafton:
And we get approached every kind of week, if not probably 6 or 7 a month, to kind of say, hey, they've run outta cash in this environment, could we bail them out and buy them? And the first thing you do is assess where they're located and you know that that complexity is gonna be too hard.

Paul Spain:
Right. So is there an example of an acquisition that you got reasonably down the track on and it didn't work out for—

Darrin Grafton:
Yeah, we've done, like, we have this, I have this process with my executives. Quite often, just 'cause of who I am, they'll come into me and the opportunity will sit there and I'll do a high-level analysis and I'll build up a programme and I'll present it to the executive. And if the executive don't support it, then it's dead. So if they can't see or I can't articulate the opportunity to my peers, then it's not worth continuing on with. And so if it doesn't stand up to their challenge, and so normally it's quicker than 2 weeks now to get through that process. And if it gets to the second process, we might go a bit further and then it might actually drop off because we see that it actually could create a conflict with something else that we're doing or a partner that we've actually partnered with. So the next level investigation may do that. And so we can normally not invest too much time.

Darrin Grafton:
And then the ones that we do see are huge opportunities. Sometimes we're not the winner of that as well.

Paul Spain:
Yeah. So I guess you've got folks coming to you, but I'm sure you're always on the lookout if there's something that comes up that looks relevant.

Darrin Grafton:
We always look at— I have this model of what's called partner, build, buy. So the first thing I want to do is partner with companies that can accelerate our ability to make money and get customers. Um, and then we look at if, if we can't partner, do we have to build that? And then the ideal person to buy is someone that you've partnered with that you could put a decision packet with them, you know, of a couple of million to help them accelerate, and then they become a great way to actually acquire them back in. So that's the way, the model that we look at. So try and find a great partner. If they need a bit of capital because you think they're good, could we do that? If they can't, if we can't find a partner, build it. And enables us to be very narrow in what we're building and use partners as kind of the rocket engines on the outside to actually accelerate the opportunity. And probably if you look at Reciprocal, that's what Booking did with us.

Darrin Grafton:
They've put a little bit of investment in with us, helped accelerate that, and then we are accelerating them through the Booking for Business partnership. And we think about it probably the same way.

Paul Spain:
Right, so it becomes a win-win. Yeah, both entities end up doing well.

Darrin Grafton:
We yet haven't found anybody to go through all of those sort of things yet on that side. So some of the traditional acquisitions at the moment have been more people that we've actually seen in the market that could gain us knowledge. So GetThere in the US, A lot of people kind of go, why did you buy a company that was a legacy product? We were winning one customer at a time. And every time we win a customer, we'd have to do a piece of work to understand what the gaps were between what they were using and what the market was. And then you realize America's a really complex travel market. So is down here. But in there, you've multiple airports around one airport, and you've got all these different ways of connecting, storms, all these things happening in a region. that's got the 50 states running through it.

Darrin Grafton:
Each one is like its own country. And so we were learning one at a time and we were successfully chopping through that, but it was one at a time. And so I looked at GetThere and I was like, anybody that's not on our number one competitor, which was Concur, was still on GetThere. The people had been building this, so some of them had been there 20 years. and were still there. Their customers hadn't moved to Concur because this company was still supporting 100 countries on the technology and it never fell over. So they'd had no critical incidents in a year and stuff like that. So this rock-solid technology.

Darrin Grafton:
I was like, there has to be something in that that we need to know. So we spoke to them and said, you know, would you be interested? And they said yes. And so we went through a process with that to kind of look at what we'd be prepared to pay for that and the opportunity. And really what we wanted was those insights, data, and understanding, and that's what we got.

Paul Spain:
So with the US market, get there, uh, who was the, who was the owner at that stage?

Darrin Grafton:
It was Sabre. So Sabre Technology which was one of the original central reservation systems.

Paul Spain:
Massive global company, right? Yeah.

Darrin Grafton:
And so they'd bought GetThere for about $700 million US and spent over a billion all up with other divisions they'd rolled into it, into the GetThere asset. And so what we were buying was something that had had quite a bit of investment in it, but But it also had a lot of big customers. And so we figured we could be in the room. We wanted to build new technology. We'd already made the decision that we wanted to build new technology and we wanted to try and get into the US in a different way than what we had been doing. And so this was kind of— this seemed like the logical choice to make. It was something that was cost effective to buy over anything else you could buy in the US to get that understanding.

Paul Spain:
But hold on, it's a billion dollar— they've put a billion dollars investment into it. Walk us through the timing and the things that allowed you to come on and make this acquisition.

Darrin Grafton:
Yeah.

Paul Spain:
And a sweet deal.

Darrin Grafton:
Yeah, and I think that's like what started out as a price here, and I think it's public records that we paid about $12 million US for it. You know, it's a big drop and you kind of go, why? They, the asset was in like a holding pattern, slightly declining sort of thing. they'd cut the teams down. That didn't change the fact that the people that were there and what was there was still highly valuable from data, from insights, from all of that stuff that I've just talked about. And I was like, well, how do we get this? And Sabre needed a solution to be backed with as well. And Serko, 90% of what we were doing in Australasia was all on Sabre. And so we had a very strong partnership with them and we were like, well, we're already a strong partner. This is what we're prepared to pay.

Darrin Grafton:
There's a big gap between what they wanted was probably X times more than that. And so we said, well, what else could we do together? So we set up a strategic partnership based on co-development and other sort of things that we could actually do and kind of put it together as a package, I guess, that— we would support other technology they brought out and work with them in that sort of space. And that was kind of why the deal formed that way. And then quickly after that, of course, AI accelerated into the world as well. So it kind of, we knew AI was doing that 'cause that was one of the things that Sabre had a partnership with Google on. So we knew that it was there, but it really wasn't at the level that it sort of accelerated past that in there. So yeah, it was quite interesting from that perspective. It was through relationships.

Darrin Grafton:
I'd pitched up one of the guys who was the head of American Express, Dave Reamer. He took me to dinner in New York and he said, you know, one of the things you should do is you should send an email every month to Sabre and Concur and say, sell your travel technology to me. And they'll say no every month until they say yes. And that's what I did. Every month I'd send them an email and eventually they said, yes, we'll look at it and do that. So it's just kind of, it was kind of like sometimes everyone will say no, but you just keep going and eventually their strategy changes, the pressures inside their business changes, and eventually they might say yes. So it was kind of, it was a really good lesson as well for me and something that, you know, we'd done previously when we'd lost an RFP. So if we'd lost a customer, we would, I would email them every month with an update of what we were doing and we'd win them back.

Darrin Grafton:
And those customers we've won back, we've never lost.

Paul Spain:
Wow.

Darrin Grafton:
So it's kind of, so you realize, you know, it's kind of sometimes it's what you, what you do that creates these opportunities.

Paul Spain:
Fantastic. So when, when would you have started emailing Sabre?

Darrin Grafton:
2018.

Paul Spain:
2018.

Darrin Grafton:
Yeah.

Paul Spain:
And that didn't happen until

Darrin Grafton:
'24.

Paul Spain:
'20? No. Okay. Yeah, so you got to play a long game on some things.

Darrin Grafton:
Yeah, COVID really kind of disrupted the travel industry, and so they were one of the ones that had been hit by that whole COVID era. But yeah, you just keep there and, you know, we had a great relationship with Sabre, so we, you know, didn't just have to be an email, it could be a phone call or a, you know, a chat at a conference.

Paul Spain:
And yeah, of course.

Darrin Grafton:
Yeah, so it's kind of, yeah.

Paul Spain:
Well done. And I'm keen to hear, and I'm sure some of our listeners will be too, of, you know, customers you had lost And that you still work to win them back.

Darrin Grafton:
Yeah. And it's like sometimes when you're selling through— we sell through travel management companies, they might do an RFP and another travel management company wins it onto their technology. And you kind of go, why would they do that? That technology doesn't work this way and they're going to lose money. Or maybe they're missing something. of why they should have stayed with this reseller. They've gone on a pricing point and they can't see it. So I sit there and go, it's always about grace. It's like, so if we can't win it, might be a new one, or it might be a customer that's already on us.

Darrin Grafton:
Let's just communicate to them. Let's tell them what we're doing and show them the same thing as what they bought wasn't just technology, it was people. And the people for us was the big part of what Circo was about. And so we would just do that and we would just email through And the next minute they'd come up for, it might be 3 years. So it's another long game, or you could say that's a medium-term game. Sure enough, they'd come up and sometimes they would just stipulate our technology.

Paul Spain:
Wow.

Darrin Grafton:
And, and so they would then go out to 2 to 3 travel management companies and say, which one can support it? Because we want to go on that. And they would turn up at conferences in the meantime and actually talk to us and see what we were doing. And we'd show them what we've been up to and what we were thinking about. And we never treated them with any disrespect or anything like that. So losing something, I say, is always for a period of time. It's what you do next that actually makes the true difference. And you— there could be a change of people that have made a decision, or there could be other sort of things in there, but our job is to take all of that off the table through what we do next and actually shift forward. And like, when we're still increasing the market share today in Australia through that same philosophy and it's still growing.

Darrin Grafton:
We think it'll grow even bigger. It's quite incredible to sort of see that that sort of side of it is sort of building up.

Paul Spain:
Now Australia and New Zealand, these are sort of your home market, right? Yeah. How have you looked at the rest of the world? Obviously we look at the US now, you talked about you were kind of doing individual deals there to win, to win business. GetThere brought you, how many customers did the GetThere acquisition bring you?

Darrin Grafton:
About 300 key customers.

Paul Spain:
Right, so you were able to really take a chunk of the market, but it's also a very big market. So how do you look at the US and other international markets in terms of growing from being very strong in the southern parts of the planet to to other markets?

Darrin Grafton:
Yeah, and I think that DNA, I think the guiding principles, I'm gonna start with kind of the foundations of Serko. So the foundations of Serko are 4 guiding principles, which is be a good human. That is trust, transparency, loyalty, and humility. And the most important part is ethics around that. And so that's how we've built our partnerships. So the partnerships are longstanding because we turn up and that good human is not only how we treat our staff, but it's how we work with our customers. customers. We have the next one, which is winning together.

Darrin Grafton:
So we win together is for our customers to win. So if they're using our technology, we are solving the problem of travel. For our partners, they're making money through selling our technology. And for our team, it's when we win a new customer, we win together. And that philosophy of every customer is like your first customer. So it's that joint win.

Paul Spain:
That's great. I love that.

Darrin Grafton:
And then the next one is boldly going beyond. So that's pushing Ideas that haven't been done before and not being afraid of that, that old startup mentality of going, there's a bigger problem in there. And then the last one leads on to dare to simplify, because we're dealing with travel and the friction is there. It's complex. But if you're bold and you have this ambition to do something more, simplify it. Take the problem away if you can, and don't be afraid to— to do that. And so that framework, I think, of the culture enables us to have built a brand and solve the problem locally. And we were really good, and we were like, what's next? And the US was our next step.

Darrin Grafton:
And we've talked about why that is, kind of, you know, we had to do a lot of learnings, and we didn't get it right. I think, I think we'd been so successful in New Zealand and Australia that we thought the US was going to be easy. And that first lesson, what I'd say in that market, was that it was hard and you're competing with companies that are startups that are raising $50 to $300 million US to take that market share. And then you've got incumbents that have already got the customers at scale in there. And so you're trying to come in there and you might be trying to do it on a shoestring because you might be trying to do it on a $5 to $8 million budget, New Zealand dollars, compared to these startups even at $50, $100, $300 million. And so you're trying to compete. So the first lesson was you need to invest into the US market. It's one of the biggest markets in the world.

Darrin Grafton:
And if you're not prepared to invest into that, it's gonna be a slower progress. And so that was kind of the first lesson. We needed to do it right. But then you also needed to buy something to get the understanding of being in the room, to know. So you could do this through steps. So by buying something, you would be in the room with customers to have the conversation, learn what they needed next. And in the AI world, that's been absolutely essential for us. So, so building that, so building that first brand is about those learning through those steps you're taking that probably weren't big enough.

Darrin Grafton:
You needed to invest more in both technology you were building at the same stage to get to the market faster. You needed to be investing more in sales to even just get ahead to build the brand. And by buying GetThere, we were able to see both. So we were able to make that step, have a— people knew we were serious. Being in the room now and building Serko AI gives us that piece of technology that's going to be truly US first. So doing it and making the investment that's appropriate. So we think we will win now. in the US market.

Darrin Grafton:
And then the rest of the world came with Booking.com. So a relationship we'd formed with Booking over many years and actually in our home markets. And they'd been around the world looking at what could be done in business travel. And they'd looked at our technology and we'd actually been building AI. So our second iteration of Circo was a product called Xeno. So we're already number one and we sat down and we said, let's destroy the business. What do you mean destroy the business? We're like, yeah, let's— we're number one, but you can only stay number one if you reinvent yourself. So let's imagine what the technology would look like, what our competitors would bring out, which would blow the market away.

Darrin Grafton:
And so we went, well, what happens if we just shopped everything into the shopping cart that people were thinking about? And we gave them 11 options. So we anchored them on the first one and then we gave them 5 either side. That's the biggest amount that the brain can consume. And we do that and we shopped everything on the same page. And everyone went, that would just be radical. And we're like— And so we presented something and then some of the stuff was way too far for the market. We balanced into that model and today 98% of all the shopping's done that way. People don't, they don't go past those 11 selections.

Darrin Grafton:
They, most of the time, they take the one in the shopping cart. And so that was the first reinvention, is taking what could have been 200 or 300 options at times and distilling it down and using algorithms, which are the basis of machine learning for AI, and doing that in 2017. Booking saw that and they went, we need a new platform and you seem to be thinking about AI. In fact, We were at a conference in 2018 and we showcased the world's first digital human with another New Zealand company which was called FaceMe. They changed to Unique. And you could talk to a digital human and make a booking. People are like, oh my God, this is 2018. Yeah.

Darrin Grafton:
And today it's like, it could be normal, but it's like back then it was kind of groundbreaking. And I think Booking looked at us as a company that could think differently, but they'd never put their brand ever on someone else's technology. So Booking.com, you know, multi-billion dollar brand, and they're going to place their brand and their customer base on someone else's technology. And this is this Kiwi company from Down Under whose culture and principles of trust, transparency— they knew that we were going to take care of it because we'd never done We'd never done anything else for our customers and other sort of things. And we were innovative at the same time and prepared to disrupt ourselves. And they kind of thought that's very much a Booking culture, you know, someone that's prepared to learn from us. So they invested in us and that opened us to 180 countries. Wow.

Darrin Grafton:
And so that was 2019. And then of course we all know COVID hit. So we had this big deal with Booking.com. We've now spanned the world in technology, which is that first milestone of that moonshot, get technology so you can get 20% of the world's business travellers. And then COVID hits through that. And so, you know, the whole opportunity is thrown up in the

Paul Spain:
air.

Darrin Grafton:
Yeah.

Paul Spain:
So walk us through, what was the hardest thing of trying to get that deal across the line? with what is a huge global player, they must have and bring an incredible kind of weight to doing a deal with an entity of that sort of a scale. Mm-hmm. So that you land on something that is kind of fair and equitable and becomes a kind of a win-win. arrangement? What was the hardest part of trying to land that?

Darrin Grafton:
I think, you know, Booking's built their reputation on trust, you know, that, you know, they're a trusted brand that you can book through and, you know, they do the right thing. And, and so the foundations was that, and then it was the belief whether Serko could make incremental improvements on where they were. And of course we believe in ourselves We don't know all of the answers, but we know that we can surround ourselves in people that would do that. So we said to them, you know, if you outsource it to us, we will do this. We may not get it right every time. And I remember they said to me, you know, what makes you believe you can do it when we've tried already? And I was like, because we can. And I had no other answers. And I said, because everything you tried is something that we've been saying to you could work and you've tried it, but we can actually do it.

Darrin Grafton:
And I think that was part of the thing. And I don't know whether that was a little bit of, maybe a little bit of arrogance to say we can do it, but we do genuinely believe when people give us a problem, we will look at it differently and actually solve it, but we will listen. So we're not arrogant enough to say that we don't have that. We have the humility to say, bring your best minds into us and teach us everything you know. We'll absorb it like sponges. We'll adapt our business. And we'll change. And that's what they did.

Darrin Grafton:
They even put in the money behind that. They put the people— so some of the talented people came down and showed us how they did experimentation, how we could build technology for e-commerce. And this is a SaaS business called Serko that has been building software as a service that's now going into full e-commerce mode where everything's about conversion and we have to be like Booking. We knew nothing about that. But we had the aptitude to actually shift our business and learn to actually get to that point. And I'd say we maybe didn't really know what we needed to know, but we knew enough about ourselves that we could actually do it. And we've learned massively, but Booking's taught us so much. We've listened, we've learned from that, and we've adapted the technology.

Darrin Grafton:
And I don't think people realize how complex building high-scale e-commerce technology is. Not only did we have to migrate tens of thousands of companies a night onto the technology without it falling over, but we do that every night now. That could be 500, 1,000, 2,000 companies or more could be coming on at any given night, and your technology just runs, and it has to run at that level. And that's the type of scale we're building with Booking.com. I'm so proud of what our team's actually done as a business and the foundations that it's actually built because we've taken that trust. And it doesn't sort of say the complexity in your original question about why it was more that we had this belief and that came across. It was still a lot of work. to sit down with the team and they went through everything and finances, the whole lot, because they were putting money in.

Darrin Grafton:
But they trusted us because we'd actually helped them out in Australia. So it was built off a relationship that wasn't just, you know, formed overnight, I guess. It was formed back off those past things that we'd actually done together. So Adrian Curry and Josh Wood, who we'd worked with extensively knew, they kind of knew that we could do it as well. So when we were saying—

Paul Spain:
These are very senior leaders within the business, right? Europe-based?

Darrin Grafton:
Yeah, both. Adrian Curry was actually running for Booking Holdings. He was kind of the number 2 guy with his grand strategy. And Josh Wood was a director for— he's now the director of Booking for business, and he was in the partnerships team. So he was working with us as a partner and could see what we were doing. as well. So there was, it was a combination of both excitement on their side and our side of what could be possible.

Paul Spain:
Now, something we haven't touched on is listing on the stock exchange. You know, you have dual listing now, dual listings across the NZX, New Zealand, ASX in Australia. Tell us about that journey, the triggers and the highs and lows of that. Because once you get out and you're in the public market, anybody can look in and have opinions. They can, but more than they can see because there's quite a level of transparency, right? Share prices don't lie. They are what they are. You know, how have you found that? Do you, you know, you still think that that was the right thing to do today?

Darrin Grafton:
Yeah, I mean, you always kind of sit back and reflect on it. You kind of say like, why would you, you know, the first one was a public company, it was the Gullivers Travel Group, and you go, why would you do it a second time? Maybe it's like childbirth because people have multiple kids and they remember the first one as being harder, then a few years later they kind of do it. But the public markets are very unique. And I remember before listing, Rod Jury paved the path for it. So you couldn't list a business unless you were doing tens of millions of revenue or on a path. But Rod came in and said, well, actually, if we can put these businesses on the public market, people can come in early to this journey and actually help fund it together. And so he kind of set that framework and he said, Darrin, whatever you do, when you, you know, basically make sure that you push your forecasts right down so that you overdeliver and you make sure you do all of that. And these are some key points.

Darrin Grafton:
And then that's the mistake we made. And then Sean from SLI Systems came and sat down. So the tech community all try and help each other. And so like,

Paul Spain:
yeah. Obviously had both, well, we had both Sean going way back on the podcast and of course Rod too.

Darrin Grafton:
Yeah. And so everyone was really kind of focused on that. And I think we missed our numbers by $100 or $200K, but we got slammed. And so we didn't take enough off that. And it was really hard because EY audits. So you realise to get onto a public market, there's all this auditing process. if you've got numbers that you think are in there, they want 'em in there. And so it was a really hard process of going that, and you know that the revenue number's tied to the valuation metrics, but you know that if you get onto the market and you underdeliver, then you're gonna get punished because it's all about overdelivery and confidence.

Darrin Grafton:
And so it was a really good lesson so that, you know, we probably should have in that first year, made those changes. And so we've done that now. So most of the time we've been pretty good at getting through that sort of side of it, making sure that we're validating everything we're putting forward. Then I used to sit down with Rod and we'd done a few podcasts together and we talk about the earning the right. And we knew that when we raised money on the NZX, every time you raised money from a group of investors, you would deliver what you said. So no matter what you see, if you put something in front of them, you would deliver what you said and you would earn the right to raise the next capital raise and you would never do it before it. So you would make the investment, you'd do the work, you would raise the money, and then you would deliver what those investors and what you said to them. And so we use that as earn the right.

Darrin Grafton:
And so that was something both of us use that same philosophy. So I've always been very focused on if I've said something, the business is delivering. Now time could slip a bit because technology's quite complex as well as you're dealing with customers. But then we try and get to that milestone of actually getting through that delivery sort of cycle. So the markets, you learn that it's, I think the markets are very, very simple. You've gotta build enough of a story and enough of momentum. You could say with our stock price so low, we haven't got that quite right because we've come outta COVID and we are 6 or 7 times bigger. And yet people, seem to not back us the same way as they'll back any other company.

Darrin Grafton:
And so you kind of go, well, what's missing of that story? And I think that's a challenge that everyone sort of has. I try and think of it like a Netflix series. You're trying to create a cliffhanger where you then deliver the next thing and there's some level of surprise and delight in that next part of the journey. And so that's what we kind of do, but sometimes going quiet between periods, investors think, something bad's happening and you're going, oh, come on, have a little bit of faith. But, uh, yeah, so it's— and then the media was really hard. So you learn, like, the media was really hard on us on the first year. It was brutal, um, in that first year of listing.

Paul Spain:
This was what, 2014?

Darrin Grafton:
Yeah, and 2015 through that year. And I know Rod talks about how brutal, you know, some of those sort of things were. Then I realized that actually it's you. Not them. Because really what it is, is that if you present something that's negative, then they get the right to amplify it. And if you're not clear on your story, then they get the right to amplify it. And so you actually have to own your story and own the parts around that. And actually, if you're producing a negative number, own it.

Darrin Grafton:
And if it's the right story for the business, then actually explain it. Because if you explain it right, and then you deliver the outcome on the other side of that, the story starts to balance through. And so it was a real simple lesson for me that you are the architect of something you're producing, and the story they're looking for is sometimes in what you've actually done. And so actually, if you have a negative number, own it and own the story of why that's important now that they may not be seeing. And so I've actually turned it around. I like, Serko, we know, hasn't been profitable or whatever. And sometimes it's made money, sometimes it hasn't. But in each case, we've done it for a reason.

Darrin Grafton:
So we've had to be very articulate in the reasons why we've done that, the reason why we're making this move, and then eventually it pans out. And so better at telling the story, better at sharing our plans, and better at taking the market on the journey with us. And so, yeah, what was hard was a really good life lesson that the media operates in a way of telling their story and what they're seeing. And if you're not articulate in that, then they'll play it back to you their way.

Paul Spain:
Yeah.

Darrin Grafton:
So they still might do that, but at least you know. And that's— yeah, so I learned, it was a really good lesson to learn how the media sort of works. And it's really something you just have to own with them.

Paul Spain:
And in terms of, you know, picking where to list and where to be, how have you made calls on that?

Darrin Grafton:
I'm unusual, I think. People know I've been very lucky. loyal to the NZX. Um, and so I've been a huge advocate because I think, you know, if you're asking money from a country— and when I talk about a country, you're talking about the institutions and the retail investors— you should list in New Zealand because you're saying you're from New Zealand and you're up for New Zealand as a company and a country. It's not just about being a global entity, it's actually New Zealanders can easily have a stake on it. The argument to that is, well, people can invest anywhere in the world now, it's easier. That may be the case, but you still want a better New Zealand in there. And so then it becomes about what we call compliance listings, so being compliant with Australia by having a dual listing and having the ability for Australian institutions to be easily able to invest into you.

Darrin Grafton:
Yeah. So I have been New Zealand first, But that stays, you know, there's a balancing effect. As long as New Zealand supports you, then New Zealand NZD stays. But if the rebalances where New Zealand doesn't support and stuff like that, then, you know, it's kind of that same earn the right. The right is there as long as the market supports it. Today, our New Zealand institutions are our backbone of Serko. So they support us, they are critical to our success. And so yeah, we've So why New Zealand has been a New Zealand Inc story, because I'm proud to be a New Zealander and I'm proud to help drive New Zealand's tech stories, which is why we created Circo House and do these other sort of things, because we want a better New Zealand tech business and we want to have businesses that are on the public market that people can aspire to do.

Darrin Grafton:
There hasn't been any real listings since that 2014 era. In fact, I think I'm the last tech CEO left from the 2014 era at the moment. So it's quite, quite interesting.

Paul Spain:
Yeah. Yeah. So where, where do you see things going, you know, from here? You've, you mentioned, you know, Serko House. You've, you've, you know, taken what, you know, been a bit of an institution there in Auckland. The old Saatchi& Saatchi, you know, had their name across the building for for decades. I certainly remember time working in that building. A lot of my tech work was with the advertising industry for probably a decade before all the control disappeared, largely offshore to London, New York, Hong Kong, et cetera. But I remember working in that building, probably setting off the alarm and waking up one of the Saatchi execs because, you know— Some young IT dude had triggered the system.

Paul Spain:
But really iconic space. And now it's very much got Kiwi tech with it being Serko House. So how did that come about?

Darrin Grafton:
A long game again. So I think we moved in between '97 and '99 into that. building there and played a long game, kept registering with the landlord that if things changed, we would take the naming rights and things like that. And that played out, I think, as Saatchi's gone through a different evolution, as their ownership's changed and stuff like that, it gave the opportunity. And we were always there looking for the opportunity. But again, you could say that's a really long game to wait. Yeah, we had an ambition, myself and Bob, which love giving back to the tech community, recognized that there was, there is a big tech community down in Parnell already. And could we help amplify what was actually needed in the scale-up and startup community that could learn from some of the tech businesses that are already doing it on the world stage? And I've had a lot of people that have been my mentors over the years.

Darrin Grafton:
And Scott Farquhar has been, you know, amazing. at learnings and what he's been able to teach people like myself in there. So it's— so that was kind of the aspiration, but we wanted to do it right. So the original gold doors are on the walls in our offices from Saatchi& Saatchi. Yeah. So we've kept a lot of that. We've kept some of the artwork, and there's some little nuggets on a few of the ceiling beams and air conditioning units around the office. It's really important to recognize the history at the same time as bringing something new to take that advertising era now into an AI digital era as well.

Darrin Grafton:
So it's, yeah, and it's an amazing building. A lot of people don't realize the roof comes off, so it slides back and it's a full— in summer it's a full open-air cafe area downstairs. It's quite incredible.

Paul Spain:
That's amazing. Yeah, yeah. What do you see the opportunity you know, being for the next, you know, decade or so looking like, you know, you've talked about the scale of the opportunity.

Darrin Grafton:
Yeah.

Paul Spain:
Or the, you know, the scale of the sector is really, really big.

Darrin Grafton:
Yeah.

Paul Spain:
How do you go about, you know, continuing to grow and build out into that and, you know, building something that has probably all that you dream of in terms of success?

Darrin Grafton:
Yeah, and it's, again, it's a long game. You know, we articulate a strategy to 2030, but we definitely play a longer game than that. It's— the AI era is probably the most exciting era that I've ever been in, and I've been through the mobile era, the internet era, but the ability to do things so different. And I think in every other era, we've relied on humans to do a lot of the complex work, even though we have technology that can solve some of it. We've actually, in most cases, needed hundreds of people to solve the problems that we face in travel technology that agents can do. So, you know, AI automation agents, things like that can augment this at scale. It's very similar to when we started out in the internet era where we said we could invent online travel and we could make a booking between, you know, a travel management company and a, um, and a corporation and the traveler making that first booking online. That was revolutionary.

Darrin Grafton:
And today the AI in travel truly can remove the friction. And when you think about what I said to the team is like, everyone's going to try and do content and booking, but what we can own is actually the whole emotion around travel and being there. So our philosophy is Circo AI, be there. And it's people think, oh yeah, get to the meeting, cool. And I'm like, no, it's about being home. And so for the first time in the world, we've got to delegate intent to an agent that acts on our behalf. And yet we have hundreds of systems that run inside businesses today. And the only thing that these systems do is a human puts context into all of these things.

Darrin Grafton:
And so the true intent of travel is always controlled by a person. And people think, oh no, it's, you put it into an online booking tool that we do today. today, or it's in a CRM. No, it's the very important client, and whether, you know, getting there and missing that and someone else bidding because you couldn't turn up, what that's going to do to your business. The importance of which people should go into there is actually controlled by people. And suddenly the ability to be home, because a lot of people have families, and to get home to see your kids recite or something that's important, it's not every time, but there is a moment in time where being there home is really important for that individual as much as that, that being away at that meeting was. And we realized that AI is now evolving to the point where we've got to enable people to be able to trust a system. So you have to be a trusted company.

Darrin Grafton:
So I think everything we've done, those cultural and those really things that make Serko unique and care, builds trust. So we're going to now enable Paul to trust an AI agent that he puts more than the context of just going from Auckland to Sydney. He's going to say, it's a really important customer, I need to be home because it's my— the meeting that I've got at 5 o'clock in my calendar that my wife's put in actually means that I need to be there for my son. And so we can take that context and give it to an agent that then says, Look at everything, weather, look at the shifts, and ensure that risk. And what we mean by ensuring that risk is that if we can't get you home on the airline we booked, we'll get you home on another airline. And we'll do that, we'll book 2 flights back, and we'll absorb that cost, and we'll cancel within 3 hours if we know that that flight's going to be online. And we can use technology to see whether the plane has taken off and it's going to land on time to actually make that assessment. And so we can use the things that you would require hundreds of people to do, and we can use AI and the way technology and access to data that we've built over the years.

Darrin Grafton:
So all these decades of partnerships that we've worked with, we can suddenly bring to life in a way that we would've had to use humans to do that before, or the scale just wasn't there. The cost to do it was just so high. And so how amazing is that? And my philosophy about Serko was, could I leave home and come home stress-free? And people would not use Serko for the technology. They would use it because the experience they had of travel was way better on it. And if you're a CEO, if you're anybody, the only way that that exists today is a VIP call center that gets you out of that. But imagine if everybody had that.

Paul Spain:
And it's also really time-consuming.

Darrin Grafton:
Oh, it is. It's like, that's where all the time is. It's also the stress. You try and, when something happens, you're on the phone for 2 hours to an airline, to a travel management company, the systems, because they're not designed to hit that level of scale, their peaks and troughs are in there. And it happens more at business travel. With leisure, the difference between leisure and business is the one thing on leisure, you accept that change and you'll go a day later or you'll miss the connection and you'll catch a connection. You'll be frustrated, but in business there's a consequence. There's a consequence to the meeting, there's a consequence of not being on the conference, on the stage to do the presentation, there's a consequence that's occurring that the business has invested into to make that outcome, and it's an outcome-driven thing.

Darrin Grafton:
And when you realize that, that business travel has this complexity, and then you look at the statistics that 20 to 30% are disrupted, and if you can solve that, and that's what I'm going, oh wow, like if we can do this and— Yeah. And the team said, so we can't do it with what we've built. So the 3rd invention of Serko is to destroy ourselves. And so we did that again, you know, once before with Xeno, and we're like, okay, let's build technology from the ground up that puts everything that we've done on notice and, and build the technology that would change our industry. And so that's what we've been doing. And we— Yeah. Just launched the Serko AI technology into the US now. So it's, it's so exciting and it's just the start.

Darrin Grafton:
Like we won't deliver on that promise. 'Cause someone said to me, you know, well, what happens if you don't always get someone there? And I said, it doesn't actually matter as long as they understand they're part of a bigger journey. Like Patagonia with Thing, they're on this journey that their insights, and even through our failures, someone else will actually be successful. And so this is how we go to market with it. And they're like, oh yeah, I'd buy into that. And so yeah, we won't get it right all the time and that's actually okay. And no one ever does. That's technology that's— sometimes people might not choose the option that we've presented or don't want to absorb the cost or whatever in there.

Darrin Grafton:
And that's actually okay. But they'll also, through those failures, it also becomes successful. Because you build trust on both sides. So it's a, it's a real interesting journey, but it's, you can see it's exciting because it's like it's, it's actually you're able to solve the problem that we've all been facing for such a long time through the shift. So

Paul Spain:
now I see, see, you know, the role of AI being, you know, quite important to the future of Serko. You know, there's often this, this concern amongst folks around AI, you know, taking jobs away. Yeah. But, you know, what I'm increasingly seeing is that there's an opportunity for AI to enable things to happen that just wouldn't have actually happened in the past. How do you, you know, how do you look at the role of AI within Serko, within, you know, the travel management sector that you serve? How do you see that sort of playing out over time?

Darrin Grafton:
Yeah, and I think it's like we did, we started the journey a lot earlier than most other companies. And we, I kind of, I set a KPI inside the company that every single person, no matter who they were, had to be fully trained. I think it was in '23 that they had to be fully trained on AI. And I said back then, we're gonna build technology that disrupts ourselves. But training on AI was about prompt engineering. If you became an expert early on prompt engineering, The tools will change underneath there, but the concept of what you're going to be doing won't. So start learning that. And so we gave them the freedom to learn.

Darrin Grafton:
The board set it as a KPI and we hit 100%. So we had everybody through onto that, got trained on it and passed the training courses on that. And so that was quite foundational. Then we said to people, right, this is where we're going. So being very clear on the direction. And then assessing whether people want to be on that. Some people may not want to be on the bus as well.

Paul Spain:
Have you found that? You've found some people have actually decided we're leaving, we don't feel the same way about AI?

Darrin Grafton:
Yeah, or that they're not prepared to change. So you give everybody the chance to really put the effort in and you create the freedom, the training, the tools. So everyone has access to Claude, to Gemini AI, and you give them all the things and you work on, you keep reassessing how teams can run with it and the learning. And then you're trying to make it exciting for them to say, hey, well, just because you're able to do things 8 times faster, think of it this way, how you can actually then put your mindset. Because if you're an engineer, sometimes you're going from everything you enjoyed. to it being different. And change is always quite difficult. They call it the innovation dilemma, where you see this new thing and people are really comfortable in the systems that they're currently doing today.

Darrin Grafton:
And if the business is doing well, they're kind of going, yeah, but that's still okay. And so you kind of have to go, no, but this is where we need to be. And you actually have to force change as well. So AI, you've got to give them the tools, but sometimes you actually have to direct it and you have to make it so it does actually shift. Otherwise you don't get all the outcomes that the business is actually doing that. So we, we've done a— we did a— I think it was last year we did a restructure to structure the business in such a way that reformed around this. And then we've seen a huge improvement since getting that mindset shift. And we have what's called constant AI ways of working I use AI constantly.

Darrin Grafton:
I've, uh, I even do the certification. So as CEO, I still do the OpenAI and other sort of certifications and things like that. I love learning and I love understanding what's actually possible because I think if it's not top-down driven, then why would people do it? So you have to live it. If you're a leader, you need to be showcasing that to your team. And leadership has changed. I think the one big thing is Leaders were always about delegating work. Now it's about creating the environment of coaching that enables teams to have the time to learn and to learn from other people that are doing it well and not being afraid to say, this team is actually a rockstar team, what can we learn from them? And as well as them being coaches backwards into there. And so setting that up in our business was really important as well.

Darrin Grafton:
So you've got to set that environment. up to do that. So leaders go from being kind of, here's a list of specifications, to the teams actually forming differently and people actually becoming more responsible through that. So their jobs are changing in all respects. And so they're augmenting technology in a different way of working, and that creates a business. And your choice as a business is you're going to get this operational efficiency, So you kind of— the first thing people look at is, do you reduce the team? Because, you know, you do that. Or are you like other companies like Serko where when you've taken this thing, which was maybe a crisis or an opportunity, do you say with another 50 people or 100 people that you would make that change with, can you do more? Can you get more market share? Because you still haven't got to your 20% moonshot yet.

Paul Spain:
Yeah.

Darrin Grafton:
And you're going to need people. But imagine if you can build it faster and do things faster and invest better. So that's the kind of the philosophy. that we actually look in as well. Can we actually be growing that faster and better? And sometimes you need to bring in new people to sit alongside them.

Paul Spain:
And how have you navigated the journey that there will be, you know, it could be some types of roles, it could be, you know, the way different people are wired and so on where it's maybe not so easy or not so natural to bring AI into certain parts of the organisation?

Darrin Grafton:
No, we've seen that 'cause there's always divisions inside any business that take longer to adapt to technology. And some people like to see that they can get the outcomes from it first, or they're seeing a material shift in there. And so it's definitely been easier in product and engineering. And then I would say actually what's been really surprising is the people area, like we call it PPC, people and culture, um, they've actually adapted to it really well because they can, with less people, do more by getting, you know, getting AI to write things and, and do reviews and get the summaries that would normally done by quite something that required lots of people and lots of time to, to go through even interview stuff and, and to work out which ones should be interviewed. So that's— they've definitely proved that. And then you have finance, which, you know, for a public company is mission critical that the data is right. So you have a more cautious approach to AI, more— their teams would actually become engineers and build scripts and things to bring the data in that they would normally have to do manually. And so they would do that and they can have a high level of check and integrity, but the ability to kind of use AI for everything becomes more cautionary because they want to it's so black and white if it's wrong.

Darrin Grafton:
And so certain areas, you're kind of, each division inside the business, you're looking at how technology runs along with the risk profile. And so we have a policy as well to make sure that you're using it the right way and using AI the right way. And so it's less about the kind of the stick approach, I guess it's the carrot at the end that they, They see the showcases. So every company meeting will showcase what people are doing in AI. We'll give out awards for that. And so you're encouraging the right behavior shift. But it is, at the end of the day, it's like a space race. If you're not there, a startup is going to be doing it faster and better than you.

Darrin Grafton:
So you still have to move with pace and that urgency. So you're still reinforcing the urgency at the same time and the pace of change. So you can't just be complacent. So I think there's a— it's a very hard juggling act at the moment to get everything right. And you've got to— but you've also got to recognize those divisions that can't go as fast and understand that there are risks in those areas, that they need to move at a pace, but maybe as they change systems. And then You're also looking at the systems you're using. A lot of them are people intensive that you can automate with AI, but maybe those systems are actually wrong. So you've actually got to keep making— there's lots of things actually changing at exactly the same time that we're saying.

Paul Spain:
Yeah, yeah, yeah. It's definitely a—

Darrin Grafton:
And then cyber.

Paul Spain:
A challenge to navigate. And I think unique in every business, as you say, you've got to also be thinking about the cybersecurity and the data privacy and whether the results you're getting are accurate. But I like that thinking of looking, you know, almost looking across and knowing that there are startups that are waiting in the wings that would love to eat your lunch.

Darrin Grafton:
Definitely.

Paul Spain:
And if you, you know, don't get that sort of balance right, you know, obviously there are governance things to sort of think about for, you know, for a business of scale that's listed and so on. that are different from what startups certainly traditionally have got away with. I do think we've got a bit of a change going on where the pace of AI brings through maybe some of those cyber types of risks that, you know, if we look back even a couple of years ago, startups like, ah, okay, we're below this size. Yeah. And venture capital companies like, no, no, just go as fast as you can. you know, we'll pick up cyber certifications and getting your house in order later. I actually think cyber's moving so fast now that, you know, smaller entities and startups, you know, actually have to rethink how they look at cyber. Agreed.

Paul Spain:
Now, just on the, you know, I guess that risk side, I'm keen if maybe you can, you know, walk us through a risk that you dealt with sort of earlier on in your journey. There was a, I think it was a data centre company that, you know, we discussed before the podcast where things maybe didn't play out so well. And, you know, what that was you dealt with and, you know, what the takeaways were for the future.

Darrin Grafton:
We had a company we were dealing with that in our early days before Serko. that it went out of business. So we got notification that by the morning, and they started to close down everything, and we were like, oh my God, this is lights out for us. How do we get the data? How do we get everything through? And we were actually working with Microsoft at the time, and Azure hadn't gone live. It was in what was called preview stage. And we'd been doing some testing on it. And so I had to make the call to Steve Ballmer and, and say to him, hey, we're going to move all of the business onto preview. And he's like, no, preview's preview.

Darrin Grafton:
We'll be rolling it out to thing. And I said, I need you to be able to not wipe our data and to get it across, but we're going to move all of our business. So we were customer number 1 onto Azure. Wow. And so we moved, we worked through the night, and it was a game-over model. So pretty much at that point, we found a way through to get our access to our data. There was one server left running that literally had access to the data that they'd left running. And we were just hoping they didn't switch that off at the same time.

Darrin Grafton:
And we pulled all the data off that and— And got the systems up and running and moved everything up. And by 11 o'clock in the morning, which was 9 o'clock Australian time, we had a whole new environment up and running and everything actually humming on Microsoft Azure. And that was the most stressful time of your life because you realize with third parties going out of business, if they run out of money, that's— That is what it is. And even though we had backups and all these sort of things we could have gone to, there was a lot that hadn't been run for the day, so the customers would lose all that data or that could have been offsite. So it changed everything from that moment. So we knew we had to be with big players. We knew we couldn't host it ourselves or use third parties that could go under, and we needed real-time data business continuity plans that were way more robust. And we were like a startup at that stage, you know, so it was fairly early on in our maturity curve.

Darrin Grafton:
But I'd still say probably 40% at that stage of Australia were running on us at that point. So although we weren't a public company, it was pretty much an early wake-up shot across the bow, and it changed our whole mindset about risk. And how we would run— when we run BCP tests, we run everything now. We run simulations for cybercrime, we run everything now because it's kind of, you just don't know. And so we, you know, it's the beauty of being a public company is you have these really strong processes. But yeah, it was kind of a very good life lesson. And what it came from is that we went to a Microsoft event and my co-founder Bob, went, hey, we should meet Steve Ballmer. And we researched that he had a couple of boys and we got him Team New Zealand gear.

Darrin Grafton:
And Bob asked a question when he was on stage, said, I just want to ask a question. Who would you support? Would you support Oracle or Team New Zealand? And cause I've got a, I've got a, I've got some gear for you to give you, like if you're, if you're supporting Team New Zealand and for your for you and your kids. And Steve Ballmer said, come out the back, and got us out the back and had a chat with us and gave us his personal email address.

Paul Spain:
Wow.

Darrin Grafton:
And so that came from a moment. And my co-founder is phenomenal at that sort of stuff. That's kind of the yin and yang. He's just a superstar at customer relationships and partnership relationships and doesn't have any inhibition about doing those types of things. And it gets these results. That one meeting meant that I could send an email and pick up the phone to Steve Ballmer and actually say, we need your help.

Paul Spain:
Wow.

Darrin Grafton:
And Microsoft did. They protected us, protected our, what they called their core at that stage through moving it to production. And, you know, it was what started out as one of their first customers ever on the platforms. And that came from a disaster that ended up being something successful for both of us. sort of thing. So it was kind of a really interesting sort of time.

Paul Spain:
That's incredible.

Darrin Grafton:
But that's something you've really parked in the back of the memory.

Paul Spain:
Not something you want to think about too often. But I think the reality is, is those sort of difficult times, you know, build something around how you approach the future though, right?

Darrin Grafton:
Yeah, definitely.

Paul Spain:
I think one of the issues we have in New Zealand around cyber security that maybe we still have to deal with is a lot of organizations haven't felt any severe discomfort through a cybersecurity scenario. Yeah. So there's still this kind of, she'll be right because I haven't seen it, so it's not real. But when you go through those sort of pain points, You know, it can really change your thinking very, very quickly.

Darrin Grafton:
Oh, definitely. And I think there's always lots of life lessons, you know, that was one of them. You know, there's been, you know, moments in your career and I think they build up that resilience that you actually need. But it also changes your thinking. Like you're sort of saying, you think about the problem way differently. You think about, you know, as an entrepreneur, you're balancing both risk and reward. And sometimes you actually, it's out of balance, like you're sort of saying, you're kind of rushing to the finish line. And so today with Serko AI, we did exactly the original way, but then we brought it into the process.

Paul Spain:
Yeah.

Darrin Grafton:
So we called it zoning to win. You know, it's the zoning system where we carved out an innovations section and we said, you are free to run. They embedded AI at pace. They had like 12 agents building code for them. It was phenomenal. They could outpace delivery rapid pace to build out this Agentic technology, rebuild it, rebuild it as many times as they like to get to the finish line. But at the same time, our team could run behind them and put the processes and everything. And then before getting ready for production, it went through a whole cycle to actually get to that point.

Darrin Grafton:
So you understood the risk, but you understood the ability of zoning them to the point where they were decoupled from everything else that we had until they were ready. rather than coupling it in there. But what was really good is that the engineers would immediately, even at the start, talk to the security guys, so our CISO, around what should we be looking at, what should we be building in. So they built in privacy by design, they built in all of the pieces from that point early on so they didn't have to do any rework later on. So there was more engagement. So they knew that freedom came That balancing because they knew that if they got too far out of whack, they'd have a bigger problem to solve. So they were able to run fast, but they engaged better and they engaged early, which gave the teams the ability to run beside them at the same time. And that was a new thing for Serko.

Darrin Grafton:
We'd never done it that way before. We'd sometimes been a lot slower because everything had been having to be done step by step. But in this case it was running as a service.

Paul Spain:
You saw the opportunity and you worked out what was going to be an appropriate way to approach it.

Darrin Grafton:
Yeah, absolutely. We were thinking we have to be better than a startup doing it.

Paul Spain:
Yeah.

Darrin Grafton:
And the startup's just going to be rushing to the finish line. But if we can rush to the finish line and have the process running simultaneously, we're going to actually end up with a better way of actually doing that. And our reputation is built on trust. So, so yeah, it was kind of wrapping it around.

Paul Spain:
Yeah. You know, across our listenership, we'll have some folks that are top of our biggest companies in New Zealand, but we'll also have folks that are maybe younger, haven't even entered the workforce, but they've got some entrepreneurial and business leanings. You know, in terms of what you're passionate about sharing in terms of, you know, tips and advice for others to be aware of that have come from your journey, what really You know, it stands out.

Darrin Grafton:
If you're starting out in business, you know, the most successful businesses normally solve a customer problem and stay relentlessly focused on that. The other side of that is cash is king. And, you know, if you run out of money, then everything you've built, including the family that you've put around that and your friends and everything that have joined you in that journey, are gonna be out of a job. And so look at the risk, look at what you have to do in parallel on the business as well as in the business, You know, the best tech startups fail through poor cash management. That is the fact. That's why so many fail. Sometimes it's a bad idea, but normally that bad idea isn't solving a customer problem. And so I think you have to have that mindset and focus in there.

Darrin Grafton:
And then the other part is resilience, is that it is what it is. So if it's COVID, if it's an event, a GFC, changes of government, anything that could affect you, it is what it is. So you can control what you can control, and you can control how you turn up every day, and you can control what your team does. And that mentality actually is one of the most important things as the founder or as a C-level person in any business. You are the champion and people follow your leadership. And leading is as much about being aspirational 'Cause if people only see problems and they only hear problems from you, it's a really hard motive to go beyond that. And so, it's really important to be an aspirational leader first and foremost, that people want to follow you and people want to lead through that, and that you're able to actually execute through those crises and have this resilience and see the opportunity on the other side. Those kind of things for me have actually stayed true through everything we've done.

Darrin Grafton:
And we've been through so many crises, whether it was GFCs, you know, SARS, COVID, the tech bubble collapse, the SaaS-pocalypse, the AI evolution. And yet you see the opportunity through each of those and you reshape the business and you bring people to follow you through that. And I think it's the most important thing if you are sitting there depressed from a situation, people can't act with you. But if you can't lead and you're always just the stick master on doing things, people can't get motivated. You don't get true high performance. But also the key thing is that we are humans. We actually connect to the purpose of your company and what you're doing. So for someone to really connect with your company, make sure that their purpose somehow ties into what you're doing.

Darrin Grafton:
So understand people and, and, and make sure they understand what Serko is about or what their company is about, because it's, it's really important for people to connect with it. And that's how you get a team functioning in the same direction and communicate. So the last thing I'd say is strategy is so important. Culture is the foundations, but articulating your strategy so that everybody mocks you because you've said it so many times and they get it. But if they can turn up and understand their why, no matter who they are, from your receptionist to, you know, anybody in the business, it's so important when they know why they're coming to work and what the company is about. Because they, one, they get excited by the journey because every milestone is no longer a question of why we did this, it's what's next and how can we help. on that journey. And I think those fundamentals are so important in any business to think about, but we quite often get it wrong.

Darrin Grafton:
And we get it wrong because the pressures that are there, we forget we can't control them. We forget that the pressure of something changing is forcing us not to be the leader we aspire to be. And it's actually okay to feel that you're also, you know, someone always says, you know, You may never have been on that journey, the next thing, but your gut and this instinct of those leadership principles will actually drive you through that. And I always say like, are you an imposter into there? 'Cause I've never built a 100x million business before and I've never been on a public market like this before. And so I surround myself, I call myself the, try and be the dumbest person in the room, surround myself with super talented people that may have been on that journey before. Yeah. for to help out with that. But also, you know, that imposter syndrome where, should I be in the room? Should I be doing this? Yes, that's why you're there.

Darrin Grafton:
You, you are there because the markets, people beside you believe in you, and that belief is everything. So that drives it. That's that aspiration. It's that part of being in business. And No matter what role you play, people beside you feed off that. So that's why they always say a high performer will bring other people up beside them. It's literally that aspirational sort of thing. I could do that or I could be better as well.

Darrin Grafton:
So that would be my parting wisdom.

Paul Spain:
That's excellent. Yeah, super inspirational. Well, yeah, thank you very much for being on the podcast, Darrin Grafton. Really appreciate

Darrin Grafton:
it. Yeah, thank you very much.

Paul Spain:
Thank you.

Paul Spain:
What an incredible journey Darrin Grafton and the team at Serko have been on. So many great takeaways from their learnings. My encouragement to you is to write down any ideas you’ve had as you’ve listened, and take action!

New Zealand Business Podcast is brought to you by One New Zealand alongside Gorilla Technology – helping small startups through to midsize firms., and by Outrun Global remote staffing to help your local teams work smarter, not harder.

Be sure to listen in to our other episodes - featuring many of New Zealand's most successful leaders - including Brooke Roberts of Sharesies, Sir Peter Beck of Rocket Lab, Cecilia Robinson of MyFoodBag and Tend, Sir Stephen Tindall of The Warehouse and K1W1, Sir John Key and many more.

And be sure to share this episode with a friend or colleague who you think will benefit.

Now I have a question:

Are you confident you’re maximising the uplift tech enablement can bring, whilst minimising cyber risks?

If not, get in touch with Gorilla Technology today for a discussion about the opportunity.

Thanks for listening in - this is Paul Spain signing out. I'll catch you on the next episode.