Why a Silicon Valley exec bought into Breville’s global ambitions (Complete Episode)

Dawn Kanelleas:
Today we have the great privilege of speaking to Jim Clayton, the decade-long CEO at Breville.

This podcast is general information and for an Australian audience only. It isn’t advice. It doesn't take into account anyone's investment objectives, situation or needs.

Dawn Kanelleas:
Thank you, Jim for making the time to speak with First Sentier. We have been a long-term supporter of your innovation-led strategy at Breville, but today I'd like to start at the beginning if you like, and get you to talk about your journey to Breville, and that you started your career as a civil trial lawyer before moving to McKinsey. And then perhaps some more time on your most relevant last role at LG in South Korea in terms of building the expertise that brought you to the attention of the Breville board.


Jim Clayton:
My career is definitely non-linear. I think that is fair. I think the big step for me actually was when I went to the Silicon Valley. So when I went to the Silicon Valley, I ended up working for a self-made billionaire that had started, I think it was on his third company, that really busted for him. And it was under Romesh Wadhwani where I really learned how to do a lot of the things that I'm applying at Breville.

So in that 10-year period when I was in the Silicon Valley, one interesting context, kind of broader context of software service, data, speed, all of this bit, but offshoring came out of that construct and Breville was, I mean, sorry, Romesh is very much a fire, ready, aim kind of guy. It was a real premium on execution and speed, which is where I picked up that affliction and we started out adventure work. Then Romesh came in, moved us up into private equity with his checking account basically as the first fund. And we were buying companies and then transforming those companies. But the transformation side of that equation was a huge learning for me because we did it so many times against so many different companies.

Dawn Kanelleas:
So you actually got to do it, as opposed to McKinsey where you got to advise somebody how to do it in an idealised situation type?

Jim Clayton:
McKinsey was really helpful because it's going to be whatever, a three-month project or a six-month project. So you're kind of parachuting into an industry you don't know to a problem, you don't know. You're very quickly having to try to figure out which end is up and then find out what the problem is and go solve it and present it back. But you're not doing the execution when you stepped over in private equity, it's one of these, you break it, you buy it kind of problems right.


Dawn Kanelleas:
It is yours but it’s a lot shorter term, for example the strategy in Breville, you’ve been there 10 years, hopefully you’re there for another 10 years. Get in there obviously execute operationally but not necessarily be there for a long time.

Jim Clayton:
What was helpful, at least for me in learning was iterate, iterate, iterate, another one, another one, another one. And you get a lot of scars on your back through that whole process, those are the learnings. And so actually when the LG opportunity came up, which is actually a McKinsey partner that I worked with way back when convinced me to cross over. And the storyline that got me in was actually LG needed to enter new markets. They hadn't done a lot of M&A, and so they didn't have that skillset. So the idea was to add me to the team to then go help them go into new markets. So maybe about the first 9 to 12 months I was at the corporate level looking at new markets, who are we going to acquire to go in? And then how do we take the capabilities of LG to drive that?

Dawn Kanelleas:
But also the idea of premiumization because that brand was very much like a private label brand to the consumer in Australia?

Jim Clayton:
Not by the time I got there. By the time I got there, whether it was white goods or Samsungs or it was, and they competed against one another. The bit that I did find a little astounding because of Samsung was that at the time I was there, LG was a US$100 billion and they were the little guys and that took me a while to get my head around, okay, we're the little ones that, because it was Apple and Google and Samsung and so forth.

So now all of a sudden I'm in a truly global company. After maybe nine months, I moved into the home entertainment business unit, which was about a $25 billion business unit, which was TVs and so forth. And I got to be at LG at a really interesting time because the iPhone had come out I think before I got there. But you could start to see the implications of that because LG was big in the phone space and then it was moving over to smart tv and then there was smart grid.

And so here comes this wave in a sense of smart. And the thing that I always found interesting about LG and Samsung or they're the only two players that are in every room of your house, where everybody else kind of focused on one. You really did get this macro view of everything that was going on because smart grid was driven for very different reasons than a smart tv, which is different than a smartphone. But just seeing this whole thing and then you got to see this company literally struggle in this articulation of how do you bring software and service into a hardware company?

Oddly enough, this is where my time at Silicon Valley, which ultimately it did, because we ended up with the same situation with the horizontal strategy.

But I think getting to work as long as I did at LG, which is for six years, you start to see the power of that company and that culture and what they can achieve and why they built the business that they did. It's really fascinating, but it's as much cultural as anything else, which for a small town kid out of Texas was a big change, big deal. And from there, I then get the random phone call for Breville and interesting, at the time I'd not heard of Breville, my wife had, I didn't know what it was.

Dawn Kanelleas:
And your wife had, that's interesting.

Jim Clayton:
She had, but I was like 98% convinced that there's no way that a company from Australia in that space

Dawn Kanelleas:
Can succeed.

Jim Clayton:
Could succeed. And it's not anything against Australia, it's manufacturing. It's everything. 5 million people. In other words, you don't have a big domestic market to build up because usually you lean on the domestic market to get big to fund it.

Then you go out and the Koreans are an example where they had to go out early. And so there are times when it's happened, but it's much harder than first build GE and then go global in a sense.

Dawn Kanelleas:
How did he convince you?

Jim Clayton:
So for me, what was interesting, and this is partly LG was at the time primarily a fast follower model, which is their innovation was really in the manufacturing process as opposed to coming up with the iPhone or something. And as I was working on trying to go into new markets, I started to really get a feel for how hard innovation really is to come up with be the one that came up with the idea. Chasing someone who has the idea is a very different game than coming up with it.

Dawn Kanelleas:
Being the one that has to come up with it and building the infrastructure around it. That's kind of easier once you've got the idea.

Jim Clayton:
Exactly. And so I started out with, this probably is not a thing, but I said send me analyst reports and stuff so I can look at it. And then the private equity guy in me looked around and it's like there's no debt on the balance sheet. Okay that one's interesting. That was step one. Then the second thing I saw was this company was only direct in five countries. So theoretically that meant possible. And the part of it that was really important to me was not their success in the US but that the UK had worked because that meant that in theory, Europe was in play. They hadn't executed it, but they had validated that, hey, this might work.

Dawn Kanelleas:
So there was a value proposition that was resonating with customers.

Jim Clayton:
Whatever that was, at the time, I didn't know what it was.
And so I was like, all right, so they have validated these little in a sense little startups is the way they had approached it and that they'd validated the UK, which meant okay, maybe. The part that was really interesting to me was that there is this natural barrier to entry into the vertical. And I say this because at LG, the competitive list was Samsung, Apple, Google, Huawei, High Sense, TCL, Xiaomi, and you're looking at serious companies with serious capability and all of a sudden now you're looking at this one vertical that has this natural barrier to entry, which is why we don't see any of them in this vertical. And that barrier to entry is there's no manufacturing scale. And so instead, what I started to see when I started,

Dawn Kanelleas:
It can be easily outsourced.

Jim Clayton:
It's not about outsourced, it's numbered of units, which is TVs. It's 60 million a year, it's 60 million a year. You can get scale in manufacturing then that can be the advantage. But when you touch food, you touch culture. When you touch culture, it gets very local. So the Breville

Dawn Kanelleas:
Had to be small.

Jim Clayton:
Means something in this country, the sandwich maker, the sandwich press, not in the US at all. So there it is, the founding kind of piece of this whole company is not relevant in this other market. Because it’s food, matters here doesn't matter there.

And so what you actually start to see are little micro markets kind of pop up all over the world because there's no manufacturing scale.

And if you think of what makes those big guys really successful, it's the ability to get to scale. So that one was interesting. And then I remember I was at CES with LG and across the street from the conference centre is a Sur La Table. And so when I would get free time, I'd walk over and I walked over three times. I wanted a different salesperson. The first time I went, I think I asked for a KitchenAid mixer, then I wanted a Cuisinart food processor, and then I wanted, I think it was a coffee machine. And all three times I was cross-sold to Breville.

Dawn Kanelleas:
Wow. Okay.

Jim Clayton:
Which is bothering me. I mean honestly, I was like, wait a minute…

Dawn Kanelleas:
There's something here.

Jim Clayton:
Why is this happening? So then I would go, I've never heard of these guys who are they? Australian company? Off it would go. And the part that was bothering me about all that as someone who'd been at LG for six years trying to figure out this new idea that we could go into was that those three products have nothing to do with one another.

But I got cross sold to Breville. And what that meant was that Breville was innovating across category. And that's the thing that doesn't happen. So what you tend to see is this one company is really, really good at the one thing. They've tried it a hundred different ways and they'll die on the hill for this one thing they're best at. And that comes from all the deep experience of trying every single way that you could to make it the best to make this thing. And this is the best balance.

Dawn Kanelleas:
And nobody else cares about it. That's the other thing, care factor zero, because you're not competing for the best TV or the best phone or whatever it is.

Jim Clayton:
And so now I'm sitting here with this Australian company because not only would they cross sell me and they would say, oh, by the way, they're the best at this one and this one and this one and this one.

So I'm sitting over here at LG trying to come up with one idea. I mean, I'm not kidding, like and here's this Aussie come. He is like, and they're acting like it's not even sport. So that was honestly the thing where I said, okay, maybe there's something here. Then I went back as a part of that process and you guys had gone through the juicing bubble there it was, it popped. So stock's down all this kind of bit, and I said, I want to see the data X juicing, take it out. And what you saw was a core that working with all these other items.

Dawn Kanelleas:
But they weren't putting much focus into it, but it was resonating with consumers.

Jim Clayton:
But it was steady as it goes. It was actually the juicing bubble hid what was happening underneath. So then I'm kind of going, okay, wait a minute. I've got a stable base underneath this story with no debt on the balance sheet and a vertical that's protected with UK validated lots of countries to go, and a company that seems to be able to innovate across category.

Dawn Kanelleas:
And I've got a lot of experience in infrastructure and building distribution and marketing and understanding that side of it that maybe had been under invested.

Jim Clayton:
And at that point, I don't know that to be true or not true in a sense right now. Then I started, so we went through that process and I started and then I found out the things that they didn't tell me.

Dawn Kanelleas:
Of course.

Jim Clayton:
So then you find out, and it was honestly, I was about two weeks in, it took about two weeks to figure it all out, and the net of that two weeks was it was the most fascinating company because it was really, really good at the thing that is the hardest to be good at, it’s really not good at all the other things that are easiest to be.

And so I went to my chairman at the time and I said, okay, well now that I see what you've got me into, I'm two years behind where I thought I was going to be. I was like, well, there's kind of good news, bad news, and the good news is it means there's some really easy wins in this process because all we have to do is kind of fix the functional capability in a sense. They had the rest of it and that was what kicked it off. And the rest is history as they say.

My starting position was way 20 steps back.

Dawn Kanelleas:
You didn't have anything to lose.

Jim Clayton:
I mean, honestly, even with the board, it's like these guys took a real flyer. It is not like they didn't see the same thing. And so for me, this is where I fall back actually on my time at Symphony.

I had the idea of where I thought the company could go, but I didn't tell anyone because that's 5 to 10 years out, you put that one on the board, and now I know you're completely lost. And instead with the investors, with the team, with the board, so forth. I set very short-term goals, I called it and then went and delivered it and then called it and went and delivered it.

Dawn Kanelleas:
So it was incremental, ticking boxes.

Jim Clayton:
And it's only to start to build the story that I mean what I say, and I say what I mean, and if I say it, it will happen. And that was it. And so you'd have to go back to some of the investor presentations of FY16 or something, but you'll see that I created kind of a scorecard and I said, here are the things, watch these. Don't watch those. I'm going to move this from here to there, and then I would go out and I would do it. And that started to build a little bit of confidence, not in the first year. I always measured every report out by what percent of the people do I think, believe what I'm saying for the first year was zero. It was absolutely zero, which is fine.

Dawn Kanelleas:
I remember that.

Jim Clayton:
I was still doing what I said I was going to do. They just didn't believe. And then I remember you get these funny vignettes, but there was an investor that came up to me after one of the meetings and he said, well, I've sat through four of these now. And each of the four, you've basically said exactly the same thing. And each time you did what you said, that's very refreshing.

Dawn Kanelleas:
Yeah, that's what gave us confidence.

Jim Clayton:
That was the beginning. In other words, this was this construct, which is, and the one that was actually very funny is when I was at Symphony, we called these transformation programmes, but I went out and I looked in every company on the SX was under a transformation programme. And that wasn't a good word, honestly, everybody was under one. So I was like, okay, it's not one of those. So I called it an acceleration programme. I rebranded it because that's really what it was. But the scariest bit of the whole thing, I say the riskiest bit of my time was in those first two years because what I figured out was that I was going to have to put the company through a top to bottom PE, burn it down, rebuild it, and it wasn't anyone's fault, it was just how they had gotten to where they had gotten, which is I literally had to centralise every single function, re-platform the whole company and so forth. And that was the scariest bit of will people stay with you while you go through this?

Dawn Kanelleas:
It had nice bones, but it didn't have, if you like the infrastructure to support it.

Jim Clayton:
Yeah, it was weird. It was really good at product innovation and in this vertical, that's the single most important thing. And that was really my bet.

Which was even if I screw up in this transformation, how we do it, as long as NPD keeps kicking out the products, they kick out, revenue's going to grow. And this was the big bet, which is, can you fix the plane while it's flying and everybody's watching? Only if you have an innovation engine that's going to deliver even if you screw this up. And that was it. The other thing that I went to the market with, and this was also a Symphony play, was I said, look, every time somebody comes in to do the transformation, what that means is it’s going to get knee capped for about three years and there's going to be this beautiful hockey stick. And when you are in a world where there is no trust, you don't have three years.

You don't got to, you got three months obviously. So I went out to the market, and this is the other thing no one believed was I went out in the very first meeting and I said, I'm going to get from A to B and I'll commit to you. It will not come from EBIT, which is I'll protect EBIT.

I'm not going to steal from it to make it go faster. I'm going to do it the hard way and literally transform the pieces that I need out to drive the acceleration. Now, there's not a single person that believed that one for sure, even the board didn't believe that one, but that's what I did. And part of what I did, and this is something that's really different about how we run the company, is to make that happen. I had to change the way our incentive structure worked, because I couldn't steal from EBIT.

So what you can't find is, well, I was going to hit EBIT except we paid our short-term incentive and now you didn't hit EBIT, right? Because this whole thing goes circular on you.

Dawn Kanelleas:
So sales.

Jim Clayton:
So whatever. So what I did was I created this screwball formula, which basically puts EBIT in as a fixed cost just like rent, which is, it was as fixed as rent. That one doesn't change. Now you can play with all the others.

Dawn Kanelleas:
All the other levers are there for you.

Jim Clayton:
And that was where that started because I'd already made the commit to the market. And if you mean what you say and say what you mean, you can't steal from EBIT, but you steal from EBIT and then it's, it's all lost, right?

Dawn Kanelleas
Yeah.

Jim Clayton:
So that early commit, and I think once we survived really the first two years, and not only did I not steal from EBIT, but we grew EBIT. I didn't promise that one by the way, but we did.

Dawn Kanelleas:
As you say, sometimes really what is EBIT given where you are going, you're actually stealing from shareholders long term by delivering EBIT today.

Jim Clayton:
So this is true, I call it dead money,

Dawn Kanelleas:
So do we, but we know that the market responds to.

Jim Clayton:
It's yes and no, right? Which is if you think about when I think about how do I drive return for our shareholders, there's two variables and I'll pick EBIT, EBIT’s one of them, what did you actually drop? And then what do I multiply it by? So if you take EBIT to zero, zero times, any number is still zero. So part of it is I describe it as the ante to get to play another round, which is you need to prove that you can.

Dawn Kanelleas:
It's your insurance policy with the market if you like.

Jim Clayton:
It's a bit of a trust and a sense of, yeah, I can drop this and still go do what I want to go do. It's a part of that trust stuff, I think. And so within that construct, I say, this is the cost of being public. You don't have to be, but there's a lot of good things that come from it. And this is one of, this is the ante at the table. If you can't consistently do this, then you shouldn't be. And that's okay. So I don't whine about it, I just do it because that means we've picked a public structure and within that, this is what it costs to play.

Dawn Kanelleas:
Like you do in private equity, it's IRR in the public markets.

Jim Clayton:
But the difference,

Dawn Kanelleas:
This is the pact you make

Jim Clayton:
And the big difference for me is that I've had my eye on 10 years out from the beginning, I'll come back to when I interviewed. It was actually funny, when I came down to interview, the board asked for me to present to the board, and I remember talking to the head hunter was present, what I don't understand, it was like, I don't know, whatever you want to talk about. And I'm like, how am I going to do an interview of anything I want to talk about? And it was, well, what would you do with the company? I was like, I don't even know the company. How am I going to do this? So I really did a PE outside in and I was like, look, this is your multiples collapse, your stock's down, here's why. And your business model's broken and here are your degrees of freedom. And I laughed, maybe it was about five years ago, six years ago I went back and I stumbled on that document. It's still true.

Dawn Kanelleas:
Yeah, of course.

Jim Clayton:
Meaning it's not rocket science.

Dawn Kanelleas:
Yeah.

Jim Clayton:
It's just execution. And that's kind of what the last 10 years have been.

Dawn Kanelleas:
You came in, you saw obviously the coffee category growing really fast. The whole idea of making professional grade food at home had hit off and coffee's right at the thick of it. And obviously coffee adoption at home is going up. And you saw the innovation, but the thing that you did that none of the others had done properly or really thought about and meant that you could execute on a number of geographic fronts in terms of entry and not fail because everybody was like, oh, he's going to Germany, he's going to fail. Oh, going to, that was he's going to fail. That was always the tell him he's dreaming sort of the castle conversation we were having earlier.

But what you did so that you wouldn't fail was you made a concurrent investment in distribution and marketing, very significant and brought the market along on that journey. And that powered your entry into multiple European markets, built the huge beach that you have in the US. Obviously you've gone into South Korea, which is growing really fast. You're direct into China now as well. How were you able to execute that as well as do the innovation? And it was a lot of balls up in the air and a lot of countries that you're entering. I remember, I think it was Prague, the first distribution. I'm thinking, oh, how's this going to go? But yeah, you seem to sail through it.

Jim Clayton:
So when I first two weeks in, when I found out how deep the water was, I went back to my chairman and the board and I said, look, we will not be adding a country for three years. We will not be doing M&A for three years because we haven't earned the right to do that. And what I mean by that is the worst thing you can do is scale what we have. So we have to replatform the whole company before you ever kind of take that step. And this was really the learning from private equity, because I don't mean it this way, it depends. There's different types of private equity. But as a general rule, and I mean not in the last four or five years, but

Dawn Kanelleas:
It's not just financial. It was actually business transformation.

Jim Clayton:
When I was in there, equity bought you. It's because no strategic would touch you and it's because you were too dirty. So then the game became, yep, this is the role of private equity. Come in, clean it up, and then hand it back to a strategic.

And what I saw in the companies that we bought was they had done M&A, M&A and M&A and didn't do the integration, eventually died of their own weight. And then we had to come in and re-platform the whole thing and then pass it on. So I was seeing a version of that honestly when I got here, which was you cannot go into a new country if you have to lay an entire company. And that's what drives the risk. So we first had to have one supply chain instead of five. We needed one go to market vehicle instead of five, and we had five of everything. They literally were independent companies. But once that was done, we're close enough to done, then we had to pick our first country. And this is where I think everyone was a little uncomfortable, which is I could have picked a small one, I could have, and if I had picked a small one, we would've failed. And the reason is because you picked a small one, we can fail.

Dawn Kanelleas:
But also you made a big investment. So failing on a small one means its a big error.

Jim Clayton:
So I actually went and found our largest distributor. That's the one I took out. And I remember when I was interviewing the GM to come in and play the role of Germany, he said, I am a little concerned because you guys haven't done this systemically, and when this thing starts to not work, I'm done. And I said, I guarantee it will work. And he said, how can you do that? I said, because if this one fails, there won't be another one. We only went into China two weeks ago because Germany didn't fail. There would be no Netherlands, there would be no France. The whole market would go, I knew that wasn't going to work. And then around I'd have lost the board. I was like, it has to work, and this is why you have to land on the island and burn the ship. And that's when there's no choice but it working.

And when you put the company in that box, the Aussies will find a way through for real. And I could do that because of the quality of the product. Meaning if you're sitting on.

Dawn Kanelleas:
Because it was compelling,

Jim Clayton:
And this is the point to the, you have to earn the right to even do this, right? If you're bringing something new to the market that you're trying to go into, you've earned the right in a sense to play. Breville already had that part. So within that construct, the biggest risk the NPD team had already taken off the table, which is they had innovative products that would be perceived as valuable to the consumers. The rest is just execution. And so that's why the risk actually wasn't in the product, the risk was in all of the functional execution. But that was the team that I brought in. They were all functional experts. And so this was just the first time.

Dawn Kanelleas:
So it was low risk really from that.

Jim Clayton:
But we didn't have a process to do it. There was no process to go into a new country. So I held a weekly call with 60 people on it all over the world. And that was our process.

And I remember the funniest part because I am fire ready, aim, so I'd place the orders with the manufacturers before we had an office. They need to get, that's the longest lead time. So they got to the point where they were ready to ship. The problem was we didn't have a VAT number to import. It's like, I'm sure we'll get that worked out by then. And so we put it all on a boat. And this is kind of land on the island, burn the ship. It's like, here it comes. You should probably get that number. We got our VAT number two days before the containers hit Hamburg to import it. And then I was like, look at all the time we saved, we saved four weeks, thank goodness we shipped it. And it's this constant, keep your hair on fire and then you'll find a way. And if you were talking to one of the team members instead of me, they'll say, that's happened for 10 years running, but it is this kind of fire ready aim. I'm sure we'll work it out. And so then when Germany worked, everything started to change.

Dawn Kanelleas:
Everything else became not easy, but it became obvious.

Jim Clayton:
It's not easy, it's that the investors couldn't say, you can't do it. The board can't say you can't do it.

Dawn Kanelleas:
So coffee machines to Italy,

Jim Clayton:
You did it once, but I bet you can't do it twice and then off you go, but as opposed to, I knew you were going to fail. I knew that wasn't going to work and it didn't. And off you went, right? So once we had Germany done, what I think I eventually explained to the market, not at the beginning because Germany was scary enough, is that actually it didn't go into Germany. I went into the EU and that was Prague, which is, we don't have any other warehouse than the one we have on the day. We went into Germany, which is I was hiring a sales team for Germany, but I was laying infrastructure for all of Europe. And then it became, it's a little bit.

Dawn Kanelleas:
And it was like a hungry beast.

Jim Clayton:
Which is we went scale.

Dawn Kanelleas:
More countries.

Jim Clayton:
If you get velocity, then all of a sudden you start to flow. So it's like we went into New South Wales and now we're going to add WA and now we're going to add South Australia. That was what was happening after that. And we didn't need any more infrastructure. We laid the backend in a sense from the beginning.

And that's what allowed us to really ratty tat tat in a sense through Europe. I think the one decision that I did make, and this was when I first got there on the first day, I said, I think we're about 500 million Aussie or something. And so I told the team, I remember we went downstairs in my first day and all this kind of bit, and I told them two things and I said, we're going to a billion and there's going to be one Breville. And what I meant by that was there were five different Brevilles at the time, New Zealand, Australia, Canada, they were all different. And so everybody's like, that's really great, until they found out what I meant.

But we were going to a billion. And so I was, yeah, we're not going to a billion. And I remember one of the shareholders like, wow, how are you going to get the billion? And I said, this is not rocket science. The road to a billion goes through Europe. It could have gone through Asia. I just came back from Korea. I had just come in from Korea. I actually could have started in APAC. But back to if,

Dawn Kanelleas:
Well, you had (X) already in the UK.

Jim Clayton:
If the investors didn't think Germany was going to work, what if I dropped South Korea on top of them right out of the gate? Yeah, no way is that going to work. And so this was another cultural risk call, which is we go fix Europe first. And so we did Europe first.

Dawn Kanelleas:
And it became incremental every new geography as opposed to big shock.

Jim Clayton:
And so then it wasn't quite as whatever, Mexico, South Korea, I mean South Korea was the one where I was like, yeah, but that one's not going to work. And then it worked. And so now we're kind of running out of excuses at some level, which is there's something about how this team does this and the quality of the products that no matter where you are, it's resonating.

Dawn Kanelleas:
And they can replicate it.

Jim Clayton:
And what I would say is if you and I try to give investors examples to help them understand, which is if I was Dyson, how hard would it be to go into South Korea for goodness sakes. You kind have one question. Is it, do your floors get dirty? This isn't a cultural question as if your floors get dirty.

I’m here, I can help that. So this is that intersection of product and culture, which is, it doesn't matter that it's India or China or South Korea or Germany, if your floors are dirty, Dyson's got a value proposition. And so with Breville, it's similar in a way, which is do you drink coffee? Because If you do,

Dawn Kanelleas:
We got the answer for you.

Jim Clayton:
The Aussie has kind of sorted this thing out. I got the thing. And so this is where coffee tended to be the tip of the spear because if I'd led with the toasty maker, I'd be like, yeah, no.

Dawn Kanelleas:
Or the pizza oven,

Jim Clayton:
Whatever. It's like, no, we don't do that. I mean in Korea we didn't, interesting bit.

Dawn Kanelleas:
It's coffee culture now.

Jim Clayton:
It is but I’ll tell you what, every apartment that we looked at to rent, didn't have an oven in it.

Jim Clayton:
In Korea, what would you use an oven for? They don’t bake.

So if you think about the whole portfolio, and we even have little ovens, they're like, well, what would you do with it? It's not relevant, but coffee is. So that gives us our little vacuum cleaner of sorts to go, well, if there's anybody in this country that drinks coffee, this is a thing the Aussies kind of figured out, and then we put it in these products and they work and off we go. And that lets us be somewhat independent of culture because we're really talking about solving a

Dawn Kanelleas:
a need.

Jim Clayton:
Now how that gets presented, how that gets executed is very country specific. Say, I mean if I compare China and Australia, you can't much more different, but the outcome's the same, which is a consumer at home with having coffee

Dawn Kanelleas:
Have a want.

Jim Clayton:
And so that gives us in a sense the path to be able to cross that line. But if I back up and go, why did it work? I said, well, I de-risked it by being a platform. So the increment required to go live is much smaller if I've centralised them platform stuff. So that was the first step. It's just the quality of the product. And I would always, when I was talking to

Dawn Kanelleas:
The, and you created the brand as well, I mean South Koreans would've heard about it because of all that previous investment over the last 10 years.

Jim Clayton:
So that part was another missing piece in a sense where when I got there I said, you guys have never launched a new product in the history of this company and they've cut it? No, I'm pretty sure. I was like, I don't know, you really haven't. You've released new products, but you've never launched one. I said, go look. Go watch Apple on the tv. There's a line that before it even gets there, there's a line. They're launching a product, not releasing a product. And it was kind of cute because with Baratza it was the same, which is I was like, you guys have never launched one before and they got to do the very first one. They're like, whoa, this is so much fun. And so that construct of GTM was absent because it wasn't that they didn't appreciate it, it's because they were run a country was an independent company. And so Sydney wasn't there to sense to do anything for Canada was Canada's problem.

And Canada had their own go to market and how they were going to go do that. But now you're getting subscale of subscale a subscale, especially by the time you get to New Zealand in this kind of eat what you kill kind of model. It's like we don't have the PnL to go really launch something. And that's what drove it into a release model. But once it all got centralised and all of that, let's call it marketing spend came to the centre and then you put in functional expertise of Cliff Toring who came out of Nike and Ralph Lauren is like, okay, here's all the money now you need to build a process with the product team to start launching product and then start building brand. They had built brand, but the way Breville had built brand up to that point to be what they were, where I got cross-sold at Sur La Table was the quality of the product and word of mouth.

Dawn Kanelleas:
It was just inadvertent.

Jim Clayton:
It's just the best one.

Dawn Kanelleas:
Everybody knows. Yeah, word of mouth.

Jim Clayton:
They did it because they had the best product and it was all word of mouth. And so having that as a foundation and then putting just table stakes go to market on the top of it then starts to really unlock the cycle of the new products and getting the most out of them.

Dawn Kanelleas:
Another, I remember when you entered in Germany and you were trying to explain why you'd be successful was that you made the point that you're horizontal, you're focused on small domestic appliances and you own that shelf space and retailers love that. And I don't even know how relevant retailers are now because what is a shelf space in Amazon? What is a shelf space for you? When you've built the brand and you're going direct, is that still relevant or as you just mentioned, South Korea's coffee, they don't want a toasty maker or a pizza oven. Is that as relevant where the idea of owning a shelf in David Jones or in a German retailer when you launched in Germany, have you tweaked that bit of the strategy?

Jim Clayton:
So I'd say, I mean it's interesting because two bits to this thing, which is I've narrowed instead of widened, because you have to stand for something. If I say Sonos, you know what that means. If I say Dyson, it means something. If I say KitchenAid, it means something, which is you can't go global with 400 random SKUs you need to first earn the right to stand for something with those consumers.

And so actually I did the inverse, which was you have to narrow down and you've got to pick your shot of sorts to say, when we go into Korea, we're going to be this company. Not the 300, just this one. Once you've earned that, right, and you stand for that, then it's okay for Dyson to have a hair dryer.

Dawn Kanelleas:
Yes, of course,

Jim Clayton:
First they were vacuum cleaning, right? That's why they were best and they were innovative and all this stuff. And

Dawn Kanelleas:
Now they're heaters.

Jim Clayton:
So then they're like, air is air. I can move air in lots of different ways. I can suck it in, I can push it out and all wait, kind of see that. And they innovated again, look at that hairdryer. But they stood for something in a sense first with a footnote, which is what you see with most single category companies is they are direct in their domestic market and they're through distributors and all others. And the reason is the TAM of that one little category isn't big enough to get over the cost of Prague and the cost of the team and the cost of finance team. And that's

That and the taxes and this and the that, and this is what distributors are for, which is bringing great product into our country. But I sell 15 brands and I go talk to Harvey Norman.

Dawn Kanelleas:
And you build brand awareness through that, which of course then can feed into your online website.

Jim Clayton:
But this is where Breville's width actually help solve the problem, which is while we're going to go in and stand for something, I got a whole bunch of stuff. And so all of a sudden clearing that breakeven, first of all by centralising everything, I took it all the way to the floor, which is It isn't going to cost that much to begin with, but if you are the thing you want to be, plus there's this other stuff, well, that's enough to kick this thing over and go, you know what?

We can go direct in Germany with our eyes closed, it will float on its own. But if I was only one thing, then I'd be like, we're going to need a distributor there because there's no way we're going to sell enough in that one country to justify it. So this is in an odd way where Breville's breadth took the breakeven risk off the table with a new country, but we still picked our shot and narrowed to be a thing in that country and to start there.

Dawn Kanelleas:
Yeah, that makes sense. Just on NPD, because obviously that's what you lead with and that helps you to invest on everything else. Have there been any spectacular misses? What's the hit rate on NPD?

Jim Clayton:
I mean, the crazy thing, so when I was at LG, we had misses. I mean, the reason you have a miss is one, it costs a lot to do this stuff. And secondly, the shelf life of that product is 12 months if you're lucky, which is every year you have another one. So it really is kind of a dart at the board, which is we're going to make this TV, we're going to build 60 million of them, and we have to decide that now,

Which means you're going to sell 60 million. I dunno at what price, but you're definitely selling them because we had decided that it's almost like fashion. You got to decide how many blouses you bring in before you ever put it on there and then it's done. What's really interesting about this vertical, which changes everything, is that whatever product that we make, assuming it passes a minimum test, could sit on the shelf of a retailer for 10 years. It's very hard to not have a positive NPV.

Dawn Kanelleas:
True

Jim Clayton:
For real. This is a funny thing.

Dawn Kanelleas:
So the pizza oven was a success.

Jim Clayton:
Pizza oven's absolutely a success.

Dawn Kanelleas:
Right? Okay.

Jim Clayton:
Absolutely. So this then becomes a different kind of problem, which is, well, if it's a chip shot of sorts to go, well, it'll definitely pay out. Now you're really going, but would this one be better than that one? Because if I can stick it on the shelf for 10 years in 30 countries, it's going to pay for the cost to build. And so you're talking really about relative goodness. I can think of actually one that didn't work, meaning it's still not on the shelf. And I would describe it as a very kind of Breville in its ethic, which is

Dawn Kanelleas:
And you learn from these things that miss, right?

Jim Clayton:
But if Breville misses, they miss kind of for the same reason, which is they genuinely are foodies and they genuinely are trying to help you get something that you wouldn't get unless you went to whatever Michelin star restaurant with a push a button. I don't know what this was, but evidently Heston Blumenthal makes an egg in a certain way.

There was this really fancy way of cooking an egg, which is very, very complicated. And so they went and literally built an egg cooker that exactly mimicked this very complicated algorithm to create this very special egg, for breakfast.

Dawn Kanelleas:
So it was slightly runny.

Jim Clayton:
Whatever it was, a heston egg,. And I only eat scrambled, so I never had one. I don't know. So it did it, but it took, it would cost you $250 or $200 or whatever it was to buy the thing that could do it. That TAM was too small, which it was. There was a food problem. They found the food problem, they solved the food problem,

Dawn Kanelleas:
You wasted your time.

Jim Clayton:
The short version was not enough. People in the world. It or are interested at $200 for that specific egg. And I think, so if they fail, it isn't because they failed on the food side. It was beyond the TAM side of,

I thought everybody only had eggs this way and this would be important to them. And honestly, in the 10 years, that's the only one that comes to mind. And that's not a function of them being great. It's a function of being stake on the shelf for 10 years.

This is true of every company in this vertical. If you're innovating and putting a real product on the table, they will stay there for a very long time. And it's almost impossible to not have a positive NPV in that world.

Dawn Kanelleas:
You came in, you saw obviously the coffee category growing really fast. The whole idea of making professional grade food at home had hit off and coffee's right at the thick of it. And obviously coffee adoption at home is going up. And you saw the innovation, but the thing that you did that none of the others had done properly or really thought about and meant that you could execute on a number of geographic fronts in terms of entry and not fail because everybody was like, oh, he's going to Germany, he's going to fail. Oh, going to, that was he's going to fail. That was always the tell him he's dreaming sort of the castle conversation we were having earlier.

But what you did so that you wouldn't fail was you made a concurrent investment in distribution and marketing, very significant and brought the market along on that journey. And that powered your entry into multiple European markets, built the huge beach that you have in the US. Obviously you've gone into South Korea, which is growing really fast. You're direct into China now as well. How were you able to execute that as well as do the innovation? And it was a lot of balls up in the air and a lot of countries that you're entering. I remember, I think it was Prague, the first distribution. I'm thinking, oh, how's this going to go? But yeah, you seem to sail through it.

Jim Clayton:
So when I first two weeks in, when I found out how deep the water was, I went back to my chairman and the board and I said, look, we will not be adding a country for three years. We will not be doing M&A for three years because we haven't earned the right to do that. And what I mean by that is the worst thing you can do is scale what we have. So we have to replatform the whole company before you ever kind of take that step. And this was really the learning from private equity, because I don't mean it this way, it depends. There's different types of private equity. But as a general rule, and I mean not in the last four or five years, but

Dawn Kanelleas:
It's not just financial. It was actually business transformation.

Jim Clayton:
When I was in there, equity bought you. It's because no strategic would touch you and it's because you were too dirty. So then the game became, yep, this is the role of private equity. Come in, clean it up, and then hand it back to a strategic.

And what I saw in the companies that we bought was they had done M&A, M&A and M&A and didn't do the integration, eventually died of their own weight. And then we had to come in and re-platform the whole thing and then pass it on. So I was seeing a version of that honestly when I got here, which was you cannot go into a new country if you have to lay an entire company. And that's what drives the risk. So we first had to have one supply chain instead of five. We needed one go to market vehicle instead of five, and we had five of everything. They literally were independent companies. But once that was done, we're close enough to done, then we had to pick our first country. And this is where I think everyone was a little uncomfortable, which is I could have picked a small one, I could have, and if I had picked a small one, we would've failed. And the reason is because you picked a small one, we can fail.

Dawn Kanelleas:
But also you made a big investment. So failing on a small one means its a big error.

Jim Clayton:
So I actually went and found our largest distributor. That's the one I took out. And I remember when I was interviewing the GM to come in and play the role of Germany, he said, I am a little concerned because you guys haven't done this systemically, and when this thing starts to not work, I'm done. And I said, I guarantee it will work. And he said, how can you do that? I said, because if this one fails, there won't be another one. We only went into China two weeks ago because Germany didn't fail. There would be no Netherlands, there would be no France. The whole market would go, I knew that wasn't going to work. And then around I'd have lost the board. I was like, it has to work, and this is why you have to land on the island and burn the ship. And that's when there's no choice but it working.

And when you put the company in that box, the Aussies will find a way through for real. And I could do that because of the quality of the product. Meaning if you're sitting on.

Dawn Kanelleas:
Because it was compelling,

Jim Clayton:
And this is the point to the, you have to earn the right to even do this, right? If you're bringing something new to the market that you're trying to go into, you've earned the right in a sense to play. Breville already had that part. So within that construct, the biggest risk the NPD team had already taken off the table, which is they had innovative products that would be perceived as valuable to the consumers. The rest is just execution. And so that's why the risk actually wasn't in the product, the risk was in all of the functional execution. But that was the team that I brought in. They were all functional experts. And so this was just the first time.

Dawn Kanelleas:
So it was low risk really from that.

Jim Clayton:
But we didn't have a process to do it. There was no process to go into a new country. So I held a weekly call with 60 people on it all over the world. And that was our process.

And I remember the funniest part because I am fire ready, aim, so I'd place the orders with the manufacturers before we had an office. They need to get, that's the longest lead time. So they got to the point where they were ready to ship. The problem was we didn't have a VAT number to import. It's like, I'm sure we'll get that worked out by then. And so we put it all on a boat. And this is kind of land on the island, burn the ship. It's like, here it comes. You should probably get that number. We got our VAT number two days before the containers hit Hamburg to import it. And then I was like, look at all the time we saved, we saved four weeks, thank goodness we shipped it. And it's this constant, keep your hair on fire and then you'll find a way. And if you were talking to one of the team members instead of me, they'll say, that's happened for 10 years running, but it is this kind of fire ready aim. I'm sure we'll work it out. And so then when Germany worked, everything started to change.

Dawn Kanelleas:
Everything else became not easy, but it became obvious.

Jim Clayton:
It's not easy, it's that the investors couldn't say, you can't do it. The board can't say you can't do it.

Dawn Kanelleas:
So coffee machines to Italy,

Jim Clayton:
You did it once, but I bet you can't do it twice and then off you go, but as opposed to, I knew you were going to fail. I knew that wasn't going to work and it didn't. And off you went, right? So once we had Germany done, what I think I eventually explained to the market, not at the beginning because Germany was scary enough, is that actually it didn't go into Germany. I went into the EU and that was Prague, which is, we don't have any other warehouse than the one we have on the day. We went into Germany, which is I was hiring a sales team for Germany, but I was laying infrastructure for all of Europe. And then it became, it's a little bit.

Dawn Kanelleas:
And it was like a hungry beast.

Jim Clayton:
Which is we went scale.

Dawn Kanelleas:
More countries.

Jim Clayton:
If you get velocity, then all of a sudden you start to flow. So it's like we went into New South Wales and now we're going to add WA and now we're going to add South Australia. That was what was happening after that. And we didn't need any more infrastructure. We laid the backend in a sense from the beginning.

And that's what allowed us to really ratty tat tat in a sense through Europe. I think the one decision that I did make, and this was when I first got there on the first day, I said, I think we're about 500 million Aussie or something. And so I told the team, I remember we went downstairs in my first day and all this kind of bit, and I told them two things and I said, we're going to a billion and there's going to be one Breville. And what I meant by that was there were five different Brevilles at the time, New Zealand, Australia, Canada, they were all different. And so everybody's like, that's really great, until they found out what I meant.

But we were going to a billion. And so I was, yeah, we're not going to a billion. And I remember one of the shareholders like, wow, how are you going to get the billion? And I said, this is not rocket science. The road to a billion goes through Europe. It could have gone through Asia. I just came back from Korea. I had just come in from Korea. I actually could have started in APAC. But back to if,

Dawn Kanelleas:
Well, you had (X) already in the UK.

Jim Clayton:
If the investors didn't think Germany was going to work, what if I dropped South Korea on top of them right out of the gate? Yeah, no way is that going to work. And so this was another cultural risk call, which is we go fix Europe first. And so we did Europe first.

Dawn Kanelleas:
And it became incremental every new geography as opposed to big shock.

Jim Clayton:
And so then it wasn't quite as whatever, Mexico, South Korea, I mean South Korea was the one where I was like, yeah, but that one's not going to work. And then it worked. And so now we're kind of running out of excuses at some level, which is there's something about how this team does this and the quality of the products that no matter where you are, it's resonating.

Dawn Kanelleas:

And they can replicate it.

Jim Clayton:
And what I would say is if you and I try to give investors examples to help them understand, which is if I was Dyson, how hard would it be to go into South Korea for goodness sakes. You kind have one question. Is it, do your floors get dirty? This isn't a cultural question as if your floors get dirty.

I’m here, I can help that. So this is that intersection of product and culture, which is, it doesn't matter that it's India or China or South Korea or Germany, if your floors are dirty, Dyson's got a value proposition. And so with Breville, it's similar in a way, which is do you drink coffee? Because If you do,

Dawn Kanelleas:
We got the answer for you.

Jim Clayton:
The Aussie has kind of sorted this thing out. I got the thing. And so this is where coffee tended to be the tip of the spear because if I'd led with the toasty maker, I'd be like, yeah, no.

Dawn Kanelleas:
Or the pizza oven,

Jim Clayton:
Whatever. It's like, no, we don't do that. I mean in Korea we didn't, interesting bit.

Dawn Kanelleas:
It's coffee culture now.

Jim Clayton:
It is but I’ll tell you what, every apartment that we looked at to rent, didn't have an oven in it.

Jim Clayton:
In Korea, what would you use an oven for? They don’t bake.

So if you think about the whole portfolio, and we even have little ovens, they're like, well, what would you do with it? It's not relevant, but coffee is. So that gives us our little vacuum cleaner of sorts to go, well, if there's anybody in this country that drinks coffee, this is a thing the Aussies kind of figured out, and then we put it in these products and they work and off we go. And that lets us be somewhat independent of culture because we're really talking about solving a

Dawn Kanelleas:
a need.

Jim Clayton:
Now how that gets presented, how that gets executed is very country specific. Say, I mean if I compare China and Australia, you can't much more different, but the outcome's the same, which is a consumer at home with having coffee

Dawn Kanelleas:
Have a want.

Jim Clayton:
And so that gives us in a sense the path to be able to cross that line. But if I back up and go, why did it work? I said, well, I de-risked it by being a platform. So the increment required to go live is much smaller if I've centralised them platform stuff. So that was the first step. It's just the quality of the product. And I would always, when I was talking to

Dawn Kanelleas:
The, and you created the brand as well, I mean South Koreans would've heard about it because of all that previous investment over the last 10 years.

Jim Clayton:
So that part was another missing piece in a sense where when I got there I said, you guys have never launched a new product in the history of this company and they've cut it? No, I'm pretty sure. I was like, I don't know, you really haven't. You've released new products, but you've never launched one. I said, go look. Go watch Apple on the tv. There's a line that before it even gets there, there's a line. They're launching a product, not releasing a product. And it was kind of cute because with Baratza it was the same, which is I was like, you guys have never launched one before and they got to do the very first one. They're like, whoa, this is so much fun. And so that construct of GTM was absent because it wasn't that they didn't appreciate it, it's because they were run a country was an independent company. And so Sydney wasn't there to sense to do anything for Canada was Canada's problem.

And Canada had their own go to market and how they were going to go do that. But now you're getting subscale of subscale a subscale, especially by the time you get to New Zealand in this kind of eat what you kill kind of model. It's like we don't have the PnL to go really launch something. And that's what drove it into a release model. But once it all got centralised and all of that, let's call it marketing spend came to the centre and then you put in functional expertise of Cliff Toring who came out of Nike and Ralph Lauren is like, okay, here's all the money now you need to build a process with the product team to start launching product and then start building brand. They had built brand, but the way Breville had built brand up to that point to be what they were, where I got cross-sold at Sur La Table was the quality of the product and word of mouth.

Dawn Kanelleas:
It was just inadvertent.

Jim Clayton:
It's just the best one.

Dawn Kanelleas:
Everybody knows. Yeah, word of mouth.

Jim Clayton:
They did it because they had the best product and it was all word of mouth. And so having that as a foundation and then putting just table stakes go to market on the top of it then starts to really unlock the cycle of the new products and getting the most out of them.

Dawn Kanelleas:
Another, I remember when you entered in Germany and you were trying to explain why you'd be successful was that you made the point that you're horizontal, you're focused on small domestic appliances and you own that shelf space and retailers love that. And I don't even know how relevant retailers are now because what is a shelf space in Amazon? What is a shelf space for you? When you've built the brand and you're going direct, is that still relevant or as you just mentioned, South Korea's coffee, they don't want a toasty maker or a pizza oven. Is that as relevant where the idea of owning a shelf in David Jones or in a German retailer when you launched in Germany, have you tweaked that bit of the strategy?

Jim Clayton:
So I'd say, I mean it's interesting because two bits to this thing, which is I've narrowed instead of widened, because you have to stand for something. If I say Sonos, you know what that means. If I say Dyson, it means something. If I say KitchenAid, it means something, which is you can't go global with 400 random SKUs you need to first earn the right to stand for something with those consumers.

And so actually I did the inverse, which was you have to narrow down and you've got to pick your shot of sorts to say, when we go into Korea, we're going to be this company. Not the 300, just this one. Once you've earned that, right, and you stand for that, then it's okay for Dyson to have a hair dryer.

Dawn Kanelleas:
Yes, of course,

Jim Clayton:
First they were vacuum cleaning, right? That's why they were best and they were innovative and all this stuff. And

Dawn Kanelleas:
Now they're heaters.

Jim Clayton:
So then they're like, air is air. I can move air in lots of different ways. I can suck it in, I can push it out and all wait, kind of see that. And they innovated again, look at that hairdryer. But they stood for something in a sense first with a footnote, which is what you see with most single category companies is they are direct in their domestic market and they're through distributors and all others. And the reason is the TAM of that one little category isn't big enough to get over the cost of Prague and the cost of the team and the cost of finance team. And that's

That and the taxes and this and the that, and this is what distributors are for, which is bringing great product into our country. But I sell 15 brands and I go talk to Harvey Norman.

Dawn Kanelleas:
And you build brand awareness through that, which of course then can feed into your online website.

Jim Clayton:
But this is where Breville's width actually help solve the problem, which is while we're going to go in and stand for something, I got a whole bunch of stuff. And so all of a sudden clearing that breakeven, first of all by centralising everything, I took it all the way to the floor, which is It isn't going to cost that much to begin with, but if you are the thing you want to be, plus there's this other stuff, well, that's enough to kick this thing over and go, you know what?

We can go direct in Germany with our eyes closed, it will float on its own. But if I was only one thing, then I'd be like, we're going to need a distributor there because there's no way we're going to sell enough in that one country to justify it. So this is in an odd way where Breville's breadth took the breakeven risk off the table with a new country, but we still picked our shot and narrowed to be a thing in that country and to start there.

Dawn Kanelleas:
Yeah, that makes sense. Just on NPD, because obviously that's what you lead with and that helps you to invest on everything else. Have there been any spectacular misses? What's the hit rate on NPD?

Jim Clayton:
I mean, the crazy thing, so when I was at LG, we had misses. I mean, the reason you have a miss is one, it costs a lot to do this stuff. And secondly, the shelf life of that product is 12 months if you're lucky, which is every year you have another one. So it really is kind of a dart at the board, which is we're going to make this TV, we're going to build 60 million of them, and we have to decide that now,

Which means you're going to sell 60 million. I dunno at what price, but you're definitely selling them because we had decided that it's almost like fashion. You got to decide how many blouses you bring in before you ever put it on there and then it's done. What's really interesting about this vertical, which changes everything, is that whatever product that we make, assuming it passes a minimum test, could sit on the shelf of a retailer for 10 years. It's very hard to not have a positive NPV.

Dawn Kanelleas:
True

Jim Clayton:
For real. This is a funny thing.

Dawn Kanelleas:
So the pizza oven was a success.

Jim Clayton:
Pizza oven's absolutely a success.

Dawn Kanelleas:
Right? Okay.

Jim Clayton:
Absolutely. So this then becomes a different kind of problem, which is, well, if it's a chip shot of sorts to go, well, it'll definitely pay out. Now you're really going, but would this one be better than that one? Because if I can stick it on the shelf for 10 years in 30 countries, it's going to pay for the cost to build. And so you're talking really about relative goodness. I can think of actually one that didn't work, meaning it's still not on the shelf. And I would describe it as a very kind of Breville in its ethic, which is

Dawn Kanelleas:
And you learn from these things that miss, right?

Jim Clayton:
But if Breville misses, they miss kind of for the same reason, which is they genuinely are foodies and they genuinely are trying to help you get something that you wouldn't get unless you went to whatever Michelin star restaurant with a push a button. I don't know what this was, but evidently Heston Blumenthal makes an egg in a certain way.

There was this really fancy way of cooking an egg, which is very, very complicated. And so they went and literally built an egg cooker that exactly mimicked this very complicated algorithm to create this very special egg, for breakfast.

Dawn Kanelleas:
So it was slightly runny.

Jim Clayton:
Whatever it was, a heston egg,. And I only eat scrambled, so I never had one. I don't know. So it did it, but it took, it would cost you $250 or $200 or whatever it was to buy the thing that could do it. That TAM was too small, which it was. There was a food problem. They found the food problem, they solved the food problem,

Dawn Kanelleas:
You wasted your time.

Jim Clayton:
The short version was not enough. People in the world. It or are interested at $200 for that specific egg. And I think, so if they fail, it isn't because they failed on the food side. It was beyond the TAM side of,

I thought everybody only had eggs this way and this would be important to them. And honestly, in the 10 years, that's the only one that comes to mind. And that's not a function of them being great. It's a function of being stake on the shelf for 10 years.

This is true of every company in this vertical. If you're innovating and putting a real product on the table, they will stay there for a very long time. And it's almost impossible to not have a positive NPV in that world.

Dawn Kanelleas

Thank you, Jim, for giving your time today to speak about Breville. If you are interested, please tune in for more episodes on this podcast as we explore some more of how Breville, has managed to export its innovation to the world.