23rd April, 2021

Why Silicon Valley was all hype for ‘Moochies’ founders

Silicon Valley nearly killed this startup. Now it’s a multi-million dollar business, writes Nina Hendy.

Silicon Valley is hailed as home to some of the world’s best and brightest startups.

Located in the South San Francisco Bay area of California, this hub of technological innovation is home to dozens major tech, software and internet companies.

But two best friends who have been in business together since 2006 describe their experience in Silicon Valley as toxic.

Adrian Lisle and Ryan O’Neill says Silicon Valley was supposed to be the golden temple of tech. But the pair left the ‘ego-fest’, having all but given up on their business dream.

“Our secret to our success was rejecting the Silicon Valley buzzword ‘startup’.

“Forget about being a startup – we wanted to be a profitable business,” said Lisle.

The pair co-founded Moochies – a wearable device offering all the capabilities of a watch and basic phone for children aged 5-12 whose parents deem them too young to be given a mobile phone.

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The Moochies startup story

Lisle and O’Neill met at university, both unhappy in their careers as a corporate lawyer and parliamentary advisor respectively.

Being best friends, they decided to leave their jobs and start a business together. In 2006, they founded a company designing and manufacturing men’s and ladies fashion accessories, which they wholesaled to over 3,000 stores in the UK and Australia, including retail groups like Harrods, Harvey Nichols and David Jones.

Lisle says building on this experience helped them face the novel challenges that came with building Moochies.

But the idea for the wearable tech itself came about after O’Neill was with his family on the Gold Coast in 2015 and noticed that his eight-year-old niece was prone to running around and getting lost in supermarkets and shopping malls, much to her mothers’ distress.

“Thinking there needed to be a solution to this, we sketched out some ideas, from a toy with a phone inside it, to a dumbed-down handset – however none seemed perfect because kids would simply leave them at home or in the car,” said O’Neill.

He flew to Hong Kong to meet with some manufacturers and the idea to create a wearable mobile phone was developed. Within six months, Moochies launched and since then the product has been developed with increased functionality and desirability.

Moochies makes a move

Moochies finds startup success beyond the Valley.
Moochies has found success despite striking out in Silicon Valley. Picture: Supplied.

The pair launched their smartphone for kids onto the Australian market in 2015. A year later, they decided to try their luck in Silicon Valley, chasing success based on the promise of investors in Texas. But they were disappointed in their experience.

They had contacts in San Francisco, so moved there to reach out to the venture capital sector to secure funding, as well as work with some tech partners for next generation devise. The tech partners were of real benefit, but the venture capital team was very difficult, they reveal.

“We moved to San Francisco with the hope to rapidly expand the business in Australia and to launch into the United States.

“To do this, we knew we had to have significant capital behind us to scale the business, which was a stretch beyond what we ourselves could afford,” said Lisle.

But they say their experience in Silicon Valley didn’t match up to the hype.

“Silicon Valley venture capitalists (VCs) are famously faddish, and we were there at a time when the VCs were looking at subscription software services only, and rejected out of hand anything that had a hardware element.

“The previous year hardware was the trend, with Fitbit being a unicorn, and had we been there at that time, we would have likely been a VC darling.”

Success beyond the Valley

After a year of frustrating meetings, they decided to focus on growing the business more organically, so returned to bootstrapping and reinvesting into the business to make it grow.

Moochies have always been a positive generator of revenue, and he has also focused on a viable business model from the start.

“In Silicon Valley, to be a startup, you don’t need to have a viable business model, and so this didn’t fit with what we saw with Moochies,” said O’Neill.

Once they rejected Silicon Valley and chased seed capital from Australia, the pair and their concept were welcomed with open arms, raising $2.5 million in a seed round from a group of investors based Down Under.

Since leaving Silicon Valley and receiving funding from Australian investors, Moochies has doubled it’s turnover every financial year since launching in Australia, achieving a turnover of $3.9 million in 2021, with a projected turnover this year of $8 million.

“The term startup can mean different things depending on who you’re speaking to and where you are,” said O’Neill.

“Our experience in San Francisco was that to be a startup, you were expected to be ‘a dreaming company’ – where you have ideas, but are not particularly expected to know how to monetise it, let alone make a profit and generate return for your shareholders.

“I understand this can work phenomenally well for companies such as Facebook, but there are a tonne of failures where ideas have burned cash and simply closed.”