My biggest mistake: Naomi Simson and David Anderson, co-founders of Big Red Group

Even Naomi Simson makes mistakes in business. In fact, she says any entrepreneur who doesn’t admit to the odd slip up is lying. For her, failing to have a difficult conversation about governance in the very early days of RedBalloon came back to bite her.

Here’s what happened, and how Simson and Big Red Group co-founder David Anderson got the business back on course.

The mistake

Simson made her biggest mistake early on in her business journey, and only realised the gravity of it much later.

She failed to have a serious, robust and difficult conversation with her business partner, who also happened to be her husband at the time, about what would happen in the event that they separated.

Unfortunately, in 2011, that’s exactly what happened. Initially, they both agreed to move into non-executive roles while maintaining seats on the board, meaning Simson had to step back from her role as chief executive officer.

The change also meant the board ended up in deadlock, making it difficult to come to a majority vote on anything and to move forward on any decisions or changes.

That was the reality for about six and a half years, Simson tells SmartCompany.

The issue limited “the investment, the innovation and the growth opportunity of what had become a household name”.

In retrospect, she believes moving away from the day-to-day running of the business wasn’t the right thing to do. Had she and her husband had a tough conversation years earlier, they could have planned better for such an eventuality.

“We were married for 20 years, we had already been married for 10 years by the time we started [RedBalloon] together — it’s just not the kind of conversation people have.”

The context

RedBalloon was founded in 2001, and enjoyed strong early growth as a pioneer of the ‘experiences’ trend. By 2011, it had delivered 1 million experiences to customers.

Simson launched her business blog in 2006 and published her first book in 2007. In 2010, she appeared on the Secret Millionaire Australia.

Naomi Simson. Source: supplied.

While it may have been her appointment as a regular shark on Channel 10’s Shark Tank in 2015 that cemented her fame among the general public, at the time of the split she was certainly well known in the business community and — crucially — the undisputed face of RedBalloon.

The impact

After Simson’s divorce, the board hired a new, external chief executive. But, with the founder no longer leading the business, things started to change.

Over the course of a couple of years it became clear the top line was “not doing what it should”, Simson recalls.

The cost of acquiring a customer had doubled, she adds, and the trajectory the business was on was not sustainable.

This was about the time now-chief executive David Anderson got involved. Thinking back to that time, he paints a pretty bleak picture.

“The business was lost,” Anderson recalls.

“That was leading to a disengaged workforce, increasing attrition and flattening revenues, and a downward trajectory on earnings.”

The fix

As far as Simson is concerned, it was bringing Anderson in as her alternate on the board that marked the turning point for RedBalloon.

Then, in 2017 the pair co-founded Big Red Group, which became the parent company of RedBalloon and, crucially, allowed Simson to get back into the office, bringing all of her entrepreneurial energy with her.

Anderson wanted to bring the focus back to outcomes and deliverables, he notes.

“From there, we created growth.”

David Anderson, co-founder and chief of Big Red Group. Source: supplied.

The shift did mean making some difficult decisions, Anderson notes, including cutting 40% of the workforce.

But, slowly the culture Simson had built started to recover. Having her around bought back the feeling of being part of something bigger, he explains (while Simson herself protests with much modesty).

Employees started to believe in the business again, and regain the confidence to push it forward.

“We’re now able to attract amazing talent,” Anderson adds.

“We’re back in a world where people really want to come and work for us.”

The lesson

This was not a mistake Simson and Anderson were keen to repeat. They’re not an item, and never have been. But they are close friends, and have set clear boundaries in the business relationship.

For Anderson, successful entrepreneurial partnerships require three key ingredients.

First, you have to be able to “argue the matter, not the man”, he says. When you disagree, the focus should be on what’s best for the business, not personal feelings.

Naomi Simson and David Anderson. Source: supplied.

Second, it’s important to have clear roles and responsibilities, and to trust the other person to manage what is their responsibility. The moment you start thinking you could do your partners job better, the problems will start, Anderson says.

And finally, partners must share a set of moral guidelines, which then filter down through the business and establish the culture. That means establishing some intimacy, and building relationships not only with each other but with other key stakeholders and employees.

If you know you’ve got your partner’s back, and vice versa, then you can have those tough conversations, safely.

“Only in those moments of vulnerability can you really actually genuinely drive through these issues.”