Friday, 16 Apr 2021

Unfiltered boss Jake Millar on regrets, plans for Africa and those Gucci loafers

Jake Millar has a problem. He’s being followed around by a red pair of Gucci loafers, treading wherever his name is mentioned online.

The ostentatious Italian shoes have become a common feature across comments sections and social media, emblematic of the schadenfreude accompanying the trendy jetsetting entrepreneur’s fall from grace.

“They’re an uncomfortable curse,” an exasperated Millar tells the Herald during a phone interview from the United States.

“I don’t even like them. I only ever wore those shoes at a public event once, which I personally organised to raise funds for youth suicide.

“I would never mention names, but the individual who first sensationalised the story about the Gucci loafers attended that auction. And you can quote me by saying it’s disgraceful and disgusting.”

The reality is that the full story can’t be squeezed into the narrow confines of a pair of highly impractical shoes.

Millar’s story is about a deeply ambitious entrepreneur with a tragic history, who through the force of his charisma was able to acquire millions of dollars in funding from some of the most experienced and sophisticated business people in the country.

In the five-year lifespan of the Unfiltered business, Millar raised around $4.6 million through a pair of capital funding rounds.

The line-up of backers reads like the membership list for an exclusive club of New Zealand elite. Kevin Roberts, Rob Fyfe, Garry Robertson, Guy Haddleton, Sir George Fistonich and Vaughan Fergusson are just some of the high-profile individuals who invested in the business at different stages.

The recent intrigue in the business was driven by the firesale of Unfiltered to Jamie Beaton’s Crimson Education for a figure understood to have been around $82,600 – a far cry from the $12m valuation the business once had attached to it.

That interest exploded into widespread morbid fascination when a number of Unfiltered’s former shareholders began coming forward to express their frustration at the sale of the business for such a measly sum.

Robertson, who held a 10 per cent stake in the company, was the most vocal among the investors, offering a scathing indictment of both the sale process and the price paid for the business.

Millar concedes that the business did not get close to what he had hoped for but defends the decision to sell, saying it was backed by 90 per cent of the shareholders in the business.

“It was the only option on the table,” Millar tells the Herald.

“Back in September of last year, I told shareholders I was going to do my best to run a process to try and sell the company. I also said that if by January 31 2021 we were unsuccessful, I would resign as CEO and let the board handle the asset.

“We went out and ran a sales process and Crimson was the highest bidder. We approached multiple companies from all over the world, but due to the incredibly complex environment we were running in, in the middle of a global pandemic over the festive season, Crimson put in the best bid.

“And what else do you do in that situation? Do you sell the business for what was a relatively small amount of money? Or do you shut the company down and let it go into liquidation? It was a no-brainer.”

Much of the investment put into the business had been expended by the time it was sold, but it isn’t entirely true that all investors were left empty-handed.

One former backer told the Herald that before Unfiltered was sold to Crimson, some investors from the second capital raise, which came in at around $2.4m, were given the option to pull out what was left of their investment.

“The board reached a decision that due to the complications from Covid, we were going to allow preferential shareholders from the last capital raise to take a percentage of their remaining capital out of the company and the company would buy back their shares,” Millar explains.

“Alternatively, they were able to keep their money in the company at a reduced valuation. Some of the investors took their money out and some kept their money in.”

Millar won’t comment on the final figures, but he claims most of those investors took out their money, clawing back what is understood to be in the vicinity of $600,000.

One investor who decided not to pull out his investment was US-based Kiwi Professor David Teece, who had put in what he refers to as a relatively small “symbolic investment” into the organisation.

Teece takes a pragmatic view of the failure of the organisation and the loss of his money, saying failure is the norm in a start-up scene where only around two out of 100 businesses ever enjoy any longevity.

“There’s always risk involved,” says Teece, alluding to hits and misses he’s had in his time.

Asked whether he thought the business was over-hyped by the founders in a bid to convince people to invest, Teece counters by saying exuberance and optimism is to be expected in the start-up community.

“You’re not going to invest in someone who gives you all the reasons why something isn’t going to work,” he says.

“All entrepreneurs are guilty of the cognitive bias where they overestimate the chance of something succeeding. You’ve got to be an optimist to be an entrepreneur. You’ve got to see the glass as three-quarters full. There always a degree of irrationality when it comes to the entrepreneurial spirit.”

Teece places the onus on the investor to consider what’s being offered by an entrepreneur and then measure that against the level of risk they’re willing to take.

The commercial conundrum

Those looking in from the outside had long sceptically wondered how the Unfiltered business model could ever scale and turn a profit large enough to justify its inflated valuation.

This was ultimately a question to which Millar and his co-founder Yuuki Ongina couldn’t find an answer.

“Covid-19 shortened the runway for a business that was still struggling to take off,” Millar reflects.

“No one is more sorry than Yuuki and myself that we did not deliver a better result for our investors. I will never apologise for my passion or enthusiasm, but I am deeply sorry for how it ended.”

So why has he left the impression on some people of fleeing to Africa rather than front up to his financial backers in person?

“This is nothing but a sensationalised narrative,” says Millar.

“I’ve never once said that I’m adamant about not coming back to New Zealand … at this point in my life I just have no interest in operating there. I’m an ambitious 25-year-old.”

He says that in running the business, the metric for success was often in landing the next big interview with a high-profile investor rather than focusing on the commercial side of the entity.

“If I had my time again, I would have obsessed more about our ability to get a scalable product to market faster while still caring deeply about the content. I think we obsessed too much about the interviews and not enough about the business model.”

The interviews themselves have also been the subject of criticism, particularly from journalists, who saw most of the questions as softballs and the format as lacking in direction.

“This always did my head in over the years,” counters Millar.

“The space we occupied was business education, not investigative journalism or gotcha-type stories. Our model was to democratise knowledge and to give people a platform where they felt they could share their learnings, their mistakes and also their success in a way that was unthreatening.

“We didn’t do interviews where someone felt that they were going to be attacked. That just wasn’t our style.”

A former investor told the Herald that while Millar had a knack for getting people to open up, the content would have needed a major strategic revamp for it be useful from a commercial or educational perspective.

The investor says he largely sees the content as serving an aspirational or motivational purpose within the context of the Crimson business.

The question marks over the commercial viability of the business did not stop investors from pouring money into the enterprise.

Most saw Millar as a young talent who would eventually work out how to make decent cash from the business.

Thanks largely to prolific YouTube creators, the increasingly cluttered online video industry presented a further hurdle to reaching profitability. And while Unfiltered did have a few enviable gets in its catalogue of over 300 interviews with elite business people, this simply wasn’t a large enough point of difference to attract more interest and investment to the model.

The first interview

There’s a photograph of a shaggy-haired Millar, dated 2010, that shows him sitting across from former Prime Minister John Key. It’s a setting that almost eerily foreshadows what Millar would spend the next 10 years doing – but it couldn’t be further removed from the controversy-free interview settings he would carefully curate later in his career.

Key’s visit to that Greymouth home came off the back of Millar losing his father in a skydiving plane crash in Fox Glacier, which killed nine people.

That chance meeting would linger with Millar through the rest of his schooling career and ultimately influence the trajectory of his life.

Millar, who became the head boy of Christchurch Boys’ High School in 2013, would reject a fully paid scholarship to study law at university in favour of starting a small business that focused on video interviews with successful New Zealanders – a venture initially funded through the sale of his car.

Oompher, essentially Unfiltered version 1.0, would eventually be sold to the New Zealand Government for a six-figure sum and set the scene for his next venture.

His experience running Oompher did two things. It gave him credibility in the sense that he created and sold a business, and it had also given him access to 55 high-profile New Zealanders.

That type of access, especially given the long-form format of the interviews, is almost unfathomable for a relative outsider from a small town.

Over time, he grew increasingly comfortable in the company of the elite members of society, evolving his sense of style and honing the charm that would eventually see him win the confidence of investors – despite his young age and lack of a university qualification.

The profile Millar had garnered by telling his story saw investors clamour to put in funds when Unfiltered launched its first capital raise. But even in those early days, the level of investor support and interest already created a few problems.

“We ended up having something like 35 shareholders, and that’s an enormously complex beast to manage,” says Millar reflecting on his first capital raise, which injected $1.2m into Unfiltered.

“In the future, I would be much more likely to raise capital from a significantly smaller group of shareholders who are uniquely positioned to add value to the proposition.

“That’s not to say I’m ungrateful for the investors because that couldn’t be further from the truth. I’ll always be deeply humbled that they were willing to support me as a young entrepreneur.”

Millar’s profile only grew from there and every additional interview gave him access to another high-profile person, who was often impressed by the person sitting on the other side of the camera.

As one investor told the Herald, “Jake has remarkable EQ and the ability to make you share things you didn’t think you would.”

Every new investor that came on board only fuelled the hype cycle and gave the business a glow of credibility. And while there were many doubters whispering their cynicism at lunches and in off-the-record discussions, there was also the sense that so many high-profile business people couldn’t possibly get it this wrong.

The reality, of course, is that they did.

Regrets, I've had a few

One thing that’s been lost in the coverage of Unfiltered is that this was not a big or nationally significant company. The attention, interest and hype surrounding this story has always been disproportionate to the size of this business.

The collapse of this business did not rock the stock market, it did not deprive mum and pop investors of their life savings, and it did not lead to mass unemployment.

In many ways, Millar was the maker of his own misfortune. His undeniable talent for courting media attention over five years magnified the spotlight that would eventually be trained on his company’s demise.

“There were a lot of cameras pointing from Unfiltered and also at Unfiltered,” says Millar.

“One of the downsides of growing a business through PR is that when things are going well, often entrepreneurs are happy to talk about those things and when they’re not going well, the media wants a response. I don’t have a problem responding to those questions.

“I think it’s a healthy thing to do post-mortems on these companies and to dissect the reasons that they ultimately didn’t work out so that other people can learn from them.”

One thing Millar didn’t count on was the level of enjoyment some would derive from reading about the demise of his business.

The sometimes brutal social commentary that has followed Millar’s name through the internet has led him to delete his social media accounts and also reconsider how he would go about running his business in the future.

“New Zealand has a real problem with success and an equal problem with failure. We love to pull people down who fail. And often when people are successful, they also have a really hard time,” he says.

“In the future, I’d be much less likely to talk to the media. I’d be much less likely to build a company based on PR as way to tell our story…

“I also worry that it will deter young people from giving it a go in the future. And that’s just a shame.”

Since the capitulation, much has also been said about his lifestyle, fashion choices and elaborate parties.

Millar can’t hide the anger in his voice when asked if he was living too extravagantly given his company wasn’t turning a profit.

“I held some modest assets independent of Unfiltered, including shares in listed and unlisted companies, which I realised value from. However, how I chose to spend my own money was a personal decision.”

Millar wouldn’t comment on his salary while serving as the chief executive of Unfiltered, but a former investor suggested it was in the vicinity of US$100,000 ($135,000) per annum.

There have also been criticisms of Millar’s travels around the world to interview these high-powered individuals, but he defends this by saying it was part of the business model. The entire idea was essentially built on interviewing successful people.

“Our financials, budgets and executive compensation were approved by our directors,” he stresses.

Despite his ardent defence of his lifestyle, Millar says he could have toned it down a bit and admits he may have been guilty of emulating those he spent so much time with.

“I was travelling around the US interviewing founders and CEOs of billion-dollar companies. Many of their sons and daughters became friends, so of course there was a desire to keep up with the lifestyle of my friends… Would I do things differently now? Of course I would.”

Sub-Saharan Africa, really?

Millar may be down, but he hasn’t lost the self-confidence and bravado that he’s built his personal brand on.

“The sheer number of job offers coming in from multibillion-dollar companies has been overwhelming,” he tells the Herald.

Asked to name a few of these companies, Millar declines because “those offers are still in conversations”.

The other big question mark hangs over his revelation that he’s going to pack it all up and move to Sub-Saharan Africa. So, what’s the thinking behind that?

“Sub-Saharan Africa is home to more than one billion people, half of whom will be under 25 years old by 2050. It’s the world’s largest free trade area. The opportunities are enormous.”

Asked for details about his plans, he reveals only that he’s eyeing Nairobi, Kenya, as his next potential destination.

None of his job offers have come from this region, but he seems undeterred about the prospect of taking the leap.

“I’m ready for a new challenge,” he says, leaning again on that classic entrepreneurial trope. As he ventures out he will, however, have to become accustomed to the added weight of failure on his shoulders. It could be a long walk to redemption. Gucci loafers are definitely not recommended.

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