Flexischools – an entrepreneurial success story

The average lifespan of an American company is 11.5 years. 50% of start-ups fail within the first 6 months.  So, what is the secret behind Flexischools, a quietly achieving Australian company that has been running for 17 years and captured 25% of the national market, while generating an off shoot which has recently been sold to a major bank at an “undisclosed sum”.

Steve Austen is one of the founders of Flexischools.  He is also my son in law.  When I first met Steve, he was on the fast track with Siemens, a global engineering company.  Returning from a global leadership course Steve, together with his friend Chris, decided to leave their promising corporate jobs and set up their own business.

As Steve put it: – “We wanted to create a work environment that we enjoyed.  We wanted to work in a company with whose values and purpose we aligned. We also wanted the confidence and the freedom to fully express our gifts so that we got the rewards of our hard work”.

Change, change and more change.

Initially Chris and Steve set up Fleximeals, a company providing executive lunches.  Their business model relied on a government tax concession.  Steve’s brother Geoff invested $250,000 in the startup.  Just as Fleximeals was beginning to make money, the government removed the tax concession which “wiped out the economics of the business overnight”.  That’s when one of Steve’s cousins, who ran a school canteen, told Steve about the needs in that industry.

This was before Uber Eats or Menu log were popular.  School canteens in Australia were mostly run by volunteer parents.  Children wanting to buy lunch brought a paper bag to school with their order written on the outside and the exact cost of the order inside.  The bags were collected in the morning and taken to the canteen where the volunteers made up the orders.  Flexischools provided canteens (‘tuck schools’ in the Australian vernacular) with a list of all ingredients needed, printed labels to go on each lunch and removed the need for volunteers to handle cash.  In time Flexischools went directly to the suppliers of the ingredients and eventually providers of the whole lunch.

Parents, schools, and kids loved Flexischools.  I would see Steve on the nightly news or a series of current affairs programs where the tuck shop operators and the parents raved about the ease and confidence Flexischools brought to them.  In time, the schools asked Flexischools to extend their service to cover all the ancillary services – such as school uniforms, textbooks, and excursions.  Of the 4 million school children in Australia, 1 million use Flexischools.

As Flexischools grew because of the demand for their services (supported by Geoff’s ability to attract investment finance), Steve started to look for another way to use the computing brilliance behind the Flexischools model.  He came up with Lantern Pay.  A financial servicing product for health and allied industries.  In time, Lantern Pay became the number one competitor to HICAPS, the dominant player in that market in Australia.  In April 2022, HICAPS bought Lantern Pay.

What can we learn from the Flexischools story?

• Staying close to your customers helps to develop a product people want.
  One of the secrets to developing a successful company is to find a market need and fill it with a good product.  Flexischools has done this brilliantly. “When we launched in the school market” Steve told me, “We were a couple of young engineers, and we had a lot to learn.  We would go out and sit in Parent and Citizens meetings for up to 90 minutes in small school districts to be able to talk for 5 minutes to say what we did.  We got to understand and reach the customers, to know what they wanted, what worked.  That’s how we moved from just lunches to textbooks, excursions, and uniforms.”
  Recently Flexischools hired a new leadership team (the founders have moved on to other things).
  “We make sure that the new CEO and the new starters all go out and volunteer in schools so that they can learn what is happening”.
  When recruiting the new CEO, Steve pushed very hard for a woman.
  “80% of our customers are women and women are great at building community-based cultures. Our clients are school communities”. Staying close to the customer has been one of Steve’s key mantras.
• Go with the flow!
  Under Steve’s watchful eye Fleximeals became Flexischools, Flexischools expanded from lunches to ancillary school products.  Although originally Flexischools serviced volunteers, demographics change (“most families now need both mums and dads to earn”). Flexischools struck up partnerships with suppliers and now services their needs as well as the needs of the schools.
  On more than one occasion, Flexischools has entered joint ventures with much bigger slower moving companies.  These joint ventures have rarely worked since Flexischools is flexible, creative, fast moving and customer centered.  When there wasn’t a cultural fit mergers were quickly undone with Flexischools returning to its core values and operating style.  The development of Lantern Pay in a completely different industry was full of false starts and pivoting, resulting in a winning product that satisfied customer needs.  When the opportunity arose Lantern Pay was sold.
  Steve was not aways quick to change.  In business he has found that “going with the flow”, “failing fast to learn fast” has been invaluable.
• Be interdisciplinary.
  Steve told me that cross functional teams were a big part of Flexischools success.  At Flexischools “a small number of people just got into a whole bunch of different things. I’d be the person who did the marketing and the product development, and I would write some code and go to some sales meetings and sell some stuff.  You have to be there because you’ve got to be so in touch with everything so quickly to just see what’s working and what’s not working. You need a small number of people who are willing to just spread around whatever needs to be done”.  Even now that Flexischools has a new team of specialists, the culture ensures that everything is done in an interdisciplinary manner.
• Stay current with technological innovation.
  When Flexischools started customer interfaces were way less advanced than they are today.  Steve told me that “customer expectations just keep going up” so the interfaces of even small firms must be as functional and attractive as those of Google or Amazon who have way more funds.  Even a national company like Flexischools is operating in a global marketplace.
• Culture is everything.
  From the beginning Steve and Chris set out to create a place where they (and others) would want to work, where they could grow and learn, be creative and be rewarded for their efforts.  That is still at the heart of the Flexischools’ culture.  This became particularly obvious when Flexischools merged with several big banks.  The banks had specialists who were uncomfortable to stray from their own disciplines.  The size of the big banks often distanced staff from the needs of the clients and work became very inwardly focused.  Steve told me “Hierarchy, really dampens down innovation, risk taking and interdisciplinary work.”  It seems that the big banks were just too slow to move, too slow to innovate and way to hierarchical.

As he grew Flexischools, Steve moved the base of his work away from Sydney into a small coastal town on the East Coast of Australia.  For many years his office was a few minutes’ walk from the beach.  He would leave home for his 5-minute commute in the morning wearing his board shorts and riding his electric skateboard.  In his spare time Steve performs in a rock band, writes music and has taken out his pilot’s license.  His dream of creating not just the workplace he wanted but a lifestyle of his choice has come true.  He has grown not just a company but a family, a community and he himself has grown.  He is currently having a well-earned rest, taking 2 months “long service” leave to ponder on what to do next.  Watch this space.

Written by Margot Cairnes.

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