Flagship: The startup being built from Afterpay founder Nick Molnar’s parent’s basement

Read the exclusive article here: smartcompany.com

Siblings can leave big footsteps for us to follow in, and in the case of Simon Molnar — the brother of Afterpay’s Nick Molnar — ‘big footsteps’ is putting it lightly.

But Simon is lacing up his shoes and taking big strides in the best way possible: with Flagship, a startup of his own.

Flagship is a retail-focused tech company, looking to bring brick-and-mortar retail into the digital world by helping in-person stores access the same data, insights and recommendations that e-commerce players can, such as product views, conversion rates, and inventory levels.

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In an exclusive chat with SmartCompany at last week’s Online Retailer’s conference, Simon said the idea came to him when working with Venroy as a consultant for its digital site.

“I started asking questions they couldn’t answer,” he said.

“And the more I thought about it when I spoke to other retailers, the more I realised that this wasn’t unique.”

This consistency across the industry “didn’t sit well” with Simon, with bricks-and-mortar sales driving a minimum of 70% of the revenue for many of the retailers he was speaking to.

Simon has always worked in retail, so the realisation that all of these players in the market had an avenue where they had “absolutely no idea what’s going on apart from selling” compared to their e-commerce counterparts was how the concept of Flagship started brewing.

“The goal was: how do we bring more of that e-commerce world into brick-and-mortar; the visibility, the data points, the control?” Simon explained.

“How do we bring that into this world and give more visibility into what’s happening before the item actually sells?”

On display at Flagship’s Online Retailer exhibition stand — which won the 2022 Best Stand Award at the event — the team demonstrated how the concept works: a tag is attached to each item of clothing and, when moved throughout the store, sensors pick up its location, allowing for the tracking of their whereabouts and usage in real-time.

This data can then show when an item has been tried on and subsequently purchased, which items have been left in the change rooms, and how much inventory of a certain item remains.

In a post-pandemic world, Simon admits people often question why he would choose to build technology for bricks-and-mortar retail.

But he acknowledges there’s “always been a power struggle between online and offline”, and that such a disparity is actually becoming more evident post-pandemic, not less.

“A lot of people call us disruptive technology,” Simon said.

“I don’t like to call us disruptive because we’re not disrupting anyone. We’re coming into a space that hasn’t existed before.

“And all we’re ultimately trying to do is improve efficiency, improve processes, and save retailers cost by not having to spend too much on manpower.”

Brother in arms

Having the likes of Nick Molnar on your side while you build a startup is likely what a lot of founders wish for, and Simon doesn’t shy away from working with his brother as he builds Flagship.

In fact he often goes to Nick to sense check ideas and discuss strategy, and tells SmartCompany that Nick acts as somewhat of an external advisor to the business.

The connection also helped Flagship with its early-stage funding, as a lot of Afterpay’s early investors backed Flagship, too.

This funding helped build the technology back in October 2020 — right in the depths of the pandemic — but Simon explains the first real ‘launch’ of the hardware was during Afterpay’s Edit Collection last October.

Back then, Flagship’s tags were still in their first iteration: battery powered illusory beacons, which helped “prove the concept”, Simon says.

Yet the battery-operated tags demonstrated some flaws: largely, the risk of going flat.

Now the tags are completely battery-less and draw power from sensors around the store, making it a more sustainable, environmentally-friendly and practical model.

But Simon’s brother isn’t the only family member helping with Flagship’s growth: the team of seven are currently working out of Simon and Nick’s parent’s basement in Sydney.

And while Simon and the team love being there — especially when his mum brings cookies down for everyone — with growth plans in sight, he recognises Flagship can’t work from his parents basement forever.

At the moment, Flagship’s focus is on apparel where there’s a “clear line to purchase”, but he’s not shying away from servicing other retail sectors in the future.

So while we can’t expect to see Flagship tags on every product in Bunnings next week, Simon still has ambitious plans for the next few years — most prominently to bring this technology online as well as in-store, allowing retailers to access the full range of data all through Flagship’s AI.

“Right now we’re focusing just on bricks-and-mortar, but the goal is to blur the line.”