maverick: ‘No one was doing that kind of cold-calling in Sydney—but I’d seen the guys on Wall Street doing the same thing. It’s hard, but it worked. Within six months, I was writing $300,000 to $400,000 of business a year, taking home the best part of $200,000.’
Soon afterwards Geddes was headhunted by BT
Financial, where he stayed for a couple of years before moving on to broker JBWere. His value-investing approach meant standing firmly against the trend. ‘Back in 2000, when the technology bubble was inflating, every body was piling into it. But I just knew it was going to crash. You see, I’d seen it all before, in 1987, when I lost a huge chunk of my own money that I’d spent half my life accumulating. That really hurt. And I could see all the warning signs again: hugely overvalued companies based on virtually no earnings, massive speculation, the madness of crowds. It had gone crazy.’
While many of his peers were cheerleading for high- tech, ‘I was advocating gold and energy stocks, both of which had been completely out of favour and were coming out of long bear markets. I think a lot of p eople thought I was a bit mad. It turned out to be a great call, because gold and value stocks such as energy companies did exceptionally well.’
86 HOW I MADE MY FIRST MILLION
Geddes tried to get his clients out of tech and into these value stocks, but was largely ignored. ‘I showed them graphs of the ’87 crash and the past and present Nasdaq index, and said the same thing was going to happen, but most of them were so sold on the tech story they’d just go and buy tech stocks through another broker,’ he says.
That was a turning point for Geddes, who found the experience so exasperating that he decided to quit. ‘I just thought that I’d be better off backing my own
ideas: starting my
It’s tough as a own newsletter and
‘
stockbroker, because
you’re interacting with website where I can p eople’s greed and fear, ‘ write my thoughts which are very intense down and clients emotions.
can read it or throw
it away, but I’m not
going to go hoarse on the phone every day giving p eople advice they’re just going to ignore.
It’s tough as a stockbroker, because you’re interacting with p eople’s greed and fear, which are very intense emotions. It can be exhausting, like banging your head against a brick wall, especially if you’re a contrarian investor like me.’
Geddes set up his own independent research house and named it Fat Prophets. Thanks to some
astute stock- picking, his small base of initial sub-scribers quickly expanded—to the surprise of some early nay- sayers: ‘P eople thought it was crazy to call ourselves Fat Prophets, because it’s a bit “out there” and not very conservative; they said investors wouldn’t trust us. And they were probably right in the very early days, but we soon made some good calls and our reputation started growing.’
Although he had been earning good money for some time, Geddes says it wasn’t until 2002–03, when the business had gained some momentum, that he made his first million—a combination of his personal share portfolio and the value of the business. But his response was just business as usual: ‘I certainly didn’t stop and think that I’d made it, or that it was any kind of milestone.’
The business was so successful that Fat Prophets opened an office in London and now has a funds- management arm as well as a listed investment company with $50 million under management. Geddes has also launched a popular range of so- called separately managed accounts: preselected portfolios of shares for investors. And soon he wants to launch a hedge fund.
His mantra, ‘There is no such thing as failure in business,’ has made him fearless, giving him the drive to make Fat Prophets a truly global
88 HOW I MADE MY FIRST MILLION
brand and the belief that he can. So what is Geddes investing in now? Not property, that’s for sure. ‘I sold my apartment in 2003 and have used the money to much better effect by investing in equities,’ he says. ‘You’re better off renting and investing your money in shares than buying a property right now. Why buy an underperforming asset that might yield 2 per cent when you could get into shares that will give returns of five or ten times that much? I think resi-dential property prices are at risk: interest rates are going to rise, and in eighteen months or so I think you could see prices falling and some good buying opportunities springing up. But I won’t be buying anything till I see some value in the market.’
When Geddes says his investing philosophy is not about the money, that isn’t entirely true. It is about the money, but as an abstract score rather than hard cash. The dollars he earns are just points in a big game called Success in the City. All Geddes wants is to be right, see his theories borne out and prove his critics wrong. So far, so good.
Nick GardNer
GolDen ruleS
1. Follow your passion. If you’re passionate about making a sandwich, open a sandwich shop.
2. be prepared to work like hell.
3. Surround yourself with excellent p eople—
p eople as smart, if not smarter, than you who complement your skills.
4. Don’t be afraid of failure—there is no such thing as failure in business. If you go down a path and it doesn’t work, go down another path; you will always find a way. Once you lose the fear of failure you can do anything.
5. Maintain your focus and the determination to achieve what you want.
6. Have fun.
A Career Well
Matched
Trudy Gilbert
elite Introductions
International;
established 2005;
five employees;
$1.2 million turnover
Money can’t buy you love,
Photo: Frank Violi
or so the saying goes. But
whoever dreamt up that one hadn’t met Trudy Gilbert, Sydney’s Cupid and boss of the most successful upmarket dating agency in town.
For $2695 she’ll make sure you have at least six dates in six months, though it’s unlikely anybody will need that many: nearly 90 per cent of
her first introductions choose to see each other again. For her, love is half the reward: ‘It’s been amazing. It’s just so satisfying when you get a call to say they’re moving in together or are in a serious relationship. I feel like I’m making the biggest difference to p eople’s lives.’
Clients can put the six- month membership on hold for a maximum of two years if they start seeing somebody regularly. It’s a concession Gilbert regards as practical as well as ethical. ‘It wouldn’t be fair to meet somebody on a first date, see them for six months, then have your membership expire. My business has grown by word of mouth so I want my clients to be delighted with my service.’
And selling love seems to be recession- proof.
Despite the global downturn, Gilbert’s business has soared. ‘I think the crash caused p eople to re-evaluate and become less materialistic,’ she says.
In the good times, ‘A lot of p eople made and lost a lot of money, but it didn’t make them happy. So I think they started asking themselves how they could be content. And for many the answer was with a fulfilling relationship.’
Gilbert, who had her first child, Siena, in June 2009, and now has an office in Melbourne and is eyeing Brisbane as the next location for her growing empire.
92 HOW I MADE MY FIRST MILLION
‘It’s actually a great time to be an employer because I’ve got such a wide choice of potential employees,’ she says. ‘Office space is cheap, it’s cheap to advertise if I need to—all in all, it’s a really good period for the business. It shows there are growth opportunities even in recessions. You mustn’t be afraid to expand just because the economy as a whole is stalling.’
Gilbert is a natural matchmaker. She got the idea for Elite Introductions after arranging twelve of her friends into six happy couples.
Two c ouples are now married, and one guy has bought an engagement ring and is plucking up the courage to propose. ‘I’m good at seeing what makes p eople tick. After putting so many of my professional friends together, I thought I could make a go of this as a business. I started researching the market and realised that nobody was really catering for p eople like them—or me. I read about a company in America that was introducing members of New York high society, which obviously works because you’re introducing like to like. So I applied the same principle to professionals and executives in Sydney.’
If this hadn’t been a winning formula, Gilbert would have come up with something else.
She’s one of those idea- a- minute types, fizzing with barely contained enthusiasm and infectious
self- assurance, something she deems essential to any budding entrepreneur. ‘You have to be confident and present a positive image to staff and clients. You are the embodiment of what you want your company to be, and your staff will draw inspiration from that.’
Gilbert grew up in Sydney’s eastern suburbs, the daughter of a clothing sales agent. Naturally charismatic and witty, her father would take her out to work with him. The experience showed her that work could and should be fun. ‘It was just like he was going out and visiting his friends.
Every visit to every retailer was full of laughs and good humour. It didn’t seem like work at all.’
Her mother stayed at home while Trudy grew up, but then became chief executive of the syna-gogue near their home in Rose Bay.
‘I get the business side from my mum and the p eople skills from my dad,’ Gilbert says. ‘After seeing how he worked, I knew I wanted to run my own business. And when I left university and took a job in marketing for a hotel group, I found the bureaucracy frustrating and the work politics a waste of time and resources.’ She soon got fed up and, aged just twenty- three, went to Italy. After a stint back in Sydney and some more unsatisfying jobs she returned to Italy, where she was hired as a communications consultant,
94 HOW I MADE MY FIRST MILLION
teaching companies how to improve their sales and marketing techniques. ‘After a while I thought, Hang on! I could do this on my own. I don’t need to be working for this company.’ So, at twenty- seven, she started out on her own.
‘It was a great success. I had clients including Ferrari, Dolce
I get the business side & Gabbana and La
‘from my mum and the ‘ Perla. In my three p eople skills from my years in Italy, I man-dad.
aged to save $50,000.’
Then she returned to Sydney to settle down. Two months after arriving in Sydney she met her husband, Philip. ‘We were set up by a c ouple that I’d set up together. Three months later, Philip and I were engaged.’
The marriage has lasted, and matchmaking is also going well. Elite has more than 500 clients, split pretty evenly between men and women.
But even those who stump up the full membership fee are not guaranteed admission to Gilbert’s books. She turns down up to 30 per cent of applicants. ‘I am judged by the quality and integrity of my clients,’ she explains. ‘I deal exclusively with highly intelligent, successful professionals. If somebody doesn’t fit the bill, for whatever reason, I won’t take them on.’
She doesn’t have to give out much dating
advice, because her clients are savvy and successful with good p eople skills. But still, p eople make mistakes. ‘Very often men talk about work too much or hog the conversation. I tell them: Be positive, don’t talk about the mad, the bad or the sad in your life. Put your best foot forward and give the best possible impression.’ Another tip she says works wonders is for the man to pay the bill without the woman’s knowing: ‘It’s a really smooth move to just slip the waiter your credit card on the way to the bathroom and have the bill settled so that when you go to leave, it’s completely seamless. It makes you stand out as a class act.’
As for her first million, Gilbert made that in 2005 just after she turned thirty- four. ‘I knew we were close to it, but my accountant rang to congratulate me,’ she says. ‘I promised myself that I’d be a self- made millionaire by the time I was thirty- five, and I’ve done it with time to spare.
My husband and I are going to the W hotel in Bali to celebrate.’
Gilbert doesn’t attribute her happiness to money. ‘Success is not about money. You need to be happy about who you are and what you have.
My parents instilled a fantastic work ethic in me and I am so grateful, because thanks to that it doesn’t matter if I have money or not. They’ve
96 HOW I MADE MY FIRST MILLION
made me a confident and rounded person who’s comfortable in my own skin, and that is what really counts.’
Nick GardNer
GolDen ruleS
1. Do something you truly love—your excitement and energy motivate p eople around you.
2. Have a clear vision and create a solid company culture where employees feel valued, heard and rewarded.
3. be self- confident but humble, and commit yourself to a life of constant learning and development.
4. Treat p eople with dignity and respect, and maintain uncompromising integrity in everything you do. giving honest value earns you respect.
5. be recession proof. Don’t be at the mercy of fashion or fickle trends.
Success On The Line
John Ilhan
Crazy John’s;
established 1991;
800 employees;
$200 million turnover
Think about how much
of your working life is
Photo: Alex Coppel
spent sending and reading e- mails, then try to guess how many hours a day a platinum- level chief executive like ‘Crazy’ John Ilhan is tied to his keyboard.
Try none. And that’s not because the mobile mogul has chosen to retire and consume some
98 HOW I MADE MY FIRST MILLION
of his $300 million- plus fortune. No, the Melbourne- based Ilhan simply refuses to use a PC, hasn’t had one in his office for more than five years, and blows a raspberry at the idea of a BlackBerry. ‘Honestly, I wouldn’t even know how to turn a computer on any more. If I pretend to use one at work the guys all start laughing because they know I’ve got no idea,’
he explains.
Ilhan booted out his computer because ‘I was losing so much of my day on it, losing business partners, losing staff,’ he says. ‘I like to communicate by vision, by sight and verbally, and I thought, I can’t keep doing this. So my executive assistant, Amanda, took over. She reads everything. She knows what I’m thinking and how I do things.’
E- mails are presented to him in point form, and Ilhan says everyone gets a response of some kind—he just doesn’t have to write it. He’s not big on paperwork, either. ‘I’ll never read anything longer than three pages. I’m not good with detail,’ Ilhan admits. Avoiding both forms of mental clutter frees him up for the important stuff: ‘It means I get to spend time doing the things that really matter. I’d rather go around and visit stores, meet with staff, get involved in training, be with the guys on the front line, give them motivation.
That’s my drug. I was tied to the office. Now I enjoy my job a whole lot more.’
For Ilhan, it’s
always been about
It means I get to spend
the personal touch. ‘time doing the things that He has the patter really matter. I’d rather go of a lifelong sales- around and visit stores, man but little of the meet with staff
‘, get
involved in training, be
impersonal
fakery with the guys on the front most p eople associ- line, give them motivation.
ate with that role. In That’s my drug.
short, he’s convinc-
ing. He must have been compellingly so back in 1991 when, aged twenty- five, he set up his first mobile- phone shop. It contained precisely zero mobile phones—except his own. ‘I only had $1000 in my pocket. I borrowed about $2000
off Mum and Dad to buy a phone, and a lot of my mates were tradesmen so they helped build the place, which was basically just a bench with brochures,’ he says. ‘I had enough money in my pocket to buy one phone at a time—they were thousands of dollars each still at that stage. So I just sold off brochures. I’d sell a phone, shut the shop and drive to the city and buy it for the customer. I had to sell myself, because that’s all I had.
I was a bit naïve and young and stupid because, when you worked the numbers, how could it
100 HOW I MADE MY FIRST MILLION
work? But when you believe in yourself it’s not the numbers that matter, it’s about, “I can sell.
P eople like me.” It’s that young, naïve attitude, and you just work like crazy.’
Ilhan, the Turkish- born, fiercely proud Australian whose real first name is Mustapha, hasn’t eased up on the work ethic since. Initially, he laughs off suggestions that he once worked eighteen- hour days. ‘No, it wouldn’t be that much. Let’s see: I start at 7 a.m. and it would only be, um, sixteen hours a day. But then I do usually go until midnight, so it probably is eighteen hours. Oh my God! That’s a lot . . .’
But it’s mostly recreation, he explains: ‘When you do something you love, it’s not really work.
And I’ve been doing it for sixteen years—it’s just part of what you do. I’ve been lucky, I’ve chosen a field I love, so it’s not work. I love dealing with p eople. I love the challenges of growing a business. It’s like a work of art—you always try to improve it.’
After dropping out of university two months into an arts degree, Ilhan took a temporary job on the Ford production line in his home suburb of Broadmeadows, Melbourne. He ended up staying more than three years but left after becoming frustrated that graduates were getting promoted and he wasn’t. A job came up selling
phones at Strathfield Car Radio, and as soon as Ilhan started he knew he had found his calling.
He quickly became the company’s top salesman.
Then a dispute over his commission payments made him so angry he walked out—and set up his own shop, right across the road.
After building a loyal base of customers, he got his big break when Telstra offered to back his business. By 1994 he had half a dozen stores in Melbourne, a rate of growth he now realises was excessive: ‘I relied on relationships and handshake deals rather than contracts. I grew too quickly and then Telstra changed its strategy and cut our commissions and I didn’t get paid for about six months,’ Ilhan recalls.
While he was feeling the pressure financially, his personal life also hit rock bottom when his brother committed suicide. ‘At the same time, the competition really hated my guts and they used to leave threatening notes on my wind-screen saying, “You’re finished now.” It was a tough time,’ Ilhan says. ‘That was 1996, and I’d already made my first million, but then I very nearly went bankrupt. I was in administration, so I lost all that. The first million was the hardest to make and the easiest to lose.’
The experience taught him some hard but valuable lessons. ‘After that I realised my own
102 HOW I MADE MY FIRST MILLION
weaknesses and I employed p eople with finance backgrounds. I ended up being the visionary and employing p eople who could get me to that vision.’
The only hurdle Ilhan still had to clear was his business name. Telstra execs were not big fans of the Crazy John’s label. ‘They hounded me, saying it was unprofessional and it wouldn’t work.
That went on for years, but they were so wrong,’
Ilhan laughs.
By 2003 he was on a roll, opening seventy stores in eighteen months and crushing all rivals—including Strathfield Car Radio. Ilhan then found himself at the top of BRW’s Young Rich List in 2005, with a fortune estimated at $300 million. ‘It was funny seeing that, consider-ing what I had started from,’ he says. Success had crept up on him: ‘You just work hard and the rewards come. It’s not like winning Lotto overnight—you don’t think, Wow, I’m rich! I only really noticed it when they mentioned it but, being a bit competitive, I did like being No. 1.
The $300 million figure was right at the time. It’s a bit more now, but in the end you don’t work for the money. At the start you do, because you have to pay the bills. But after that it becomes about challenges and success.’
Ilhan clearly remembers the first thing he
bought when he started feeling rich: a second-hand, smashed up brown Porsche 930. ‘When I was sixteen I said to Mum, “One day, I’m going to have my own business, a house by the beach and a Porsche!” I couldn’t afford a new one, but I loved that car. I never did buy a new Porsche.’
Instead, Ilhan now drives a Bentley, after ditching his Lamborghini. He’s also got the $15 million home by the beach, in Brighton, but the house he’s proudest of is the one he bought for his parents, with whom he lived until he was thirty.
‘I built them a new house in Broadmeadows because they refused to move; they thought it was a big thing just moving across the suburb,’ he says.
‘It was wonderful to be able to do that for them. I wouldn’t be here if it wasn’t for their support. They said, “If you fail, there will always be a bed here for you—we’re always behind you.” And that support was crucial, because I knew if I failed they’d still love me—so I could try anything.’
StepheN corby
GolDen ruleS
1. Always have humility.
2. be compassionate.
3. be ruthless with your business strategy, but not with individuals.
104 HOW I MADE MY FIRST MILLION
4. Always give back to the community.
5. Whatever you do, pick something you love and never, ever give up.
6. Take risks and learn from your mistakes.
ADDenDuM
John Ilhan died shortly after this interview was first published, in October 2007.
His 75 per cent stake in Crazy John’s automat-ically passed to his wife, Patricia. She held on to it for a while but, with four children under ten, keeping it on the fast track proved too much.
Ilhan was replaced as chief executive by Brendan Fleiter, who had worked with him since 1996. ‘The whole company was in shock for a while,’ says Fleiter. ‘So many p eople knew him personally, and his very first employee still works here after seventeen years. So it was a personal loss as well as a professional one. But we knew that if he was watching, he’d want us all to get on with it. He would have thought it was a great branding exercise—great publicity. I joked with staff afterwards that the one day he got his face on the front page of all the papers, he wasn’t around to see it. But he would have wanted every body to keep the business growing.’
A year after Ilhan’s death, his wife and other shareholders sold the business to Vodafone
Hutchison. ‘The slowdown has hardly hit us at all,’ says Fleiter. ‘Mobile telcos is a very defensive place to be, and we are still expanding with new products such as pre- pay and contract mobile and broadband services.’
Ilhan, it seems, put Crazy John’s on a sound enough base that it can get along calmly without him.
A Life Of Talking
Points
Alan Jones
occupation:
broadcaster
e
If you think interview-
ing Alan Jones would
be slightly intimidating,
you’re wrong. It’s very
Photo: Alan Pryk
intimidating.
Normally in interviews—particularly the ones conducted by the king of the air-waves himself—the interrogator is seen as the attacker. Even when he’s being interrogated, Jones seems unable to get off the offensive. It quickly becomes clear that he is unsure why
the interview has been scheduled. Then, after a glance at my notepad, he says: ‘And you’ve got too many questions there. I won’t be answering all of those, but away you go.’
A question seeking his opinion of ABC- TV’s Media Watch elicits the response: ‘I don’t think about it. I don’t watch it. Like most Australians.’
As to whether Jones, like fellow talk radio star John Laws, sees himself as being outside any code of ethics because he’s a broadcaster rather than a journalist: ‘I’m not a journalist. Nooo.
Never.’ But there is some safe ground, such as the remarkable career that, from a late start in radio at forty- four, brought him to his present apogee of wealth and influence.
Born in 1941 and raised on a dairy farm in rural Queensland, Jones remembers ‘drought and poverty. It was terrible,’ he says. ‘Heat and dry, and cattle dropping dead.’ His mother was a teacher for the deaf and blind, and he would eventually teach too. ‘She had very high ideals about teaching as a vocation, and I suppose she persuaded me. But coming from where we were, I wasn’t exposed to many vocational choices,’ he says. Jones was sent to boarding school at thirteen, but says that doesn’t mean his family was wealthy. ‘I went to a private school because there were no other schools, and my parents gave up
108 HOW I MADE MY FIRST MILLION
everything so I could do that, and died never having had a holiday in their lives.’
The transition from boarding- school student to teacher was smooth, and in 1970 Jones was poached from Brisbane Grammar by the King’s School in Sydney, where he became an extremely successful rugby coach. Five years later Jones was asked to leave the school under something of a cloud but, typically, he doesn’t see it that way. ‘I don’t think I ever intended to be a teacher all my life. I soon saw that there was a bit of a ceiling there—you could only go so far. At King’s I had in fact taught the son of the Deputy Prime Minister, Doug Anthony, and that’s how my movement into politics occurred,’
he explains. ‘Three times I’ve been a candidate for parliament, and they were sensible enough to reject me.’
He may not have been elected but he was noticed, and in 1979 he was hired by Prime Minister Malcolm Fraser as a speech writer. ‘Fraser was a very loyal Australian. Obviously we would have had our differences, but I don’t ever talk publicly about them,’ Jones says. The work was
‘night and day, with no sleep’, but was it making him a millionaire? ‘A what? Oh, come off it,’ he snaps. ‘What makes you think I’m a millionaire now?’ (An attempt to interject something about
his rumoured $5 million- a- year salary is met with a disbelieving snort before he powers on.) ‘I was on $42,000 a year. And Malcolm Fraser was always borrowing money. He never had any on him, and he’d always be asking me for $50, and I didn’t have any money to my name. I remember once he paid me back—$12.80 it was, and I kept that cheque. One day it’ll be an auction item.’
From 1981 to 1985 Jones remained a non-millionaire, working as executive director of the Employers’ Federation of New South Wales. His side job, as coach of the Wallabies national rugby team, paid nothing at all. Jones is voluble on what makes him a great leader of men: ‘I think I can say, modestly, that my teams mostly won. If I’ve got any ability it is that I can get the best out of p eople. And I can get p eople to go beyond what they think they’re capable of.’
In 1985, out of the blue, ‘without ever having been in a radio station’, Jones was offered a job at 2UE. ‘Program director John Brennan said, “I think you should be on radio”—and it all took off at a cracking pace,’ he says. A deal was struck on the back of a serviette at a Chinese restaurant, and while Jones won’t say what numbers were written on the napkin, he was soon after more. ‘David Maxwell [the then general manager of 2UE] started talking about ratings, and
110 HOW I MADE MY FIRST MILLION
I said nothing because I had no idea what they were,’ he says. ‘So I raced out to John Brennan and asked what these ratings were all about. I said that I can’t even have an intelligent conversation unless I know what’s this ratings stuff.’
By the next meeting, Jones was ready. When he was told that his ratings were ‘terrible, only twos or threes’, he asked what would be considered good. ‘Maxwell said: “If you got ten, I’d die and go to heaven.” And I said, what incentive is there to get ten? And he said: “Listen, if you get ten by the end of the year, I’ll give you a $100,000 bonus.” I’d never seen $100,000 in my life. I’d never seen anything with six figures in it. And we got to 10.2 in the second- last survey, and they came and gave me this cheque. It was quite something.’
The next payment that blew Jones’s mind was so big he felt compelled to record it. ‘It was when I came to 2GB from 2UE [in 2002]. The deal was that I’d get some of the money up front, and I photocopied the cheque.’ So, were there six zeroes on it? ‘Oh, my God, no. There were six digits, but not six zeroes. Oh, no!’ he says.
‘I also photo copied the cheque I got for the Golden Slipper [won by his horse, Miss Finland]
because I couldn’t believe the Sydney Turf Club was writing a cheque to me for that amount of
money. I think it was $3 million.’ Though Jones professes surprise that he’s perceived as a millionaire, it seems safe to deduce that he passed that mark somewhere between the start of his radio career and 2002.
Jones also struggles to remember the first extravagant thing he ever bought: ‘I have no idea,’
he says. ‘No. I think I
most probably sent
I’ve never been one for
my father to the ‘extravagance. I don’t need Melbourne Cup. He the best phone or to be always wanted to go. at opening nights in black I always thought if I tie. I hate black tie‘. I get criticised because I spend
had money I would all my money on other send him and gave p eople. I think I give a bit him the real royal too much away.
treatment.’ He him-
self has pretty modest tastes, he says: ‘I’ve never been one for extravagance. I don’t need the best phone or to be at opening nights in black tie.
I hate black tie. I get criticised because I spend all my money on other p eople. I think I give a bit too much away. But I say to p eople, none of these things is worth two bob unless you share them. The only thing that gives you any pleasure is sharing. I’ve got a lovely place down in the Southern Highlands, but the greatest satisfaction I get is when others are sitting in front of the
112 HOW I MADE MY FIRST MILLION
fire having a drink and I know they could never afford to be there [on their own account], but they’re loving it.’
Jones believes there are three things that make a man feel rich: ‘If you can drink whisky out of a crystal glass, you’ve got an air- conditioned room, and you’ve got a housekeeper to help you with all that drudgery, you’re a millionaire,’ he says. ‘So that makes me a millionaire.’
What he makes strenuously clear is that he’s earned everything he has. A self- confessed workaholic, he gets up at 2.30 a.m. every day and never, ever gets even five hours’ sleep a night.
‘Whatever money
If you can drink I’ve got, I’ve rolled whisky out of a crystal up my sleeves. I’ve
‘
glass, you’ve got an air- got up at two o’clock conditioned room, and and I’ve put the light you’ve got a housekeeper on before anyone to help you with all
that drudgery, you’re a ‘ else, and I turn it off millionaire. So that makes after anyone else,’ he me a millionaire.
says. ‘There are no
shortcuts in this sort
of stuff. All this talk of luck is nonsense. You’ve got to make your own luck.’
So, after what could be described as a colourful career in radio, does he have any regrets?
‘Look, I don’t live in the past,’ he fumes. ‘We all,
in life, have ups and downs, and who am I to live in regret? There are p eople out there who can’t walk, who can’t see, who can’t hear, who can’t talk, who’ve never been to a restaurant, who’ve never got a passport. Who are we to be living in regret? We’re very fortunate. Very privileged.’
StepheN corby
GolDen ruleS
1. Don’t expect others to do what you should do for yourself.
2. The only thing you get without hard work is failure.
3. Enjoy things—successful p eople are those who enjoy themselves.
4. be decisive. P eople fail because they’re wishy-washy. Stand for something.
5. Share. If all of the above produces anything, share it.
A Cut And Dried
Success
Denis McFadden
Just Cuts;
established 1990;
1500 employees;
$80 million- plus turnover
In 2007 Denis McFadden
thought he was in trouble.
The bank had called. His
presence was required in the city. It sounded bad.
But this was the Denis McFadden, founder of the Just Cuts hairdressing franchise. Whatever the problem, he would answer the bank’s summons with shoulders squared, chin up and hair gelled.
Something was a little odd, though. The
meeting would not be in the bank manager’s office. Instead, he was to present himself just after midday at Times on the Park, an upmarket steakhouse in Sydney’s Sheraton Hotel.
When McFadden arrived, he found two other bank clients already there. ‘I realised I was sitting around the table with some very wealthy individuals—and it dawned on me that I must now be classified in the same way,’ he says. Far from being in trouble, Denis McFadden had arrived. He had attained the level of affluence at which bank managers cast off their polite indifference and adopt a solicitude bordering on the obsequious.
Two months after he was born, McFadden’s father died. About the next ten years he says very little. His formative years, as far as he’s concerned, didn’t begin until he was eleven, when his mother married a Qantas pilot. ‘I benefited from a wonderful life from then on,’ he says. Most of his youth was spent in the United Kingdom and he began working in London as a hairdresser, later opening his own salon in Marble Arch, at the top of Oxford Street. ‘It was the Swinging Sixties, and we were doing Lady So- and- so and also doing the nannies, so it was a real mix of p eople,’
he says. Clipping the locks of English aristocrats kept McFadden in London for ten years.
116 HOW I MADE MY FIRST MILLION
During that time he married an English-woman who already had two daughters. They had two sons together, and in the late 1970s the family came to Australia after deciding it was a better place for the children to grow up. McFadden began cutting hair at Hurstville. ‘In those days, there was either a basic barber shop or the full- works chemical salon—nothing in between,’
he says. ‘So, I started in 1983 with the idea of something in the middle—something with broader appeal.’
His idea came to him when Hurstville Council ran a promotion to get p eople to shop locally.
McFadden painted a sign on his window that read: ‘If you’re paying more than $6 for a haircut, you’re getting clipped.’ More than 100 p eople trooped through the door that week. ‘I’d seen these p eople before. They had come in and asked if we did dry haircuts. I’d say: “No, I’m an artist. I need to wash it and I need to blow- dry it, and it’s going to cost you.” But these were busy p eople, time poor, and all they wanted was a haircut. I realised after that promotion that there was an angle here, a need in the community for p eople who just wanted a haircut.’
He later moved his main business to the new shopping centre at Hurstville. With him went the sophisticated equipment and the clients who
made appointments. But, with three months remaining on the lease at the old premises, he put up a sign saying: ‘Just Cuts—$7.’ While he indulged his artistry at his salon, he didn’t abandon his cost- effective cutters down the road.
He devised little scripts for them to deliver so they could glean information from the p eople responding to the $7 enticement. McFadden wanted to know about these customers. Who were the p eople who didn’t care that much about their hair? And why were there so many of them?
At this point in the late 1980s he still saw his full- service salon as his core business. But McFadden would soon down tools forever. He looked at franchising and went as far as meeting p eople who were in the business, but he wanted a simpler business model. His first franchisee was a young hairdresser who worked for him. After she approached him with the idea of starting out on her own using his Just Cuts model, her father, a wealthy property developer, asked McFadden about franchising agreements and business man-uals. McFadden got busy writing and came up with a simple formula. ‘What we came up with was a fixed fee—equivalent to just twelve haircuts a week,’ he says. ‘That first franchisee had to give me cash for twelve haircuts a week, and I think at the time a haircut was $11.’
118 HOW I MADE MY FIRST MILLION
So in 1990 he became a franchisor. ‘I wanted an easy life, but I knew the only way to do that was to have lots and lots of franchisees. The way I’ve done that is by working out what my franchisees wanted.’ In the early days, they were interested in lifestyle. ‘I had single mums with four kids, and all they wanted to do was spend time with their kids,’ he says. ‘Today it’s slightly different. They’ve got expenses. A big house and a mortgage. Kids in private schools. They say they need to earn $150,000, $200,000 a year and that’s difficult in franchising. We can’t guarantee something—they could come back in a few years’ time and sue us.
It’s making it more difficult.’
So, with the economic downturn McFadden decided to make some changes: ‘While everybody was hunkering down, we got Saatchi & Saatchi on board for a rebranding exercise. Like Woolworths, we wanted a new image to ensure we’re looking fresh when the recovery kicks in.’
The business he’s in may be a perennial, but he can’t afford to be complacent. ‘The good thing is that hair grows in good times and bad, but it’s become more competitive. We are in a number of shopping centres, and shoppers have dropped off, so our business has suffered a little in some locations. We’ve had to move a little up- market and compete not so much on price but on
service. It’s crucial that we stay fresh and relevant for the next ten years.’ Meanwhile, the company was still about 10 per cent up in the 2008/09
financial year.
McFadden is closing two salons, which he says were not performing very wel anyway, but he’l be opening three others in different locations, al with the new logo and store design. He is also expanding his product range—offering DIY salon- standard colouring kits for just $14.95, instead of the $200
charged for many in- store colouring services.
‘It’s about being convenient, competitive and innovative,’ he says.
As for new franchisees, he continues to receive between two and four applications a week. They pay between $150,000 and $200,000 up front to invest in Just Cuts. The company has a small con-sortium of banks prepared to lend 50 per cent to franchisees, and the owner has to find the balance. The money pays for the shop fit, a month’s rent in advance, furniture, the grand opening strategy and McFadden’s fee. The average Just Cuts franchisee owns 2.4 outlets, although one owns fourteen, and 70 per cent of franchisees own more than one outlet. ‘It’s not about ego, it’s about making money,’ McFadden says.
And making money he is, with 174 salons in Australia, New Zealand and India. Multiply
120 HOW I MADE MY FIRST MILLION
the 150 salons in Australia by the $288 a week they pay him and McFadden’s local owners are bringing head office
more than $43,000
I needed the numbers to
make the money, and a week. Throw in
‘
‘
when there are 174 of the twenty- three Just them it adds up.
Cuts franchisees in
New Zealand and
the newly opened New Delhi Just Cuts, and the artiste from Marble Arch looks to have shorn franchising’s golden fleece very deftly indeed.
‘I needed the numbers to make the money, and when there are 174 of them it adds up.’ Keeping costs down is not too hard, either. McFadden has seven p eople in his office. There are no auditors policing his franchisees, and he keeps in touch with them through meetings of the franchisee advisory council, which meets about five times a year.
The most visible sign of his personal success is the thirty- two- hectare property he bought two years ago in the New South Wales Southern Highlands. While he might be a hairdresser, McFadden likes his fun. He’s got a chainsaw and tractor, quad bikes and motor bikes, and he works three days a week, from Tuesday to Thursday. If his banker wants to take him to lunch in the city it will need to be on one of those days.
peter GoSNell
GolDen ruleS
1. Use an economic downturn to refresh your branding.
2. Always consider change—don’t get stuck in a rut.
3. Do your homework.
4. Think about your business in a global sense.
5. be passionate and think big.
6. give your clients what they want, and they’ll give you what you want.
A Fine Performance
Andrew McManus
Andrew McManus
Presents;
established 2000;
eighteen employees;
$80 million turnover
It turns out that all the
stories are true. Sometime
Mötley Cruë drummer Tommy Lee really is the hardest- partying man alive. Rock promoter Andrew McManus has the bruises to prove it. ‘Tommy and I hit it off last time they were here and we got lost for three days and nights,’
McManus groans. ‘He just wanted to keep going.
He was too good for me. I had to put the white flag up—I just could not continue. Normally I hold my own with these guys, but he’s a charac-ter and a half, that one.’
Drinking with—and trying to rein in—the baddest boys of rock is all part of the job for McManus, but he says the hardest partiers he’s ever handled are not rock stars but wrestlers.
Back in 2000 he and the manager of Kiss, Doc McGee, saw an opportunity to take wrestling to Europe. They scooped up fifty- eight ‘big, kooky guys, including a guy called Big Poppa Pump, some midgets and some female wrestlers’ from World Championship Wrestling.
‘They party really hard—how they do it has got me,’ McManus laughs. ‘And then they have to go to the gym and train during the day. After the wrestling, they’re just on this huge high and they go and hit the clubs. Boy, do they hit the clubs.’
McManus and McGee basically bought WCW and enjoyed twelve months filling arenas in Europe before the ka- ching king of wrestling, Vince McMahon, realised they were eating into his potential and started sending his A team over. ‘We were like a twenty- pound monkey fighting a 500- pound gorilla. He just ate us up,’
McManus says. It was one of the few times in
124 HOW I MADE MY FIRST MILLION
his high- voltage career that McManus has been forced to take a backward step.
Surprisingly, McManus is not a frustrated rocker. ‘My uncle had a pub, and from the age of twelve or thirteen I just wanted to be a hotel-ier. I really liked the lifestyle and his ability to come and go and make money.’ At seventeen, he enrolled in a four- year trainee management course and so impressed his teachers that he was fast- tracked, graduating after two years to become an assistant manager in Townsville. At twenty- one he was given the Rose Bay Hotel to run, making him the youngest licensee in the country. ‘It was mine for eighteen months and I was loving it. We took it from doing twenty- seven grand a week to sixty- something grand. But I outsmarted myself.
We were making so much money the owners sold it out from under me, and I was out of a job.’
Fortunately, one of McManus’s bookmaker contacts heard of his predicament and set him up with a job at the Coogee Bay Hotel. ‘They rang me up and said, “Do you know anything about music?” And I said, “Absolutely nothing,”
and they said, “Neither does the guy who’s running Selina’s. When do you want to start?” ’ That was 1981. Over the next seven years McManus grew the live- rock venue into a Sydney landmark—and a huge money- earner for the hotel.
In 1985, one of his regular bands, The Divinyls, asked for help because they weren’t seeing enough profit for their hard work. ‘They told me they were doing all this work but never making any money,’ he recalls. ‘I said, “Give me three shows and I’ll show you how to make money.
You get $20,000, and I’ll keep anything we make over that.” They didn’t believe we could even make twenty, but we made $47,000.’ He went on to manage the Divinyls for seven years—during which time they had an international hit with I Touch Myself.
By 1995, McManus was ready to move on.
He took a year off, his first real holiday ever. ‘I just wanted to chill out and I could afford to do that, but I certainly wasn’t a millionaire yet—
nowhere near it. The Divinyls thing was just part of the training,’ he says.
During his long break, he considered his options. ‘I had no degrees or schooling. The only thing I had was my little black book, so I rang some friends and asked them what to do next.’ Someone suggested becoming a promoter.
Crooner Barry Manilow happened to be in need of one, so McManus established the International Touring Company. ITC became such a success it was bought out by Abigroup, which then sacked its founder in 2000. ‘I remember thinking, It’s my
126 HOW I MADE MY FIRST MILLION
company, how can they do that? And forty- eight hours later I’d set up Andrew McManus Presents.’
The next year, McManus came up with the idea for Kiss Symphony. That was his break-through, he says: ‘the highlight of my career, and when I made my first million’. Fortunately, he was already mates with Kiss. ‘Gene [Simmons]
and Paul [Stanley] are great businessmen. They jumped at the idea of putting the Melbourne Symphony Orchestra in Kiss make- up and going orchestral. We made the first million that night and I was very proud to get 37,000 p eople along to one of my shows,’ McManus says.
The promoter, who nominates a white Rolls-Royce as the first extravagant thing he bought, believes most modern rockers take the Pearl Jam approach and run their bands as businesses. Some never grow up. All they want is drink and drugs.
With bands like that, ‘you can’t give them too many days off because they’ll go and get on the soup, so you might lose them’.
McManus has also seen his share of weird riders over the years (the list of demands an act sends out in preparation for a tour). ‘Stevie Wonder just loves to take the p***. He always asks for purple and orange towels, for example. Stevie Nicks wanted a certain running machine on a certain floor of Crown Casino so she could look out the window
while she was running and see the view.’ Of course, he was more than wil ing to accommodate the whims of her band
Fleetwood Mac, who
Stevie Wonder just loves
provided his com- ‘to tak
‘
e the p***. He always
pany with its biggest asks for purple and orange ever earn: $14 mil ion towels, for example.
from fourteen sold-
out shows. McManus’s other proud record is for the biggest take from Sydney’s Acer Arena in one night: $3 mil ion, thanks to Luciano Pavarotti.
The financial crisis has knocked the business around, slashing older audiences in particular.
‘They’ve been hit hard with their income and their super funds, so they’re not spending,’ he says. ‘Youth acts are still going strong because the audience is young and living at home so they still have spare cash.’
McManus has cut back on costs as much as possible and is taking a far more conservative approach to his business than he is used to. ‘I should probably have battened down the hatches more quickly, but I booked New Kids on the Block and they failed dismally, even though my research suggested they should do well. We took a big hit there,’ he says.
‘Now I am being more careful, and more sen-sitive about the price we charge for tickets. You
128 HOW I MADE MY FIRST MILLION
can put p eople off even the biggest names by charging too much.’
McManus says he is now expanding the business, focusing heavily on ‘viral’ marketing campaigns, which are cheap but enormously effective when they work well.
The promoting game is not all hanging out with famous p eople and scraping the cream off their profits. ‘It’s a very risky business, and there are too many promoters at the top level. If you won’t pay enough for a particular band, someone else will,’ he says. ‘It’s all about the money—no loyalties in this business—and you can find yourself paying too much and losing money. And yes, tragically, that’s happened to me.
Bands like Kiss and Fleetwood Mac are different, he says: ‘They have a loyalty, and I know what they’re going to need financially. I’m not going to say I’m blessed, but I’ve had a very good run, and made some very good friendships, and it’s from them that the opportunities come.’
Besides cars—he has a Bentley and a brace of Benzes to go with the Rol s—McManus’s other extravagance is gambling. Just last weekend, he won $154,000 on the Geelong/Melbourne Storm double. He is, it seems, a man who just can’t lose—
unless he goes drinking with Tommy Lee.
StepheN corby
GolDen ruleS
1. You are what you think. No matter what, have no regrets.
2. Never look back, only forward.
3. Money alone will not make you happy. The biggest thing, outside of the comforts that money can bring, is friends. Surround yourself with good p eople and you will be a wealthy person.
4. be innovative with your marketing.
5. Life is full of choices, and you are the only one who can take responsibility for those choices.
6. be flexible and ready to change along with the economic climate.
The Boss With
The Lot
David Michaels
Bite Me Burger Co.;
established 2007;
eighty employees;
$18.5 million projected
turnover for Bite Me and
two other enterprises
Photo: Dean Marzolla
From Las Vegas casino
king to Sydney burger baron, the roles come like courses for entertainer turned entrepreneur David Michaels, founder of Sydney’s newest fast- food outlet, Bite Me. Life seems like one long banquet for the British- born businessman, who models himself on Richard Branson and
enjoys at least two lunches and two dinners a day.
‘Sometimes I’ll have six meals—then a cocktail party after that,’ he admits cheerfully. ‘Eating out is my pleasure.’
He’s gained a couple of kilograms since opening the first Bite Me burger bar in 2007, but Michaels’s smallish frame is only slightly rounded.
His shape and his relentless energy convey only rude good health. Maybe his hectic lifestyle helps keep him trim. Bite Me—at Star City Casino—
sprang from his early assessment that Sydney suffered from a lack of good burgers—a view many may hotly dispute, especially outside the inner city.
His open- plan, first- floor office in Paddington hums with activity. At one table three women, dressed in carefully casual chic, discuss arrangements for a cocktail bar. Topics include the relative merits of wooden cocktail crushing sticks or mud-dlers as opposed to stainless steel ones. At another table staff from Michaels’s design company, BEE
(Brand Environment Experiential), are busy preparing material for various projects, including Michaels’s ice- cream brand, Pat & Stick’s. In the lane downstairs, a fleet of Smart cars in red and black Bite Me livery stand in a neat line.
Michaels, who shares Branson’s fascination with the power of brands, is primarily a design
132 HOW I MADE MY FIRST MILLION
guru, but he began his business career selling breathalysers. ‘I made my first bit of money when I was nineteen in England,’ he says. After ditching theatre school the
brash lad from north
I’m no good with money.
I’m a creative person, an London approached
‘
‘
ideas person. I’m not a a financially troubled financial person.
manufacturer, offer-
ing to shift its surplus
breathalyser stock in return for a 50 per cent share.
The company agreed, and Michaels says he made his first million pounds repackaging the devices and selling them as Christmas- stocking fillers.
Within two years the money was gone—blown on boats, cars, friends, jewellery and houses.
‘I don’t regret that,’ he says. ‘It was part of being young. But blowing a fortune helped to teach me about my own limitations. I’m no good with money. I’m a creative person, an ideas person.
I’m not a financial person. So ever since then I’ve surrounded myself with good p eople who can take care of the parts of the business that I’m not so good at handling. The finances and cash flow are among them.’
He left for the US in his early twenties, landing first in New York, then in Los Angeles, where he ended up as a staffer (or ‘cast member’) at Disney. Despite his complete inability to draw and
lack of any formal training he quickly became involved with the company’s design team, producing concepts for new theme parks and other projects.
Later, in Las Vegas, a combination of design nous and fast- talking bravado gave him entrée as a design consultant to the city’s lucrative casino industry. ‘Las Vegas is an amazing place,’ he says.
‘I ended up spending a lot of time there. I just wanted to learn what makes the whole Vegas model tick.’
Something of the theme- park casino—with an inner- city twist—has found its way into Bite Me. The menu, developed with prominent chef and food writer Kim Terakes, includes the Beef Encounter, Soft Prawn and Pluck Me (chicken).
A concession to the local burger culture is available in the Great Australian Bite—‘one with the lot’ to you and me. It turns out to have all the right ingredients in a slightly narrower and substan-tially taller package—about 12 cm high, with a Bite Me flag stuck on top. Chips arrive crammed into miniature shopping trollies. Michaels admits to a certain bemusement at the Aussie burger: he doesn’t like beetroot and doesn’t understand the inclusion of pineapple.
He doesn’t quite understand how he became so rich, either. ‘I can’t attribute the success to any
134 HOW I MADE MY FIRST MILLION
one thing,’ he says. ‘It’s really been a combination of a whole load of projects and businesses and fingers in different pies.’ Despite being worth many millions of dollars, Michaels says he doesn’t regard himself as wealthy: ‘Wealthy to me means Bill Gates and Donald Trump. To me, it’s not about the money. It’s about the game—the fun of building something new. Money gives you freedom, and that’s great, but I want to get up every day and create something. That’s what makes me happy.’
For Michaels, who works ‘sitting cross- legged on the floor and drawing in my head’—leaving trained designers to finish the job—concept is the key to success. ‘If I had to say what I am more than anything else, I’m an ideas person,’
he says. Friends—and the chance to buy an apartment on Kent
Wealthy to me means Street with views of bill gates and Donald King Street Wharf
‘Trump. To me, it’s not
about the money. It’s about ‘ on one side and the Opera House on the
the game—the fun of
building something new.
other—brought him
to Sydney, but he
remains a man of international horizons.
Rejecting the franchise model, he plans more wholly owned outlets in Australia before taking the brand to China, the US and Europe. More
casino projects in Macau and Las Vegas also keep him constantly on the move, as do plans for a return to the theatre with a massive ice production, billed as Cirque du Soleil meets Torvill and Dean.
Although he enjoys a party and clearly knows how to have a good time, he doesn’t seem the type to lapse into extended bouts of relaxation.
Among Michaels’s few private passions is television: EastEnders, The Sopranos, Boston Legal and Oprah are particular favourites.
He seems to mean it when he insists it isn’t all about money, that if business isn’t ‘fun’ it isn’t worth doing. ‘I don’t know whether it’s being a driven person, or being stark raving mad,’ he laughs. ‘Nothing’s ever done. It’s always a work in progress, and I’m learning every day.’
Jim dickiNS
GolDen ruleS
1. Relationships: It’s crucial to get on with the p eople you work with and go into business with. If the chemistry isn’t there, forget it.
2. Passion: I have to be able to be passionate about my work, so it has to interest me. If you said we could make a fortune selling air con-ditioners, I wouldn’t be interested. It’s too dull, and life’s too short.
136 HOW I MADE MY FIRST MILLION
3. Innovation: I need to create new things, to be imaginative and not have that constrained.
Always dream to the fullest, then pull back if you have to.
4. Fun: If it isn’t fun, then there’s no point to it. I want to get up every day and enjoy it.
5. Diversity: I know it’s a cliché, but variety is the spice of life. I love to have a variety of projects on the go and different challenges to meet.
X Marks The Spot For
A New Approach
Jennifer nielsen
X Inc. Mortgage
Brokers loan
Market Group
e
established 1995;
600 employees;
$42 million turnover
arren Clark
When twenty- three- year-
Photo: W
old home- loan queen Jennifer Nielsen went to the bank in 1982 for her first mortgage, she co-applied for the money with a single female friend who also wanted to secure an asset before a husband. ‘I don’t know if the bank manager thought we were lesbians, but I recall he thought it very
138 HOW I MADE MY FIRST MILLION
odd,’ Nielsen recalls with amusement. ‘Now, it is very common for friends to buy property together.’
The unconventional loan application was accepted, and the block of land she and her friend bought was Nielsen’s first step towards making $1 mil ion from shrewd property trades in the lucrative Brisbane and Sydney markets. ‘I love to buy and sel real estate and I’ve done wel out of it, especial y in Queensland. But Kenny Rogers, in the song The Gambler, had it right—you never count your money when you’re sitting at the table.’
Having experienced the satisfaction—and financial benefits—of putting her money into bricks and mortar, the chief executive of X Inc Mortgage Brokers is helping others to do the same in a complex lending environment now overshadowed by credit- crunch anxiety. Despite the uncertainty, X Inc—which effectively doubled its market presence by merging with Ray White Mortgages last year—is employing up to thirty new brokers a month. Nielsen and her business partners John Kolenda and Dean Rushton aim to make theirs the biggest mortgage broker in Australia by 2010. ‘We want to have a mortgage broker attached to every real estate office in the country,’ she says.
So how did she make the leap from young
X MARKS THE SPOT FOR A NEW APPROACH 139
home- buyer to mortgage magnate? ‘It’s tempting to believe that success is due to individual brilliance or a magic formula,’ Nielsen says. ‘In reality, it comes down to hard work and, in our case, identifying a gap in the market. We wanted the white- collar market—the AB demographic. We made a difference for them. Now, it’s far more acceptable for those
p eople to go to a
It’s tempting to believe
broker for a loan.’
‘that success is due to
And in tough
‘
individual brilliance or a
magic formula. In reality, it
times such a service comes down to hard work is all the more wel- and, in our case, identifying come. ‘P eople need a gap in the market.
to talk to someone
like a broker to understand the finance options and what is likely to happen, because it’s con-fusing. They are turning to mortgage brokers for objective advice.’
She sounds as if she’s been in finance all her life.
But Nielsen’s first jobs could hardly have been further away from that world. She worked as a cook and deckhand on a tiger- prawn trawler in the waters between Cairns and Groote Eylandt.
Then she was a regional sales manager for Yellow Pages. Both jobs, however, taught her how to run a business and inspire other p eople. ‘On the trawler, I learned about teamwork. I can’t claim
140 HOW I MADE MY FIRST MILLION
it was as bad as the Deadliest Catch TV show or anything, but there were situations where, if someone didn’t do their thing, the boat could literally sink. At Yellow Pages I was a benevolent dictator, but I learned to listen. I had no choice.’
Nielsen went on to become a recruitment consultant and worked closely with Kolenda and Rushton, executives at the time with Aussie Home Loans. In 2004, they asked her to join them in setting up X Inc. She trusted their knowledge enough to concentrate on learning.
‘Their competence took enormous pressure off me,’ Nielsen acknowledges. ‘It’s much harder learning a new industry at the top than from the bottom. It changes your leadership style because the p eople around you know more than you.’
Nielsen applies the lesson she learned on the prawn trawler to the fast- paced world of finance.
There’s a captain, but when you are riding the waves it’s all hands on deck. ‘We have built our brand on limited funds,’ she says. ‘We were taken to court [by Aussie Home Loans for poaching staff ] when we were less than two minutes old, and a major bank wouldn’t work with us until that case was resolved.’ Now it seems to be plain sailing, but the same principle of equality continues: ‘I have an open- plan office. I personally return calls. I think having a personal assistant
X MARKS THE SPOT FOR A NEW APPROACH 141
is a luxury rather than a necessity. And when you surround yourself with assistants, they are between you and the real world.’ Nielsen shares a PA with three other managers.
Having a child has also changed Nielsen’s management style. Commuting between Brisbane and Sydney, she travels with her four- year- old son and a nanny, who cares for him in the flat above her Surry Hills office in Sydney. The experience has made her deeply sympathetic towards employees who also have young children. ‘I scheduled my Caesarean, then I couldn’t control it [child rearing] any more! When a staff member has a child- care issue, I now say, “Bring them into the office.” If that had happened before, I’d have been mentally counting the lost productivity through gritted teeth. Now I know. The biggest challenge has been to balance my business life with my young son and my husband—who runs a global business of his own. I love my family, and I honestly believe balance is important.’
kerrie davieS
GolDen ruleS
1. Stay close to the p eople who are close to your customers.
2. Treat every customer as if he or she is the last one you will ever get.
142 HOW I MADE MY FIRST MILLION
3. Keep all your key intellectual property in- house.
Don’t outsource it.
4. be aware of, and stay on top of, what your competitors are doing.
5. believe above all else that there is a solution to everything.
ADDenDuM
In October of 2007, X-Inc merged with real estate chain Ray White Group’s Electronic Mortgage Organisation Channels of Australasia Pty Ltd (eMOCA), comprising Ray White Financial Services, Loan Market and REA Home Loans, to create a $13 billion loan book.
Nielsen headed the new entity, commonly known as the Loan Market Group, but stepped down in January of 2009 to focus on develop-ing Ray White’s online marketing strategy. She is currently head of online marketing for the Ray White Group.
Success All
Wrapped Up
Michael Paul
Pack & Send;
established 1993;
240 employees;
$35 million- plus turnover
A successful entrepreneur
needs many qualities:
passion, patience, deter-
Photo: Dean Marzolla
mination, a willingness to make sacrifices and belief in your idea. Michael Paul has all of them in spades.
Had he listened to conventional wisdom when hawking his idea in the early 1990s, Paul would have thrown in the towel. Fifteen years on
144 HOW I MADE MY FIRST MILLION
he’s boss of Pack & Send, a multi- million- dollar, award- winning, Australian- based empire that is taking on the world. His idea was simple: to take awkwardly shaped, valuable or delicate items that are a nuisance to mail, pack them professionally, take care of all the paperwork, and ship them anywhere in the world.
The business was already thriving when eBay came along, but its advent has been a godsend for a postage company specialising in bulky, fragile and irregular items. Paul said shipments of goods purchased on eBay account for about a third of Pack & Send’s business. But it was several years before he was in a position to capitalise on the online auction- room’s emergence.
Paul has spent most of his working life among parcels. His career began in a post room at the pharmaceuticals company Richardson- Merrell (now Marion Merrell Dow), where he learned all the ins and outs of postage and packing—and a little about logistics. After rising to a management and logistics role he took his expertise to a series of other firms, continuing to learn as he went.
Paul was working as a freelance logistics consultant in the early 1990s when he had his eureka moment. The problem: how to send a desktop computer from Sydney to Melbourne.
It doesn’t sound like rocket science, but at the time Paul thought it was close. ‘I couldn’t find appropriate packing materials, or a carrier that would pick it up,’ he says. ‘I had to do all the paperwork and find a way of getting it packaged properly. It turned out to be a two- day exercise. It was crazy. Why wasn’t there a place I could go and just drop it off and let them do all the work? It seemed such a blatant gap in the market.’
To discover what might plug the hole, Paul travelled to the US. ‘They did have companies that packed and posted items for you, but not as well as I planned on doing it, so I was absolutely determined to come back to Australia and make a go of it.’ He set about looking for freight partners—
and immediately hit resistance. ‘There was a lot of scepticism. One senior executive took me aside and said: “Michael, Australians will not pay for a convenient packing service.” He said he’d been in the industry for thirty years and that there were
“limits to what you can do in this market”. Well, I didn’t agree with that at all. In fact, I thought the opposite. There are no limits to what can be done.
That made me more determined than ever.’
Paul was so determined that he sold his house, moved in with his in- laws, and borrowed from family to scrape together enough money to open
146 HOW I MADE MY FIRST MILLION
his first Pack & Send store in Parramatta, in Sydney’s west, in 1993. On his first day of business, he made one sale—of a cardboard box, priced at $2.90. ‘I’ve still got the receipt from that day to remind me how far we’ve come, and never to lose faith,’ Paul says.
It wasn’t exactly a flying start. He and his wife Susan ‘wore out many pairs of shoes’ pounding pavements, knocking on company doors explain-ing their service and putting flyers in letterboxes.
It was hard work, but the idea took off. Within a year, the store was turning over $200,000 and expansion beckoned.
‘The store was doing really well, but I always had a vision to take this right across the country,’
Paul says. ‘It was never going to stop at one outlet.
We knew we had a fantastic business model with high gross- profit margins. The challenge was to replicate it on a national scale.’ That’s when they thought about franchising. ‘This type of business is all about personal service and going that extra mile. That’s our real selling point. It’s difficult to get employees to go that extra mile for customers. That’s why franchising—effectively giving them their own business—really works. Then they have the incentive to do it.’
His first franchisee approached him in 1994.
He was the regional sales manager for Startrak,
at Crows Nest in Sydney. The outlet is still there today. There followed a decade of heavy investment in infrastructure, computers and technology, including legal work on contracts and franchisee agreements, a national marketing campaign, and a buying department to source and negotiate prices for supplies for the franchises. The program required a huge amount of funding, which Paul had to borrow.
By 1999, Pack & Send had twenty franchised stores. In that same year, two pivotal events took place. First, Paul was approached by businessman Barry Smorgon, who shared Paul’s enthusiasm. He invested enough in the company to cover many of its infrastructure needs. Then eBay launched in Australia, and that changed the face of the business.
‘Suddenly, we noticed a big change in consumer behaviour,’ Paul says. ‘P eople everywhere had awkwardly shaped objects they needed to send around the world. And there we were, perfectly placed with a national network and well- thought-out infrastructure. It was a godsend.’
Today, a quarter of Pack & Send’s franchisees own multiple outlets, and some have made millions in their own right. ‘It’s wonderful to see,’
Paul says. ‘One couple worked very hard and borrowed to buy their first outlet. Now they have three, and they own the premises as well.’
148 HOW I MADE MY FIRST MILLION
And there will be more to come. Paul has set a goal of opening 1000 stores around the world.
He has started a master franchising operation in Britain, where his first store is booming. New Zealand has also seen its first successful Pack & Send opening, and Canada, Singapore, India, South Africa and mainland Europe are also targets.
During 2008/09, Pack & Send grew by 40 per cent. If the financial crisis is to blame, then financial crises should happen more often. ‘We have gone on marketing during the recession, and p eople are shopping harder for bargains online,’
Paul says. ‘In March of 2009 our website got a record number of hits and also of price requests.
We opened eleven new stores in the twelve months to July 2009, and start- up sales for those stores have been the best in the company’s history. We’re doing very well, thanks!
‘If we’re this busy during a recession, what will it be like when the economy bounces back?’ Paul says he’s already thinking about how to make the most of the recovery. ‘We have invested heavily in our technology and systems. We are now an even more efficient business and well placed to take advantage of growth opportunities as they arise. We’re opening quite a few stores to take advantage of cheaper leasing arrangements at the moment. There’s no doubt about it—economic
downturns throw up opportunities, and you mustn’t be afraid to grasp them.’
As for his first mil ion dol ars, that’s wel behind him. ‘It was 2003 before we became debt- free, because we invested so much in the business and that required significant
borrowing,’ Paul says.
To be honest, we’re too
‘It was a great feel- ‘busy to think about the ing the first time we
mak
‘
money very often. What
turned over $15 mil -
es me much happier
ion, which was about is the success of the 2005. But to be hon- business.
est, we’re too busy to
think about the money very often. What makes me much happier is the success of the business.
In 2007 we won PricewaterhouseCoopers’ Franchisor of the Year award, which was a fantastic achievement and made everybody proud. That’s the kind of thing that real y matters.’
So with all that success under his belt, how does Paul reward himself? Fast cars? Champagne every night? A boat, perhaps? ‘I love bird watching,’ Paul says, ‘so I bought myself a pair of $3000
binoculars. That’ll do me. I was happy when we had nothing and I’m happy now. I don’t see how having more money in the bank is going to make me happier.’
Nick GardNer
150 HOW I MADE MY FIRST MILLION
GolDen ruleS
1. Have an exciting, big, imaginative vision focused on the customer.
2. Avoid negative p eople. Always stay positive.
3. Work hard and put the hours in—only good can come of it.
4. View your business the way a seasoned long-distance runner views a marathon—focus on endurance rather than speed, and pace yourself to finish strongly.
5. Keep learning. believe in self- improvement—it is a journey that never stops.
6. Surround yourself with great p eople who are passionate about the vision.
7. There really are no limits!
Go Green For Gold
Malcolm rands
ecoStore;
established 1993;
thirty employees;
$8 million turnover
Malcolm Rands is not
your typical entrepre-
neur. For one thing, he is
Photo: Sam Ruttyn
a business man who insists on giving away ten per cent of his profits. For another, he has lived in an environmentally friendly eco village. ‘It’s a community we set up in rural New Zealand with the ethic of trying to work with nature, not fight against it. We wanted to create a
152 HOW I MADE MY FIRST MILLION
permaculture—essentially an agricultural system that copies nature in that it can be left unat-tended and still be productive. There are jungles in the wild that feed whole communities but are not farmed. I still call it home,’ he says.
His other home is in Auckland, from where he oversees the spectacular growth of his company EcoStore, maker of environmentally friendly cleaning products. ‘I had to move back to the city to start my international empire,’ he jokes.
EcoStore products are now on sale in Australia, New Zealand, Hong Kong, the US and the UK, including the Woolworths supermarket chain.
Rands’s journey has been a colourful one.
He looks back with mixed emotions at his student days, when he was the keyboard player for the Auckland- based band Beaver Shot. He dropped out of university at nineteen to become a full- time musician. He left the band when he concluded that the music business was fickle and he might not have the talent to make it, and set out to travel the world—first stop, Sydney. ‘I trained as a radiographer and worked at St Vincent’s Hospital for a while before moving on to the US. Travelling was fantastic. It opened my eyes. In California, I fell in with this crowd of rich young kids and we ended up living in a huge house in Orange County, rent free.
‘I was living the American dream with p eople who had more money than sense. Whatever they wanted they could buy. Most p eople spend their lives trying to get to that state, but I realised then that if you can have every thing, your life becomes empty. These p eople weren’t happy.
They were trying to fill a gap in their lives with material things. Even then I realised that there’s more to life than money, that you have to believe in something.’
So when Rands returned to New Zealand after four years overseas, he turned away from the world of business and profit and tried to follow his passions. He started fund- raising for not- for-profit organisations, then took a job organising community arts festivals in the small town of Whangarei, on the tip of the North Island. ‘I had a two- year contract and ended up staying fifteen years,’ he recalls. ‘I became an expert in business management, fund- raising and events organising. The problem was that you’d spend eleven months slogging it out raising money and only one month doing what you actually loved.’
He and a group of like- minded artists set up the ecovillage in 1987. And it was while living there that he had the brainwave that gave birth to EcoStore. ‘We had a nearby water source that produced some of the purest water on the planet.
154 HOW I MADE MY FIRST MILLION
We thought, Wouldn’t it be great if we could make it as clean after we’d used it as it was when it came to us? So we started looking at the way we lived and realised that all the cleaning products we were using in our houses contained the most horrific ingredients, yet we were using that same stuff to water our food gardens. Who knows what that did to the food. This was before there was any requirement to label products or test the ingredients. I thought there must be other p eople who would want cleaning products that didn’t contain such terrible chemicals.’
Rands has always been a realist, and he knew p eople would not live a green lifestyle if it was too difficult. ‘P eople always think, What difference can I make? I’m just one person, and all that. So I knew I had to make it as easy as possible to go green. That’s why cleaning products are such a great area to tackle. It doesn’t take any effort at all to buy green cleaning products, yet that kind of everyday action can make a huge difference to the environment.’
The revelation made Rands a capitalist. ‘I got a small loan from my brother and started the business in 1993 as a mail- order company, delivering the products to retailers and individuals.’
Four years later, EcoStore had grown into an Auckland- based factory, with its own outlet
store, products and research department. ‘Fortunately, a supermarket decided to set up next door to us, so all of a sudden we had foot traffic, which made a huge difference to our sales,’ says Rands.
The business has continued to boom. Woolworths has expanded its range of EcoStore products from just three to twenty- one. Each product’s packet promotes another product in the range, a cost- free promotional technique that helped the company achieve a 40 per cent growth in turnover.
Rands says the downturn has focused consumers’ minds on the value of his products. ‘We’ve found that p eople have ditched more frivolous purchases to continue buying products that are aligned with their personal values. We have also grown in the lower- income demographic. When p eople analyse how many washes they get from a traditional powder compared to how many they get from ours, they see that our product really does deliver on value.’
Sales have also been boosted by a massive sampling campaign in which the product was given away in supermarkets. ‘That really worked wonders. We have to get over the prejudice p eople have about eco- friendly products: that they’re more expensive and not as good. The sampling really helped with that.’
156 HOW I MADE MY FIRST MILLION
Like other astute businessmen, Rands has seen the downturn as an opportunity to ramp up his marketing, taking advantage of lower costs.
He is also trying to squeeze greater economies of scale from his supply chain—but as a matter of good business practice rather than a forced belt- tightening.
From the outset he saw the business as a way of fund- raising for the green cause, and when he found a like- minded partner to invest in the business it was on the understanding that 10 per cent of profits would go to the Fairground Foundation, which supports initiatives to help protect and restore the environment. It was in sel ing this stake to his sleep-ing partner that he made his first mil ion. ‘I wanted to realise some of
Sometimes greenies the company’s worth are perceived as having so my family could
‘a problem with making enjoy the benefits money. I don’t have any
issue with getting rich at ‘ now rather than later,’
all, but I do want to raise he says. ‘But it was funds at the same time.
just as important that
I found a partner with
similar principles, and I was very lucky in that.
‘Sometimes greenies are perceived as having a problem with making money,’ he adds. ‘I don’t have any issue with getting rich at all, but I do want to raise funds at the same time.
‘The idea for the Fairground Foundation is ultimately to build an urban eco- community that is profitable and sustainable so that others want to copy it. It’s easy. You need to make it at least three storeys with a roof garden on the top so everybody has their own outdoor space. Grass is the best roofing material for all sorts of reasons.
Then you’d have a tarmac play area and a swimming pool. All these things become cheap to do when you’re building a number of apartments.
‘For it to work, it would have to have an over-riding ethic. It might be that you look after your own grey (waste) water, in which case you could have a wetlands site. If you have a social centre or cinema within the block it enhances the community feeling. This idea has to work with minimal effort from those who live there. If it is hard, or p eople have to make sacrifices, it won’t work.’
Rands says his first urban eco- development will be in Australia or New Zealand. If it’s in Sydney, he might end up solving the city’s rental shortage as well as cleaning up the world.
Nick GardNer
GolDen ruleS
1. Make your profession your passion.
2. be specific about what you want to achieve.
158 HOW I MADE MY FIRST MILLION
3. Know your strengths and what you are capable of doing well.
4. Stick to your business principles.
5. Eco- ventures have to produce profits to be sustainable.
The Coffee King
Who Changed
Australians’ Taste
les Schirato
Cantarella Bros;
established 1947;
150 full- time,
fifty part- time employees;
$160 million turnover
Only twenty- five years
ago Les Schirato was
Photo: Angelo Soulas
laughed at when he suggested to supermarket chains that they should sell his company’s Vittoria brand coffee. Then it was available only in Italian delis, cafés and restaurants, and in the international sections of gourmet food stores.
Schirato was advised that Australians would find
160 HOW I MADE MY FIRST MILLION
the coffee too strong. Now Italian staples are everyday items in most Aussie shopping trolleys, and the elegant Schirato is reaping the benefits of his persistence—with a multimillion- dollar business, a Bentley in his garage, a sleek motor-boat and a wardrobe of Italian designer suits.
Schirato left school at seventeen to join his father at Cantarella Bros. The aspiring young salesman fell in love with the boss’s daughter, Luisa. Realising he would have to prove himself elsewhere if he wanted to marry her, Schirato went to work for Italian car company Fiat. That largely personal decision gave him invaluable professional experience as well as nurturing his love of cars. ‘I learned about sales management and p eople skills,’ he says. ‘I would be selling trucks one day to a big corporation, and the next day I’d be in Wollongong talking to coal-mine workers. Business is all about relationships.
Today, p eople don’t spend the time understanding o thers. Human relations are important—at every social level.’
As for the relationship with Luisa Cantarella, it flourished. They married in 1983, and Schirato returned to the firm as part of the family. ‘I have to be honest, I love what I do. I love to sell coffee and wine and deal with the restaurants and hotels. The money became a fringe benefit.
COFFEE KINg WHO CHANgED AUSTRALIANS’ TASTE 161
I never expected the money on the scale it is now; I loved what I did and I had a passion for it.
I never sold the business, even though merchant bankers tried to buy us.’
When Schirato came back to Cantarella Bros he launched his push into supermarkets with Vittoria, along with European cheeses, Barilla pasta, Italian mineral water and the then exotic choco-late spread Nutella. Realising that food editors could influence public tastes, Schirato ensured that they received information and ideas on Italian cooking. In an era of chops and three veg, Schirato and his contemporaries helped bring about a food- culture revolution—and make millions for the company in the process.
His father- in- law—whom Schirato bought out, along with his brothers- in- law, in the 1990s—was proud to see Italian foods become such Australian staples. ‘He started the company in 1947 when he brought in a roasting machine from Italy,’ Schirato says. ‘He stuck to strong Italian coffee and he was proud to see how tastes had changed. It’s like our coffee beans from all over the world that we mix to make the brand—
Australia also takes things from everywhere and blends them together.’
Back then, Cantarella produced Vittoria coffee but was merely a distributor of other products.
162 HOW I MADE MY FIRST MILLION
Schirato got his next big business lesson when companies for which he’d created an Australian market, such as Barilla, moved in to import and distribute their products themselves. Schirato responded by creating his own products—Aurora Pasta, Santa Vittoria mineral water and Nutino spread—which are made to order in Italy and sold by Cantarella Bros.
This investment, along with Schirato’s earlier ambitious push into mainstream markets, took Cantarella from being a $2.5 million company in the early 1980s
It felt like I was taking to one with a turn-the controls of a big plane over of $160 million
‘with all the passengers and today. But starting shareholders on board. I
had their lives in my hands, ‘ to produce its own brands was a big risk.
and I was in the cockpit
trying to fly this thing.
‘It felt like I was tak-
ing the controls of a
big plane with all the passengers and shareholders on board. I had their lives in my hands, and I was in the cockpit trying to fly this thing,’ he says. ‘And, let me tell you, I hate flying.’
But he learned to do it, and he’s landed smoothly.
‘We learnt there was no future in building other p eople’s brands,’ he says. The average Australian now consumes around 3 kg of pasta a year (a trifling amount compared with Italians’ 54 kg) and
COFFEE KINg WHO CHANgED AUSTRALIANS’ TASTE 163
drink $90 million worth of coffee. Cantarella is the largest Australian vendor of pure coffee.
For Schirato, however, money is not the meas-ure of success. Family remains his cornerstone. His wife, Luisa, is a co- owner of the company, as is his sister- in- law. His son, Rolando, is now marketing manager. ‘Find your own balance between work, family, health, community and anything else that’s important to you,’ he advises. ‘Give back every chance you get, and enjoy the journey.’
kerrie davieS
GolDen ruleS
1. Think like a pilot. Know what your critical gauges are and keep your eyes on these. If they stay green, everything should take care of itself. If you see any flash red, like cash flow, act immediately.
2. Have a flight plan. give clear directions about where you’re going.
3. Look after your profitable customers. First- class passengers are not always the most profitable.
4. Focus on the little things as well as the big things. Pilots have a checklist for a reason. If you miss any of the little things, it could spell disaster.
5. Train your crew. get involved in key appointments.
give everyone clear, measurable performance indicators and set them up to succeed.
High Flier
Penny Spencer
Spencer Travel;
established 1998;
twenty- five employees;
$20 million turnover
elly
ohan K
What’s the most lusted-
after seat on an aircraft?
Photo: R
Penny Spencer knows.
‘All my top clients want seat 1A, whether they’re famous or not,’ she says. ‘Particularly on a jumbo jet, because it’s right at the front and you’re even further forward than the pilots. It’s a prestige thing.’
For the upmarket travel agent, flying first class
and staying at luxury hotels is pretty routine.
Spencer has an obligation, after all, to sample the high life on behalf of her wealthy clientele. Back in the early 1980s, though, when she got her first job, ‘I was so desperate that I literally worked for nothing,’ she recalls. ‘I worked at a travel agency for six months stamping brochures before they started paying me.’ It wasn’t quite what Spencer, a New Zealander by birth, had pictured. ‘I was fifteen when I got on a plane for the first time,’
she says. ‘It was only from the South Island to the North, but I knew then that I wanted to work in travel. It was just so exciting.’
A few years of drudgery and a couple of jobs later she was hired by Ursula King Travel, in Sydney’s Woollahra, and began six ‘inspiring’ years of learning from a great mentor. ‘Seeing Ursula so passionate about her business, winning awards, even as a woman in a male- dominated world, really made me believe that I could do it too,’
Spencer says. ‘I learned a lot from her.’
Eventually, after a stint managing an agency with a former colleague, she decided to go it alone. She funded the 1998 launch of Spencer Travel with nothing but credit cards and faith in the loyalty of the clients she had dealt with—and held on to—over the years. ‘I still have many of my original clients today,’ Spencer says. ‘P eople
166 HOW I MADE MY FIRST MILLION
who appreciate a good service will always stay loyal if they can.’
Her solo venture soon took off, but not without tireless effort and fierce determination. Spencer doggedly pursued a particular TV producer in a bid to win his business. ‘I’d heard he wasn’t happy with his travel agents, so I called and called and called, and he never answered and didn’t return my messages,’
P eople who appreciate she says. ‘Then one a good service will always night I was working
‘
‘
stay loyal if they can.
late and tried call-
ing his offices in the
hope that his secretary wouldn’t be there and he’d have to pick up the phone himself. He did.
And he said that for my ‘sheer perseverance’ he’d let me go and see him. Sure enough, he signed me up.’ A couple of months later, the same producer won the contract to produce the famous Qantas ad with all the children singing I Still Call Australia Home. ‘I had to arrange the travel for thirty- six kids and forty crew, parents, guard-ians, security guards, the lot,’ Spencer says. ‘They went to five continents and countless locations. I worked solidly for four months. It was exhausting, but I loved it.’
That job was the making of Spencer. Word of mouth did the rest. Soon she was employing
more p eople to cope with the demand, especially from the p eople in the entertainment industry.
That was both a blessing and a curse, since they can be fussy travellers.
‘We had one very famous and handsome actor who insisted on a ten- man “meet and assist”
from the plane through Customs, but it was on a flight to Hong Kong, and the ten- man escort was actually ten giggling, slightly hysterical Chinese air stewardesses,’ she says. ‘The actor was livid, and insisted nothing like that ever happen again.
Unfortunately, the next stop was in Bangkok, where the girls have a similar mentality. So I had to call and persuade the airline to provide either men or girls who wouldn’t make a fuss. Then he was annoyed that nobody recognised him.’
A famous and wealthy American woman became so frightened after the September 11
attacks that she refused to use any commercial planes or even commercial airports. ‘I had to plan her whole trip from Bermuda to Kuala Lumpur using private jets and military air bases,’ Spencer says. ‘I pointed out that it would have been cheaper to hire the whole first- class cabin of a Boeing 747 and that it would also mean only one stop, but she insisted she wasn’t going to get on a commercial flight. It ended up costing more than $560,000 for that one- way journey.’
168 HOW I MADE MY FIRST MILLION
It remains the most expensive fare Spencer has ever booked, and that’s up against some pretty stiff competition.
Today, she has branched into a new field—the final frontier, even. In 2008 Spencer beat off more than 200 other agents to be chosen by Virgin Galactic as one of nine Australian ‘space agents’
accredited to sell trips into space. She also became the first agent outside the US to sell a fully paid-for $260,000 ticket. ‘It’s a three- hour trip into space, and paying upfront ensures that the client will be among the first 100 space tourists once commercial flights begin.’ In an industry that has largely done away with travel agents’ commissions, Virgin Galactic is making an exception for its space flights (expected to start in 2011). It is paying almost 5 per cent, though Spencer says that it took quite a bit of negotiating.
Spencer is not one of those entrepreneurs who live for work and can never see themselves doing anything else. On the contrary, she started looking for a way to quit in about 2003. ‘I’ve got two very young children, and I want a balance between life and work,’ she says. ‘I don’t want to still be doing this when I’m sixty, so I’ll sell up to the staff or to an external buyer.’ But if leaving the industry is something she’d readily do for her family, it’s not the way she reacts
to business downturns. Faced with an obstacle, she simply perseveres and overcomes. There have been many such challenges in recent years. After September 11, 2001, for example, ‘Nobody was going anywhere. And there was talk about an end to business travel—that p eople would start using teleconferencing and virtual meetings. Of course things picked up after a couple of months, but for a while a lot of p eople in the industry thought it was the end of the road. Then in 2002 there were the Bali bombings and the SARS crisis, and the decision by airlines to stop paying commission to travel agents. They always used to pay us 9 per cent of the cost of the flight, but that was taken away.’ Spencer Travel’s solution was to charge a service fee. ‘That came as a shock, because p eople weren’t used to paying a travel agent. Corporate clients were generally OK about it—they understood that we had to earn a living and charge for a top service. But retail clients were, and still are, harder to persuade. They don’t realise that the service fee at other agencies is just bundled up in the price of the ticket.’
Spencer will never forget the first time her firm turned over $1 million in a single month. When that happened, in 2002, ‘I was ecstatic,’ she says.
‘Now I need to hit that mark every month just to break even, but then it was a real milestone.’
170 HOW I MADE MY FIRST MILLION
The economic downturn has hit her business hard but, far from letting it get her down, she says it has renewed her ‘entrepreneurial spirit’.
‘In a strange way, there are many positives we’ve taken from the crisis,’ she says. ‘It makes you get back to your roots and focus on the basics. I’ve found I’m thinking with originality again, about how to generate new business and get the numbers back up—just like when I was starting out.
Spencer’s old clients are still loyal, but they’re flying less and buying cheaper tickets. To make up the lost income, she’s looking to new customers and specialising in new areas. Space travel is a big- ticket item but it’s yet to take off, so she’s focusing her efforts closer to home. ‘We’ve started delivering leaflets in our local area, which is something that we would never have considered before, and we’re doing deals with companies to offer prizes as incentives to get p eople to come to us.’
Spencer is also diversifying into the leisure cruise market. ‘I’ve joined an organisation called Cruiseco, which is basically a bulk buyer of cruise deals and enables us to offer packages at the low-est possible prices.’
She has worked out a plan ‘detailing exactly how much we have to make each month and what needs to be done if we don’t meet those
targets. I have stuck to that, and it’s meant considerable changes.’ Over Christmas 2008 Spencer put her employees on four- day weeks, and from March to June 2009 they worked nine- day fort-nights. ‘My staff understood,’ she says. ‘They would rather be working shorter weeks than be out of a job.’ They are back to full- time now.
And she’s far from pessimistic about the future.
‘The economy might be struggling, but p eople still need to travel—and when the economy does rebound, our leaner, meaner and more innovative structure means we should be well placed to benefit.’ Oh, and those plans to leave the business are still on hold.
Nick GardNer
GolDen ruleS
1. Know your financial situation on a daily basis.
2. be passionate—you have to enjoy what you do.
3. Don’t be afraid of making difficult decisions in tough times.
4. be flexible and always open to new ideas and changes in direction.
5. be positive—if you aren’t, your staff will not feel optimistic either.
6. Cash is king—keep as much as you can.
He Chose To
Kick Goals
Peter Switzer
Switzer Group;
established 2005;
twenty- three employees;
$4 million- plus turnover
As a nifty prop with a
desire to wear an Easts’
Photo: Carlos Furtado
rugby league jersey, Peter
Switzer was faced with a momentous decision when the curtain fell on his teenage years. He could chase a sporting career he knew was well within his reach, or hit the books and get a degree. For his business- minded father the choice was clear. But for the young Switzer it
was an agonising dilemma. The league life wasn’t his only sporting option, either: he played first-grade water polo and won a Sydney title in the early 1970s with North Bondi Surf Club. ‘I had a choice: President’s Cup or a Master of Commerce. Thankfully I chose the latter,’ he says.
Thankful is probably an understatement clothed in humility, given the accolades Switzer has garnered as one of Australia’s leading business commentators and advocates. His brand and his pedestal is Switzer Financial Services, which he founded under the motto of ‘trusted provider of accounting, business and financial advice’. But he admits that it wasn’t his own business that propelled him into the millionaires’ realm but some smart property purchases in the 1970s.
Raising a young family, Switzer and his wife Maureen didn’t have much cash to spare. ‘We moved into Paddington in 1979, when it was not a trendy suburb,’ says Switzer. ‘I recall my father- in- law seeing our purchase—an old Victorian cottage—and saying: “Oh, love! Sell this as quickly as you can.” But the home launched our interest in real estate. We bought old homes in great suburbs and renovated them. Your principal property is capital gains tax- free when you sell it, and that makes it a great way to build wealth.’
174 HOW I MADE MY FIRST MILLION
After completing his Master of Commerce, Switzer worked as a teacher at several private schools before moving on to the economics fac-ulty of the University of New South Wales and starting his first business, an economics coaching school. After thirteen years in academe he was, as he puts it, seduced away by Radio Triple M’s then ratings- leading breakfast radio host, Doug Mulray.
As he expanded from radio spots on finance into TV and newspaper columns, Switzer transformed his coaching school into a media company. On the side, he and Maureen also created a publishing firm which at first they ran from their Paddington home, all while raising their young family.
The rewards for those years of toil took a while to show. ‘We added financial planning and business coaching to our media and publishing business because there are great synergies,’ Switzer says.
‘After years of writing about personal investment, we decided to create a financial planning business that upholds the highest standards of honesty and transparency. That gave us a competitive edge. As a natural progression we created Switzer Business Coaching, which teaches principles I have been taught and admire. So our business is now about providing business information, education and
advice to media organisations, corporations, small businesses, investors and consumers.’
Though his array of roles keeps him busy, Switzer has maintained his love affair with real estate.
It is about diversifying his financial portfolio, he explains—something he frequently instructs clients to do. ‘Most p eople are amateurs when it comes to investment and wealth building. I hate p eople treating investment like punting,’ Switzer says. ‘Day traders can be on the spot and, if they are smart, make more good decisions than bad ones. But a lot don’t. I tell my clients and read-ers that we’re in for the long run. We buy great blue- chip assets, especially when they are well priced, and we hold on to them. It works for all asset classes and
brings good returns.’ ‘Most p eople are But Switzer never
‘
amateurs when it comes
wants the enter- to investment and wealth building. I hate p eople
prise to depend on treating investment like him alone. His sons punting.
Martin and Alex also
work in the business, a source of solidarity and support that Switzer finds especially valuable in difficult economic times.
For Switzer, the chief benefit of wealth is that it expands one’s choices. ‘The funny thing is I could retire and relax, but I love writing, building our
176 HOW I MADE MY FIRST MILLION
business, educating Australians and helping our clients to create wealth and great businesses,’ he says. ‘I always say you should do something that you are absolutely passionate about, which means you can play to your strengths. And don’t be afraid to seek expert help to get the best out of yourself.’
Once, after Switzer had given a speech on the importance of business coaching, he was approached by a woman who asked if he had had any business coaching himself. When he said no, she quoted him saying moments earlier that we all need someone else’s objective eyes to get the best out of us. Undone by her quiet reason-ing, Switzer took the woman up on her offer of three months’ free business coaching. Now she is a Switzer Group business coaching partner.
After the financial crisis Switzer’s firm has received fewer inquiries about business coaching, but the p eople who make them are much more likely to follow through and enrol. ‘They can see it is a false economy not to invest in improving themselves, especially in such uncertain times,’
he says.
The financial planning division has held up well, in part because Switzer has always charged a flat fee rather than a percentage- based one. As fund values have fallen, percentage fees have too.
But Switzer has been in great demand for
speaking engagements and on television and radio. He now has an eponymous slot on Sky Business four nights a week, interviewing experts about investing and economic forecasting.
Switzer is advising his business coaching clients to go back to basics and devote themselves to making sure their best customers are happy.
‘Show your customers consideration and it generates great loyalty,’ he says. ‘One great salesman I know sends his clients little newspaper links or cuttings if he thinks they might prove use-ful. That’s a terrific idea. It shows real concern.
Another good piece of advice is to network more. Turn up to more events, and don’t go anywhere without business cards. And when you are at an event, have a quick script in your head to let you succinctly explain your business. That could generate work for you straight away.’
Finally, Switzer says, analyse your marketing to see if it’s doing all you need it to. ‘Use the purple cow principle,’ he says. ‘The American marketeer Seth Godin says our marketing messages can be like black- and- white cows in a field—all looking the same. But imagine if the farmer painted a cow purple. P eople would all point and say, Look at the purple cow!’
With marketing like that, the sky is the limit.
aNdrew carSwell
178 HOW I MADE MY FIRST MILLION
GolDen ruleS
1. Market like never before.
2. Make sure cash flow is fantastic.
3. Make sure you communicate with staff to engage them.
4. Make sure the vision of your business is understood by everybody in the business—and don’t be afraid to tell customers about the need for feedback.
That Aussie Bloke
John Symond
Aussie Home loans;
established 1992; 1000
employees; about $1 bil ion
worth of home loan
er
applications each month
akb
Considering the infa-
mous indulgences of his
Photo: Andy
$50 million Point Piper pad, one enters the city office of ‘Aussie’ John Symond expecting big things. Surely there’ll be a basketball- court-sized desk, hewn from the salvaged deck of the Endeavour, a wall- sized plasma screen and a ceiling plastered with $100 bills. In fact, the décor
180 HOW I MADE MY FIRST MILLION
is more functional than flashy, and the occupant a self- confessed workaholic who says his mind is so hyperactive he gets barely four hours of fitful sleep a night.
Sitting in his office, Symond could be any chief executive except when he discusses money. A one- time debt of $5 million is mentioned with a dismissive flick of the wrist that suggests the sum is a mere trifle. Given that Symond’s now worth more than $500 million, it is. As for his first million dollars, he has trouble recalling precisely when he passed that minor milestone. ‘I was a young articled clerk for a law firm, but at the same time I was learning the ropes about property from my uncle and father. I bought and sold properties and would have made my first million when I was in my late twenties,’ Symond says.
‘That was a lot of money back then. I invested it back in real estate. But I lost most of that first million on property, too. I remember investing in building some units and there was a recession.
But you learn from your mistakes.’
Symond’s biggest ever error was entering a joint venture with the State Bank of South Australia. ‘It was the late 1980s, when interest rates were hitting 20 per cent. I just never thought, being naïve, that a government- owned bank could go belly up,’ he recalls. The memory clearly
still riles him. That experience fired a dislike of the major banks that would inspire Symond in 1992 to set up Aussie Home Loans, which changed the way money was lent in this country.
With his ‘arse on fire’, creditors at the door and bankruptcy looming, Symond decided to fight back. ‘It was just total devastation,’ he says. ‘My greatest motivation was having a three- year- old and a seven- year- old and not wanting them to be denied an education. I hated the thought of them saying: “Oh, yeah, my dad went bankrupt.”
So that wasn’t an option.
‘And I was so incensed by the way the banks, the big banks, were treating thousands upon thousands of Australians who had got themselves in strife through no
real fault of their
own. So I worked ‘old and a seven- year- ‘
My greatest motivation
was having a three- year-
out a deal with my
old
creditors, giving me and not wanting them to be three years to pay denied an education.
back about $5 mil-
lion.’ An ordinary salary clearly wasn’t going to be large enough to make those payments, so Symond set up his own financial institution, undercut the big banks, filmed some now notorious ads and made a fortune. ‘P eople say, “Why did you do your own ads?” Well, at the time I
182 HOW I MADE MY FIRST MILLION
couldn’t afford to hire any real talent,’ Symond explains. ‘It taught me the importance of marketing yourself, because p eople will listen to you.’
In 2008, Symond sold 33 per cent of Aussie to Commonwealth Bank and used funding from the bank to buy rival Wizard Home Loans. That development was as much of a surprise to him as it was to everybody else. ‘If you had said to me a year ago that I’d
have appointed a
P eople say, “Why did CEO to take on the
‘you do your own ads?”
Well, at the time I couldn’t ‘ day- to- day running afford to hire any real of the business and talent.
gone into a partner-
ship with a big bank,
I’d have said, “What are you smoking, mate? You must be mad!” But I learned a long time ago that the best way of predicting the future is to create it—and that means being proactive and not being afraid to change.’
Symond’s face, and voice, on those ads helped him establish a bond of trust with the public, he believes: ‘I can’t walk fifty paces without p eople walking up and asking for advice, and they feel very comfortable in doing that,’ he says. ‘And I always stop and talk, whether it’s the garbo or the policeman or whoever.’ Symond believes his working- class roots are the key to his everyman
appeal, and he gives his parents—who owned fruit shops where he worked as a boy—much of the credit for his success. ‘My greatest role models were my mum and dad. They didn’t have a lot of formal education, but I learned more from them than I did from eleven schools and two universities,’ he says.
‘I thank my lucky stars that I grew up working class because it means that I can relate well to mums and dads in suburbia. If you’re born into a privileged situation, you really don’t know what makes p eople tick.’
While the long property boom filled his cof-fers, Symond says he’s appalled by house prices.
‘Houses are just too expensive, and the dream of home ownership is becoming a nightmare for many p eople. Governments are milking the golden goose dry with all their various taxes, and the way we’re going it’s not going to be possible for younger p eople to own their own homes.
That will have serious consequences for our economy,’ Symond warns.
Money isn’t a panacea, he says, ‘but it does help when you’re going shopping’. He likes to spend his spare cash on boats, cars, watches, contem-porary Australian art and his spectacular house that overlooks the Sydney Opera House, the largest private residence in Australia. ‘I do like to
184 HOW I MADE MY FIRST MILLION
shop. My staff know not to let me have any spare time because if I do, I’ll go and buy a watch or something. I really like watches,’ he says.
And all the time
My greatest role models his mind is racing.
were my mum and dad. ‘It’s very hard for
‘ They didn’t have a lot me to just relax and of formal education, turn off, but I find but I learned more from
them than I did from ‘ being on the water, eleven schools and two whether in a din-universities.
ghy or a bigger boat,
really helps. And I’m
lucky, because I’ve got a nice boat and a beautiful home on the water. Every day I pinch myself and think how very fortunate I’ve been.’
But he also feels he’s achieved something worthwhile. Looking back, ‘The big break-through was when, after we’d been undercutting the big banks for a while, they turned around and dropped their home- loan interest rates by almost 3 per cent,’ he says. ‘I know that put money in the pockets of millions of Australians. And that makes me proud.’
StepheN corby
GolDen ruleS
1. You must look after your staff. I’ve always believed that your No. 1 customers are the
p eople who work with you. If they don’t trust you, if they don’t believe in you, they’re not going to be loyal to you.
2. Show strong leadership, and p eople will follow you.
3. Concentrate on your core business and cut out all unnecessary expenses.
4. Don’t be afraid of partnerships if they’re necessary.
5. Talk to positive, successful p eople and ask them how they got there.
6. Learn from your mistakes and embrace change.
And be brave. There are opportunities even in recessions.
Special Blend For Success
Angela Vithoulkas
VIVo Group;
established 2003;
twenty- eight employees;
eginato
$2 million- plus turnover
Angela Vithoulkas was
born into the cafe busi-
Photo: Anthony R
ness: her mother’s waters
broke at the family’s suburban milk- bar cafe as she was making coffee. By the age of three she had caught her first shoplifters: she ran after boys stealing lollies and smacked them with a broom.
When Vithoulkas was seventeen, in 1983, she and her older brother, Con, started their own
cafe in William Street, Sydney. They sold it at a 100 per cent profit two years later: 90 per cent of cafes fail within five years. Vithoulkas and her brother now own Vivo Cafes—three sites on George Street, in the city centre—which turn over $3 million a year. ‘P eople think of cafes as small business, but it’s anything but small,’
Vithoulkas says. ‘We are setting a new standard for small business. My mother is very proud of us, but she can’t understand why we keep taking risks opening new businesses. But we love what we do. It’s not about the money—it’s about the adventure.’
Vithoulkas’s mother would dearly like to see her successful daughter married to one of those nice city suits who frequent the cafes. Although whoever wants to date her must accept her tremendous work ethic, which sees her rise at 4 a.m. most weekdays to prepare for the morning rush and power on till 8 p.m. or later. In 2007 Vithoulkas won the Telstra NSW Business Women’s award. She and Con had already won City of Sydney Business Awards for Business of the Year in 2006 and outstanding cafe of the year in 2005 and 2006.
From her first few months in that first cafe, Angelique’s, Vithoulkas has been learning continuously. Her parents put up half the money for
188 HOW I MADE MY FIRST MILLION
that business, but it was up to Angela and Con to make it work. Within three months, however, they faced disaster when Con nearly died in an accident that killed other family members.
Vithoulkas was left alone in the business while Con spent months in hospital. ‘After his accident, my employees demanded that I pay them double or they’d leave,’ Vithoulkas recalls.
It was a painful trial for a teenager who had never worked with anyone but family. ‘It’s horrible to fire someone. You don’t often plan that, so you don’t have a replacement. But I thought I’d rather close the business than be blackmailed like that.’
Vithoulkas struggled on alone until Con was well enough to join her and they have worked together ever since, splitting responsibilities according to their talents. She’s good at p eople management, so she handles staff, customers and suppliers; he has a knack for efficiency, stream-lining procedures and spending. For more than twenty years now they have bought failing cafes and transformed them into buzzing venues supplying successful corporate catering. But it’s a slow- burn money- maker: the real profit doesn’t come until they sell the business.
Angela and Con’s third venture turned a near- broke cafe into one of Sydney city’s first
European- style, al- fresco havens. They added 200 seats and introduced paper cups instead of polystyrene so the coffee tasted better. The sale of that business after five years brought them their first million dollars. ‘Taking over businesses that have a history of failure is an enormous risk and a stressful road full of obstacles. There are absolutely no guarantees—except that it probably won’t work,’ Vithoulkas says.
‘Why do we do it? We don’t dwell too much on this, except to say that it’s what we do—
start with what looks like a disaster, pull it apart, reorganise it, turn it into a challenge and then conquer it.’
During the 2001 stock market crash they lost most of their fortune. ‘It was very difficult to lose that amount of money,’ Vithoulkas admits. They sank the remainder into the original Vivo cafe in 2003 and have now regained what they lost.
‘It’s always hard to find a good site,’ Vithoulkas says. ‘Despite its position, this business was bankrupt. The rent hadn’t been paid in two years.
When we bought it, all the money went into back rent and paying the suppliers.’ Why did they succeed where others had failed? ‘We knew the cafe business. Running a small business is tough—it’s always tough. You are opening a door without any customers, continuously funding it
190 HOW I MADE MY FIRST MILLION
and wondering whether you can pay anyone, including yourself.’
Knowing the customer, especially the city office-worker breed, has been crucial to their success and, more recently, their very survival. Thousands of their customers
Why do we do it? We were made redun-don’t dwell too much on dant as the financial
‘this, except to say that it’s crisis hit the big end what we do—start with of town. But Vithoul-what looks like a disaster,
pull it apart, reorganise it, ‘ kas saw the writing on the wall and acted
turn it into a challenge and
then conquer it.
fast. ‘It wasn’t diffi-
cult to see what was
coming. We are in the central business district, and when one building loses 700 p eople—and these p eople represent your customer base—you can lose your business in a heartbeat. If you lose 20 per cent of your turnover, where do you go?
‘I knew that not only did we have to retain as many customers as possible, we had to find new ones, because so many of our existing ones were clearly going to vanish.’ So Vithoulkas got busy planning. Store renovations, new menus, new prices and a fresh attitude from the staff all played their part in transforming the business. ‘The crisis has hit workers from all walks of life—everybody is more money- conscious now, so we had to offer
better value and focus on service. Consumers are savvy, and you cannot take their loyalty for granted. I asked myself what we were doing well, in every part of the business, and then figured out a way of doing it better for less. Now the company is in the best shape it’s ever been. When the recovery comes, we will be very well positioned.’
Today, the company is turning over around 30 per cent more than before the crisis—an extra ordinary achievement.
Vithoulkas has noticed over the past few years that the pace of working life has sped up dramat-ically: ‘The days of the long lunch are over,’ she says. ‘P eople are meeting for a coffee now—to save time as well as money.’
All leftover food from Vivo Cafes is given to OzHarvest to feed the homeless. Vithoulkas also supports the Nelune Foundation, which helps p eople with cancer buy special food that assists their diet during chemotherapy. Vithoulkas became involved through a customer. ‘We do get to know p eople here,’ she says.
She and Con are now planning to franchise Vivo, but they hope to keep it more personal than international chains such as Starbucks. ‘We want to conquer the world,’ Vithoulkas says.
‘One coffee at a time.’
kerrie davieS
192 HOW I MADE MY FIRST MILLION
GolDen ruleS
1. Attitude is everything. be positive and brave.
2. Don’t be afraid to admit you have been making mistakes and to put them right.
3. be prepared to spend money on innovations, regardless of economic conditions.
4. Everything is negotiable except your vision.
5. There is nothing wrong with Plan b.
