https://www.oasispartners.com.au/series/troubleshooters-podcast/ We aim to put you in touch with real life business lessons that may help you save valuable time rather than trying to figure it all out on your own. Each month Mike McGrath delves deep into the lives and careers of business owners, entrepreneurs and leaders that have spent time in the tough school of hard knocks. Intimate and deep dialogue aimed at really getting to the heart of the stories, behind the gloss and successes. So why not jump-in and take a listen to the brightest and best leaders sharing the good, the bad and the ugly! Thu, 08 Oct 2026 04:49:52 +0000 en-AU © 2021 Oasis Partners Real Life Business Lessons Oasis Partners We aim to put you in touch with real life business lessons that may help you save valuable time rather than trying to figure it all out on your own. Each month Mike McGrath delves deep into the lives and careers of business owners, entrepreneurs and leaders that have spent time in the tough school of hard knocks. Intimate and deep dialogue aimed at really getting to the heart of the stories, behind the gloss and successes. So why not jump-in and take a listen to the brightest and best leaders sharing the good, the bad and the ugly! Oasis Partners martin@eastcoaststudio.com.au clean yes fa369ad3-8172-55b0-be8a-ed7173fd9d10 https://wordpress.org/?v=6.6.10 https://www.oasispartners.com.au/podcast/from-marketing-beer-to-marketing-marketeers/?utm_source=rss&utm_medium=rss&utm_campaign=from-marketing-beer-to-marketing-marketeers Tue, 10 Mar 2026 04:39:23 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17838 https://www.linkedin.com/in/iamsimondell/ Transcript Michael McGrath: 0:06 Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now today's guest, Simon Dell is a sales and marketing man through and through, among other things, he's the CEO of the world's largest fractional marketing platform, CMO, today, we unpack the world of marketing, looking back at the good old days, and then getting current and chatting about the digital revolution, before finally having a look at the world of AI and what it might mean for business and marketing in the future. So sit back and enjoy my back and forth knock about session with Simon. Simon Dell, welcome to the troubleshooters podcast. Simon Dell: 0:48 Lovely to be here. Thank you for having me. Michael. Look Simon. Michael McGrath: 0:51 I'm looking forward to this. I thought we'd have a little tour through marketing, starting back perhaps when I came of age in the early 80s in terms of business. So that is a while ago. Now, you are the founder of CMO. You are the largest fractional network business in the world. So tell us what Simo stands for. Tell us what you what you do now, Simon Dell: 1:18 fractional marketing network. So and look, when I say we're the largest in the world, I've, no, I've absolutely zero proof of that. Michael, I just keep saying that to people. Michael McGrath: 1:28 No, well, I suppose there's a lesson there for all of us, yeah. So tell us a bit about it. Simon Dell: 1:37 So essentially, we operate very similar to how Airbnb operates. We collect up all these fantastic consultants and freelancers, and then we sort of resell them back to the market. Who needs somebody? It's the same operating pattern as something, as I said, like Airbnb or Upwork or freelancer.com except the difference between us, between us and say, Upwork. It's normally they're slightly higher ticket people, and we are very sort of geographically, or largely, 80% of the time we're geographically, trying to match people with businesses in the same city or the same area as them so they can actually go in and be part of the team, sit in meetings and that sort of thing. So it's all people in marketing space, anything from senior strategists all the way down to social media managers, videographers, anything in marketing. Michael McGrath: 2:36 So it's a platform effectively to put support businesses in touch with, with with, with the talent, Simon Dell: 2:44 yeah, yeah. Look, that's that's where we are. That's where we are taking it into that platform format. The perhaps the difference with us is that we recognize that marketing is quite obviously. We'll talk about that today, but marketing is quite a sensitive topic for a lot of businesses, and they do really want to understand who they're getting, who they're getting, and whether that person has the right skill sets, and so on and so forth. So there's a little bit more, there's a little bit more of an intimate relationship, rather than just being a sort of a cold click and click and buy platform, Michael McGrath: 3:23 yeah, so it's interesting. So we'll touch on this today, because, you know, marketing, when I came of age, you know, operated and happened in a certain way. There were certain rules to the game. And then I think there was a big change, you know, around the around the smartphone, and that, big digital there was, you know, was the technology lads were threatening for a long time. If you remember that we were going to be doing buying and purchasing, doing everything online, didn't have for a long time, but it did happen fairly quickly when that smartphone got into everybody's hands, and then the whole game began to change. If you remember, with YouTube, no one could figure out how they were going to make any money. But they only, well, sorted that out, didn't they? So, so there was some big changes there, which I'm I'm going to dive in and get your perspective and thoughts on. And then obviously there's, you know, just when you thought, couldn't get any worse, I guess, in terms of the fractional nature and the sort of the splintering of marketing and the disciplines we're now looking at AI, which I think is having a significant impact. I mean, I read the the other day that that that the marketing is kind of, you know, bit like the airline business did in covid. Marketing is really getting a big brunt of AI, and what's happening there, we've seen, you know, significant consolidation already, from an m&a point of view, in the ad. Ties the agency world. Globally, we're seeing layoffs here in Australia, so there's definitely a reset going on. And we can perhaps chat about that. But before we get into that, I want to, I want to take us back to the early 80s. And when I came of age, we had, it's interesting brands in this I mean, I remember in the 70s brands, there were big brands like Heinz Cadbury's Hoover Purcell was a very famous washing, washing, cleaning kind of thing that, in fact, I remember Victoria Beckham said when she joined the Spice Girls, that she wanted to be bigger than Purcell. So that's how big personal was at the time. She may have achieved it, but, but those big brands and they used to dominate the television with advertising. So you only had two channels, you know, Coronation Street, or the Two Ronnies, or whatever they get like 20 million audiences, right? And I can sing you, I won't, because I've got a terrible voice, but I can sing you all the ditties that Cadbury's were putting out and Heinz were putting out, because we kind of, you know, you either watched ITV or BBC. We didn't even have BBC Two, I don't think and, and we would basically be brainwashed with with these brand ditties, if you like, and, and so that was my understanding of branding, but it it really exploded in The late 70s, 80s. I remember being at school in the fifth year and Ian Fleming, who claimed his dad got the bond job, but turned it down. Nobody believed me. But anyway, I used to. I was telling my mom and dad that once I was only 14, and I bought it from him that his dad was going but anyway, his name was Ian flem. He was a good footballer and and he came back from Germany, interestingly, that his parents were divorced. His dad lived in Germany. He was the only divorced kid in the school. I mean that. I mean that this is the mid 70s, and he came back with some Adidas football boots, and he opened them up in the changing room, because we were mad on football and he brought these boots out, which were green and gold. And we were like, it was like, he just was showing us a spaceship. And we're like, wow, because at that point, football boots were just that football boots. So there was no like, you know, this type versus that type. And that was the beginning of from 75 the beginning of us waking up to the sports brands Nike. I remember Nike basically sponsored John McEnroe and John macros at will, Wimbledon acting out. And if you read the Nike founder Phil Knight's autobiography, he talks about how good that was for their brand. John macaro acting out. And he used to ring him and say, keep on. Keep it up, right? Because it was clearly having a big impact on, on selling their trainers and stuff, so, so that was, you know, and then when I got into business, you basically hired an advertising agency. So when you got to a certain scale, and they pretty much did everything, you know, you wanted. You wanted an advert, they got you an advert. You wanted some print done, they got you the print done. And it was a sort of one stop shop, if you like. And I suppose that's the way it was for quite a while. If you had enough money, you hired an advertising agency, and they got to work for you. And I remember my first business was called Geno's, which was a pizza business and pizza home delivery. And I remember us brainstorming one day at this advertising agency in Manchester, and we decided that we needed a jingle, and because we're doing a lot of radio advertising, so I said, Well, what about the dex is Midnight Runners tune, because that was a number one. It was called Gino and so, so anyway, so they reached out to they reached out to the Kevin, I can't remember his other name, but they reached out to the guy who'd written this song. And he said, No, he didn't, he didn't want to do it. So they said, Look, don't worry. All we've got to do. Do is drop one bar every six notes, and we can get around the copyright. So they did, and they got to work on this jingle. Completely butchered it, but somehow they worked the words, piping up pizza delivered direct to your door. Oh, gi knows. And having but. It and then smashing the airways with it. It was such a successful little jingle for us. But again, we never paid him a cent in royalty because they got ran it. But they would take care of us, and they would walk us through this kind of stuff and and now, coming up to date, we've we've got this, we had this digital revolution where we've now got, I don't know how many, but we've got 18 or 20 different disciplines in the marketing arena. So tell us a bit about that digital what happened with the smartphone and how that's affected marketing and evolved effectively and led to this fractional marketing solution that you've provided. Simon Dell: 10:47 Look, I just very quickly harp back on the 80s, because I grew up in the 80s, and one of the most memorable campaigns I still remember to this day was all the silk cut adverts. And I wasn't a smoker. My dad wasn't a smoker. My mum, nobody smoked in my household. My my grandfather did. But I just remember all the incredibly clever silk cut adverts because they couldn't use the name. They couldn't put the cigarette names on the actual billboards. So you just had this piece of silk with a cut through it. But of course, everybody then knew what it was. So there was, I think there was some incredibly, incredibly clever, clever ideas back then. And I think, you know, when you watch old episodes of Mad Men and stuff like that, and watch that happening, you know, in a fictional environment, you you kind of understand how it all worked and the power that those creative people had, but you're absolutely right. It all changed. Well, it all changed with with two things was, you know, the iPhone, which was 2007 and then Facebook, and Facebook wasn't the first, first social network, but that was because that was Facebook was three years before the iPhone, so that was 2000 2004 but it didn't. It took a good two or three years, and those kind of things both happening at the same time. Suddenly just exploded. The opportunities for people, for people, for basic human communication. All of a sudden you were dealing with this capacity that you could one to one without needing to, you know, pick up a phone or, you know, it just, it just blew that opportunity for communication completely into 1000 pieces. And it took a lot of time to settle down, for people to understand how it was going to work, and for, you know, Facebook, to understand how they were going to monetize and everything but that 2007 to 2010 was just like, revolutionary, Michael McGrath: 13:07 yeah, yeah, I suppose what, what I'd seen, I'd come through that early digital period where everyone had a website and and then, you know that originally, you know, we, we, it was slow, And it was effectively a brochure online, and they were threatening that commerce would be done. But for years and years, it never imagined. All of a sudden, for some reason, over the space of two or three years, we became comfortable with with doing business online and buying stuff online, and now you know that that has evolved to Yeah, I mean, the last podcast we did, we talked about a guy we talked with a logistics business in the US that's doing last mile and the speed of delivery now that you're getting deliveries within two hours of pretty much whatever You want in the US at the moment, it's just sped up dramatically. Simon Dell: 14:04 But in terms of E commerce, I don't think a lot of us realize that eBay turned 30 years old this year. So you know when we when we you know when we think of eBay or the last time we bought something on, you know, Amazon, you kind of, you don't necessarily think that back that far and just go platforms, that eBay platform, which I think was one, again, one of the very first ones out there in terms of, you know, e Commerce and the change of the model direct to consumer. But that's, that's 30 years old. This year was 1919, 95 Yeah. Michael McGrath: 14:43 No. It's interesting. When you look at the top five companies in the world that might buy market cap, and they're all those digital global giants, which, although they've been around for 40 years, they weren't here 50 years ago. If you look at the top 540, or 50 years ago, they've taken a. 150 years to get to the top five status. So there's been a massive revolution. And, you know, we in business. We're just, we're wrestling with, well, what do we do with this, you know, and how does a typical small business have put some context on this? So there's a million businesses in Australia that operate, and about 700 and odd 1000 of them employ between one and four staff. About 300,000 employ between four and 200 staff, and only 5000 employ more than 200 people. And so that's the context, and your average mid sized businesses turning over 6 million and making 10% and they are, you know, they're having to get very creative around marketing. So I mean that, just on that point alone, I did a quick Oxford English dictionary definition of marketing, which says the activity, or busiest business of promoting and selling products or services, including market research and advertising. It's interesting, the corporates, the big lads, have separated marketing and sales years ago, effectively, to the point where a lot of the buyers companies we're dealing with, they don't even talk to each other. Sales and marketing. It's just like two disparate disciplines, but most of us in the in the humbler real world, are seeing sales and marketing as very much needing to be aligned and needing to work together. Simon Dell: 16:36 Yeah, and, and I would I say this to everybody? Sales, good sales, people make marketing easier. Good marketing makes sales easier, right? That is, is, it's a symbiotic relationship. Sometimes you need more marketing and less sales, and sometimes you need sales more sales and less marketing. But they both, if they're both done well, they both make each easier. And by easier, I mean better return on investment, quicker conversions, so on. So it they have to exist in parallel with each other. Michael McGrath: 17:11 Yeah, the old days, it used to be, you know, the the old adage was, you know, only 50% of your marketing budget works, but no one knows which 50% whereas we've moved into this hyper intensity around trying to measure everything, how do you think we're going on the measuring front? Simon Dell: 17:31 I absolutely terrible. And I think this is one of those things that marketing lets itself down with, incredibly badly, even just the basics of I work with a law firm, and we do some work with a wealth management company. Now, both of them are generating leads every day, but the law firm logs every single lead, irrespective of where it comes from. They log it in a register full details, who it is, what they're asking for, etc, etc, etc. The wealth management company don't do that. And I've been trying to explain to the wealth management company that they should do that so we can understand what's happening and where leads are coming from. But with the law firm doing that, we can sit there and go straight away, they sort of go, Hey, we're getting they're getting in 10 leads a day. It's absolutely insane. But they'll go, let's put more money into marketing, you know. Let's do that because they see the value in it. Because they see better, you know. And for them, the job then becomes refining the spend. Okay, yes, spend some more. But also, let's spend let's change the messaging. Let's try and get a few less tire kickers. Let's get some higher value clients with the marketing spend. But that's working for them. The wealth management company don't have that ability to track they're not tracking anything. So we can't sit there and go, Hey, this is what your money this is what your money delivered. And I think without that, irrespective of whether you're a company of three people, or 300 people, you should, you should essentially be recording how many new clients, how many new inquiries you get every week. Michael McGrath: 19:09 Yeah, yeah. Look, I agree. I mean, I've done a fair amount of consulting and strategy work over the years, and you know, I can tell you that 90% of business problems are typically sold by more sales. The difficulty with that is that if you don't put a process, a sales process in place, which includes a kind of, some kind of marketing machine that analyzes and measures you're you're really just, it's a hidden hope. And we see professional service firms are terrible at this that, you know, they're, they used to referral. They used to, you know, they used to, you know, not really having to worry too much about sales. But, you know, you talk about marketing being affected by AI, certainly, accountants have been massively affected by AI, which can do a really good job of crunching numbers, by the way. And so I think you know that ability to measure, monitor, figure out, have a strategy and a process and and then begin to get into the psychology, you know what, what we're dealing with. But the other thing is, is that discipline of running a pipeline and then running clothes lost. I mean, the amount of businesses I've been into where the, you know, we get older, if they've got a CRM and they've spent a lot of money on it, often it's full of junk, and no one's kept it clean. And then there's a pipeline which has got stuff in that's years old. Well, it's not effectively, a pipeline at that point. So that that lack of rigor around that sales, marketing area, I think, is a is a big problem for for many small businesses. And I think, you know, there, there is an opportunity to tidy that stuff up, I think, and make it happen. And you, you know, the law firms are classic, if there sounds like they're across, they're across. Simon Dell: 21:04 It look before I was in marketing, I spent 10 years in sales and, you know, from largely in the FM, FMCG space, so I kind of understand both sides and the importance of both things there. But you're absolutely right. Is that is data. Data is the lifeblood of a lot of businesses, and good data is, you know, is what makes businesses strong. And again, a good example of that. We started, this is a good six, seven years ago. We worked with a manufacturing business here in Brisbane that manufactured confectionery and she just got a new factory, she was starting to really scale up her operation. And for the previous two or three years, she'd been operating in like, pop up stores. And I said to her, I said, Well, how many sales have you made in the last two or three years? And she's like, hundreds and hundreds. We get people that are coming back all the time. They love our products. You know, we've been doing really well. And I said, okay, so where's the, where's the data of all your customers for the past three years? And she just looked at me blankly, and we're like, Well, we haven't recorded anything. And I was like, you know, look, and I'm good friends with her, and we have a we joke about that, you know, but I'm like to not, to not do the basics. Michael, of recording the data of the people that are buying from you properly, I think is still a massive problem across and that goes for whether you're making chocolate or whether you're an accountant. I just, I just don't think they do it well enough. Michael McGrath: 22:43 And look, you know, it's never been cheaper to collect data in terms of, we've got the technology and we've got the digital so the, you know, it really is time to, you know, sort that out. If you haven't sorted out in terms of, just bring yourself today, if you look at advertising agency the market in Australia, it's, it's worth about 3.9 billion and it employs 20,000 staff. Interestingly, they pay about 1.8 billion out in wages, which is about 46% of revenue. That's that's going in wages, and they make about 11% which is pretty much the average. The average is about 10 and a half percent for that mid market. Most of the agencies are mid market. There's some big guys, but most agencies are sub 50 people, or if you look at them by numbers, I mean, what do you say to a young marketing graduate these days? I mean, what you know that's either studying or finishing their studying, the amount of change that's lightly in the next five years. What do you tell them to Simon Dell: 23:47 my thought is, I think there's two types of Mark. I think when you're at that marketing graduate level, you need you go in one of two directions, right? Number one is, you go, you become a generalist, and you understand the whole marketing sphere that's online, offline, advertising, everything, right? Because I think those people are so extremely valuable for people that can look at the that look and can look at a problem from top down, and sit there and go, Okay, here's your here's your strategic solution. Now, is chat GPT going to replace some of that? Yes, quite possibly. But that doesn't mean to say these people still aren't hugely important for helping strategies become implemented. So getting someone that sits there and go, Hey, we're making sure these things are happening in the timescales that they're supposed to be happening. So I think that's that's one conversation I would have with a graduate. The other thing I would say is, go and really specialize in something that you're passionate about, right? Be that Google ads, be that copywriting, be that graphic design. Design be, and if you are really, really good at that, you can still be using AI to help speed your work up, produce some ideas and things like that. But taking a deep dive in a particular sector of marketing, I think, will still be extremely valuable. You know, we still, we still need, we still need bookkeepers. We thought 10 years ago, everyone thought zero was going to make every bookkeeper redundant, right? And it's simply not the case. What happened was the terrible bookkeepers got made redundant, and the good bookkeepers made more money and got more clients. Michael McGrath: 25:36 I mean, you, you're talking into some extent about these soft skills, or what we're always known as soft skills, right? This emotional intelligence and humans understanding human psychology and that, I mean that AI is not good at that. It's not good at strategy. It's not good at, you know, how do you influence stakeholders? How do you walk into a room and figure out what's actually going on? And I think that, you know, we're definitely seeing in the professional service world, those skills are going to come to the like, they're already at the top. Like, if you, if you track any, any accounting business, any accounting career, the guys with the EQ rose up the chain because, and, you know, I IQ. I mean, that's AI in a lot of ways. AI's figuring out technically what what to do. But it's interesting. I was with a CEO. I had coffee with a CEO, a former CEO of a large international advertising agency. He's now just got re skilled, but effectively he got made redundant through a recent merger. And he said to me, I was just having a coffee with him, and he said, Mike, everything we do in marketing can now be done by AI, and if it can't be done that, well, it's going to be done well, very quickly. He said, All we've got his soft skills. He said, All we've got is socializing strategy. And I thought that was a bit over the top, but since I've spoken to him a few weeks ago, I'm beginning to see that being reinforced. So it's interesting, you said about getting a good breadth of knowledge and then drilling into some things and getting really good at one or two things that you love, seems to be that's what I'm reading. It's saying Simon Dell: 27:27 because, because you're still going to need somebody to explain the results to somebody at the other end, right? And it's somebody that can empathize with the client and sit there and go, Yep, this is what we did, or this is what the AI tool did. Yeah, we can improve on that and those kind of things. So it still need, it still need that you're spot on. EQ is the, I think, is certainly in the marketing space, is the, is the currency moving forward, right? And I think that, and the other thing that I try and teach my kids, bear in mind, they're seven and nine. So it's, it's like, you know, flogging a dead horse sometimes. But to me, it's, it's the leadership. It's and leadership, not necessarily, hey, I'm in charge of a team, but it's leading, leading change, leading an implementation, leading a strategy. Because that AI won't do that. Ai won't lead. AI is a tool for implementation. So I think if you're in marketing today, become, become that leader, and that's what I think a CEO, or, you know, a business owner, will look for when it comes to employing someone and paying someone in the next 10 years. Michael McGrath: 28:45 I mean, you know, I speak to a lot of owners. I mean, we've got, we got, you My day job is running an M and A practice, and we're, well, what we see a lot of in our world is that owners are looking for problem solvers. They're looking for troubleshooters. They're looking for people with initiative that none of that's changed. You know, as a 10 year old kid delivering bread around Solio, the streets of Solio in Birmingham, I'd figured out that there was a problem. The problem was the baker had bad legs, and my legs were great, right? And and I went to work, and then I smiled at everyone, and I was pleasant, and then I got tips and I got encouragement. So it's no different. Now, you know, I looked to owners, and they're they're desperate for leaders. Like you're right, the leader is not always the guys in charge. Actually, the best leaders are often good followers, and what they do is they anticipate what might need doing, and they get busy with that. And that's often just a positive psychological mindset that says, I. Okay, how can I be useful and constructive? Anyone can go over the problems, but there's a much smaller group that can say, right, what can we do? What can we do about this? I think that's going to be true of marketing. It's going to be true of everything. Simon Dell: 30:12 Here's another little story, a friend of mine who's a dad at the same school as where my kids are, he jacked in his, I think, software, job, management job, about six months ago to go and become a to become a gardener, right? He wanted just to be outside more. He just didn't want to sit in an office. He's got four kids. His wife thought he was mad. He is absolutely inundated with work right now, because he does one thing better than 95% of the rest of the market out there is, he communicates with the customer better, right? He calls them back within an hour. He emails them back when they are when they email him, he's quoting them within 24 hours, he's turning up to the jobs on time. If you're going to be a success out there, irrespective of whether you're going to be a success in marketing or M and A or delivering pizzas, right? It all boils down to you doing doing that job really well, okay, and doing it as you said you would do it, or the client wanted you to do it. And I think those people will continue to succeed, even in the days of AI and advancement and all those kind of things. Michael McGrath: 31:23 Yes, it's a very good point that that you know, the delivery, the execution, just doing that from a customer's point of view, like one of the things that we're seeing, it's easy to put the boot into the corporates, and I quite enjoy it, to be honest with you, but, but, but, you know, the one thing that a small business, so one thing a small business has, a mid sized business has in the market, is it's flexible and it's it can be very responsive. Whereas, if you look at the, you know, I'm deal with Westpac, my bank, they're completely dysfunctional from a customer point of view, and have no recognition of that, right? So are the other three, by the way, like moving banks is a bit like changing from Coles to oasis. It's the same, same, really, but, but that challenge of you know, you know, I have to wonder why the senior guys at Westpac or NAB or whoever don't get on the phone and see what it's like to solve a problem for themselves. Because if they would, there's no way they could be happy with what's being delivered. Whereas, I think, as a small to medium sized enterprise, if you get customer centric, which is what you're talking about. You're going, what does this feel like for them? How can I make it better? Because if you do, you make friends. Because whatever the consumer, whatever product or service they're looking for, they're absolutely desperate for good service. Simon Dell: 32:58 And going off on a tangent. Here is i? When I went to university, I did a I did a degree. Well, I did two degrees, one in politics and one in law. When you, when you talk about the definition, I'm going to get deep here, when you talk about the proper definition of capitalism, right? It was all about making the best product that you could make for the market, right? So if you were making a sandwich, it was about using the best bread, the best ham, the best salad, the best sauce, the best salt, right? That's what core basic capitalism is. Was producing the best product, and in return, the consumer would pay you the best price for it. Okay, what? What's happened? I think, in the last 2030, years, that we've got this bastardized version of capitalism, which you which, as you said, you can see, you can see so obviously in the banks, is that their main concern is delivering the value to the shareholders rather than delivering the best service. So when you're a small business, when you're a medium sized business, your priority is service to your customer. You don't give a shit about there. You don't have shareholders. So that's why I think so many mid sized businesses do so well, because their focus is completely customer centric in the in the true original sense of what capitalism was supposed to be, you know, and not getting diverted by going, what dividends are we paying out to the shareholders this year? Michael McGrath: 34:30 Yeah, if you look at the top reasons for the failure of any business, and the stats vary, but it's as high as 80% in the first five years that 80% businesses don't survive the first five years. But if you look at the number one reoccurring reason for that is there was no proper evaluation of the market done in terms of the customer. What you know, what does the customer want? What does the customer need? And what will they. Like, what will they pay for it? And can I produce it? And so that idea is really at the heart of what you're talking about, which is what you know, what does the world need right now? You know, what does the market need, and can I provide that in a way that's eloquent and effective and he's going to produce a return. And I think that that's one of the critical roles of marketing, is to figure out, okay, what, what's the context here, and and then operate within the broader context. So if you look at my business, I got into m&a 17 years ago, the context for that was that of those 300,000 companies that are in the mid market that employ between five and 200 staff, 20% of them were owned by the baby boomers. Are going to exit over the next 15 or 20 years. That's just that's like the tide rising. That's just a fact. So the question then is, how do you, how do you, how do you get mobilize to be of certain genuine service to those people that clearly, you know, Oh, Father Time, you know you can run, but you can't hide. And there's the biggest shift of wealth going on in the M A market in terms of the transfer of ownership that we've ever seen and and that was, that's the curl of it. So whatever you're doing, what's the context, what's actually happening? And, you know, you look at marketing now, you know going forward now, with AI, certainly there's going to be some change for marketing, but there will be winners and losers, and the winners are going to figure out what the market needs. Simon Dell: 36:46 Yeah, it's to that exact point. My, my, my business partner had a quote that he made, I'm going to say, about five years ago, and I often repeat this all the time. It's the it's the only smart thing he's ever said. Let's hope he doesn't listen to this. He said, People don't buy the cheapest product. They buy the product that they understand the quickest, right? So when I look at, you know, like a business like yours, if the if your if your target market understands what you do quickly, they'll buy from you if you're if your messaging is confusing, if they can't see the value, they don't understand if they're dealing with the right person, they not quite sure who they're talking to, all those kind of things they don't buy from you. But if you can succinctly, and this is any business, if you can succinctly, get your message across to people quickly, and that's important, quickly, easily, and clearly, they'll buy from you, and they won't give a shit about the price. Michael McGrath: 37:49 Look, I think that that the natural default is is to be verbose and confusing, right, particularly in professional services, right? And the use of bid world, one of our values is Simplexity, because if you're going to explain something simply, it's not necessarily simplistic. You've got to actually be a master of what you're doing to be able to explain it simply. So it's not a dumbing down. It's actually an ability to communicate something that's quite complex, very simply. And I think that's one of the definitions for me of good marketing, is to cut through the clutter, be less verbose. What is it that you're trying to say? And I think that's, you know, I think that's where the value is in. I mean, you know, the objectivity of an agency, or the objectivity of a of a practitioner that's good at what they do can absolutely transform a business and its messaging. Simon Dell: 38:55 There's no the quote as a British, I've just looked it up. It was a British economist, EF Schumacher, German name, British economist. His quote is, any intelligent fool can make things bigger, more complex and more violent. It takes a touch of genius and a lot more courage to move in the opposite direction. And I think that's a key thing, is there is the courage, courage to make things simpler, right? We all sit there and go, if we add more features and if we add more messaging and we add more colors and more pictures, that's going to appeal to a bigger market, but it's there's a there's a courage in saying, No, that's our market. That little thin sliver there is our market. We've got a single message, and that's who we're going to go after. And I've made that mistake in the past, where you go, hey, I want to be all things to all people. You know, you can't be that. It, it's courage that you need to take to go. I'm just going to focus on that. Michael McGrath: 39:55 It's interesting. In those 17 years, we've rebranded twice. We've changed our. Name twice, albeit fairly modestly the last year, but, and that was the second time, was in early covid in 20 and it's probably time to rebrand and reposition again like it's never once and done like it's it's never is. And now to do that? Well, we have to put money aside, we have to get people in, and we have to do it properly, because it's so tempting to half ass it. Yeah, absolutely. And to cut corners, and, and, and, you know, one of the traits of the advertising agencies in the 80s, when I was in business, was they would always agree with you, because you paid the bills. And in the end, I was looking for people who were contrarian, who were prepared to go into bat and say, No, you're wrong, because it was no good having people agree with me. There's no point. Yeah, that's just silly, right? Simon Dell: 40:54 Yeah, well, again, there's that Steve Jobs quote about you don't, you don't employ people and tell them what to do. You employ people and get them to tell you what to do that. Yeah. You know, I've paraphrased that terribly, but it was something along those lines, Michael McGrath: 41:07 yeah, look, just perhaps finish on a positive note. I mean, we see enormous potential for AI to help us do what we're doing better. Like, unbelievable. Like it's almost heaven sent from our as was covid. By the way, covid completely transformed our business from a productivity point of view. We would never have guessed it right, what we were able to do online that we'd never really imagined prior to covid. So I remember us doing a transaction, our first transaction in the middle of covid, with a buyer from Dublin, a client in Melbourne, and us in Sydney, and we were all in lockdown, and that deal got done. And and then the idea of business development, none of us believe we could do business development remotely, and now we can very effectively, right? Not 100% but 90 plus percent. No problem now we it. Covid taught us that. Now what AI is going to do for us is we've got lots of Intel. We've measured everything for 17 years. I've got a digital guy who was involved at the beginning we were developing and measuring when we couldn't even afford it, and but what we've got is a lot of lost Intel in the system that AI is is beginning to just transform real time through the language model. It's we were used to be restricted to objects and fields, and now with the language model, it can sweep real time, and that data is is dynamic, and we're we're now figuring out, okay, how can we find it, how can we get it, how can we use it, how can we put it in front of the people that need it? And without AI, we couldn't, we couldn't contemplate that. Yeah, so tell us about some of the advantages of AI from a marketing point of view. Simon Dell: 43:06 Yeah. I mean, well, I'll tell you that. I'll tell you the pros and the cons. So the pros for me, I think Id, ideation, ideation and copywriting, the idea of saying to I mean, I've come up with tag lines for businesses using chat GPT that I would have never come up with. So that's not to say that every idea that chat GPT comes up with is good, but it all boils down to this idea of taste. It's about you as a professional, as someone in marketing, the ability to filter through the dross of what chat GPT can produce and go, actually, that's quite and it's the same for you with data. You know, chat GPT could throw you, you know, sheets and sheets of data. But to a degree, it's still got you to sit there and go Hold on. What's the important data here? What are the things that I still that I need that are actually going to influence my ongoing decisions. So I think data analysis, content creation, ideation, I think those are the huge opportunities with with AI in marketing space that said, I look at, I still do a lot of work with Google ads. It's one of the things that I still sort of get myself involved in. I watch Google ads, try and write a a description for a business, and it fails miserably. The AI just fails miserably, right? It doesn't produce anything that's even close to understanding what the business is about. The other thing is, when you leave those systems to then try and generate your business on their own at the moment, they send you a lot of pointless traffic, a lot of clicks and things that you're paying for but aren't necessarily valuable. All to you. So you do still have to stay on top of those kind of things. Will that change in the next couple of years? Quite possibly, quite possibly, they'll just get better and better at it. Mark Zuckerberg is talking about meta going you won't ever need to set up any ads anymore. Meta will just do it all for you, because it knows what customers you want and it knows how to target them. So there's, there's pros and cons, but I think really that if we were saying one fundamental aspect of AI that I think is is fantastic for marketing, is just ideas. It's the capacity, the capacity to produce just a whole range of ideas. Again, I would say that's not to say they're going to get every idea. I think there's still some left field ideas that come from the human brain that that chat GPT isn't going to get. But those are the, those are the sort of pros and cons that I see for marketing and AI at the moment. Michael McGrath: 45:59 No, I mean, certainly that the technical, creative output, campaign execution that that's probably under threat, you know, I look at, you know, I look at the wage bill for marketing agencies at 1.8 bill on revenues of 3.9 that's 46% I imagine the opportunity for them is to reduce the wages and maintain their try and try and maintain their revenue, which Simon Dell: 46:26 is, here's the contrasting opinion, Michael, is that Coca Cola did their Christmas advert this year, entirely on AI, right, entirely with AI, okay, it's the classic truck driving through the snow scene, blah, blah, blah, the one that We've all seen 1000 times, right? It's entirely done by AI. It took six people, 30,000 prompts, 30,000 prompts into the video creation tool. The argument that a lot of people in. And when you watch this video, you just go, this is not this is not great, right? The argument is, is that, yes, there's less people in this but there's also this undercurrent of things now, I think Amazon and Microsoft were in the news in the last couple of days by saying that their AI systems are now costing more than the people that they sacked. So I would say we're at this really interesting turning point where we sit there and go, which is better for us, the people or the AI. And I think we've gone too far in one direction. Michael McGrath: 47:36 I think you're right. I don't think anyone knows yet. I think that. I definitely think, in fact, you know, my my youngest daughter, I've got five kids. My youngest daughter, Emma, is contemplating uni next year. She's 18, and she's been looking at marketing. She's looked at counseling and psychotherapy. She's looked at a few things. And one of the things that she's been thinking about, we've been chatting about, is how AI is going to anticipate, or, you know, what's the anticipation of AI in these sectors? And there's plenty out there, but I don't think anybody really knows yet. And I think we're going to be surprised. I think we're going to be surprised on what happens to employment ultimately. And I certainly think we're going to be surprised. You know, I think the opportunity is the young people in our organization, they're getting, they're being elevated through AI so we're, we've been inundated by graduates who want to do their undergraduates, who are looking for internships? Well, we've always been inundated, and we're now, we're now trying to find a way to accommodate them, and because they're smart and they're all over this in a way that the senior guys aren't. And so we're trying to find a way to harness that and say, Okay, how can we give them some exposure as an intern? And how can they, how can we tap into their their tech savvy, frankly, and they're, they're native, you know, they're kind of digital native. It you can't reproduce that, even if you're 40. They've never not had a screen, many of them in front of them. Now, there's plenty of drawbacks and all the rest of it, but certainly from a business point of view, we're not sure where we're going. We do know it will be organic. We do know we're going to have to be nimble, and we do know we're going to have to figure out as we go, like it's not going to be a bureaucratic process this. It's, I think it's going to be quite nimble. So anyway, that's been a fantastic discussion, Simon, I'm very grateful for your time today. Simon Dell: 49:53 Absolutely, my pleasure mate. It's I, you know, I could talk about these things to the cows come home. And so yes, thank. Michael McGrath: 50:00 You look, we wish you well with CMO, we were, we wish you well in what you're doing in fractional marketing, we'll make sure that your details in the show notes. If there's any owners out there that are looking to try and navigate marketing, then you've heard about Simon bright smart. Just to declare an interest, we have begun to use Simo and we've, in fact, I think it's our first week we're using one of your digital creatives. So anyway, I've declared my interest once again. Thank you, Simon. Simon Dell: 50:30 My pleasure. Michael, thank you. Michael McGrath: 50:37 Well, there you have it. I hope you got something out of our look at marketing and AI today. Now if you want to talk to Simon Dell, the details will be in the show notes. Quick shout out to our sponsors, Oasis partners, corporate advice with a practical bias, over 500 deals done since 1984 if it's time for you to look at your exit options, be sure to reach out to the guys at Oasis partners. We'll be happy to chat with you about your options. Now, if you like this content, be sure to tell your friends, and if you'd like to leave us a comment, only nice ones, please. As you know, we're very sensitive until next time, stay safe. You. You.]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 32 3 https://www.linkedin.com/in/iamsimondell/ Transcript Michael McGrath: 0:06 Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now today's guest, Simon Dell is a sales and marketing man through and through, among other things, he's the CEO of the world's largest fractional marketing platform, CMO, today, we unpack the world of marketing, looking back at the good old days, and then getting current and chatting about the digital revolution, before finally having a look at the world of AI and what it might mean for business and marketing in the future. So sit back and enjoy my back and forth knock about session with Simon. Simon Dell, welcome to the troubleshooters podcast. Simon Dell: 0:48 Lovely to be here. Thank you for having me. Michael. Look Simon. Michael McGrath: 0:51 I'm looking forward to this. I thought we'd have a little tour through marketing, starting back perhaps when I came of age in the early 80s in terms of business. So that is a while ago. Now, you are the founder of CMO. You are the largest fractional network business in the world. So tell us what Simo stands for. Tell us what you what you do now, Simon Dell: 1:18 fractional marketing network. So and look, when I say we're the largest in the world, I've, no, I've absolutely zero proof of that. Michael, I just keep saying that to people. Michael McGrath: 1:28 No, well, I suppose there's a lesson there for all of us, yeah. So tell us a bit about it. Simon Dell: 1:37 So essentially, we operate very similar to how Airbnb operates. We collect up all these fantastic consultants and freelancers, and then we sort of resell them back to the market. Who needs somebody? It's the same operating pattern as something, as I said, like Airbnb or Upwork or freelancer.com except the difference between us, between us and say, Upwork. It's normally they're slightly higher ticket people, and we are very sort of geographically, or largely, 80% of the time we're geographically, trying to match people with businesses in the same city or the same area as them so they can actually go in and be part of the team, sit in meetings and that sort of thing. So it's all people in marketing space, anything from senior strategists all the way down to social media managers, videographers, anything in marketing. Michael McGrath: 2:36 So it's a platform effectively to put support businesses in touch with, with with, with the talent, Simon Dell: 2:44 yeah, yeah. Look, that's that's where we are. That's where we are taking it into that platform format. The perhaps the difference with us is that we recognize that marketing is quite obviously. We'll talk about that today, but marketing is quite a sensitive topic for a lot of businesses, and they do really want to understand who they're getting, who they're getting, and whether that person has the right skill sets, and so on and so forth. So there's a little bit more, there's a little bit more of an intimate relationship, rather than just being a sort of a cold click and click and buy platform, Michael McGrath: 3:23 yeah, so it's interesting. So we'll touch on this today, because, you know, marketing, when I came of age, you know, operated and happened in a certain way. There were certain rules to the game. And then I think there was a big change, you know, around the around the smartphone, and that, big digital there was, you know, was the technology lads were threatening for a long time. If you remember that we were going to be doing buying and purchasing, doing everything online, didn't have for a long time, but it did happen fairly quickly when that smartphone got into everybody's hands, and then the whole game began to change. If you remember, with YouTube, no one could figure out how they were going to make any money. But they only, well, sorted that out, didn't they? So, so there was some big changes there, which I'm I'm going to dive in and get your perspective and thoughts on. And then obviously there's, you know, just when you thought, couldn't get any worse, I guess, in terms of the fractional nature and the sort of the splintering of marketing and the disciplines we're now looking at AI, which I think is having a significant impact. I mean, I read the the other day that that that the marketing is kind of, you know, bit like the airline business did in covid. Marketing is really getting a big brunt of AI, and what's happening there, we've seen, you know, significant consolidation already, from an m&a point of view, in the ad. Ties the agency world. Globally, we're seeing layoffs here in Australia, so there's definitely a reset going on. And we can perhaps chat about that. But before we get into that, I want to, I want to take us back to the early 80s. And when I came of age, we had, it's interesting brands in this I mean, I remember in the 70s brands, there were big brands like Heinz Cadbury's Hoover Purcell was a very famous washing, washing, cleaning kind of thing that, in fact, I remember Victoria Beckham said when she joined the Spice Girls, that she wanted to be bigger than Purcell. So that's how big personal was at the time. She may have achieved it, but, but those big brands and they used to dominate the television with advertising. So you only had two channels, you know, Coronation Street, or the Two Ronnies, or whatever they get like 20 million audiences, right? And I can sing you, I won't, because I've got a terrible voice, but I can sing you all the ditties that Cadbury's were putting out and Heinz were putting out, because we kind of, you know, you either watched ITV or BBC. We didn't even have BBC Two, I don't think and, and we would basically be brainwashed with with these brand ditties, if you like, and, and so that was my understanding of branding, but it it really exploded in The late 70s, 80s. I remember being at school in the fifth year and Ian Fleming, who claimed his dad got the bond job, but turned it down. Nobody believed me. But anyway, I used to. I was telling my mom and dad that once I was only 14, and I bought it from him that his dad was going but anyway, his name was Ian flem. He was a good footballer and and he came back from Germany, interestingly, that his parents were divorced. His dad lived in Germany. He was the only divorced kid in the school. I mean that. I mean that this is the mid 70s, and he came back with some Adidas football boots, and he opened them up in the changing room, because we were mad on football and he brought these boots out, which were green and gold. And we were like, it was like, he just was showing us a spaceship. And we're like, wow, because at that point, football boots were just that football boots. So there was no like, you know, this type versus that type. And that was the beginning of from 75 the beginning of us waking up to the sports brands Nike. I remember Nike basically sponsored John McEnroe and John macros at will, Wimbledon acting out. And if you read the Nike founder Phil Knight's autobiography, he talks about how good that was for their brand. John macaro acting out. And he used to ring him and say, keep on. Keep it up, right? Because it was clearly having a big impact on, on selling their trainers and stuff, so, so that was, you know, and then when I got into business, you basically hired an advertising agency. So when you got to a certain scale, and they pretty much did everything, you know, you wanted. You wanted an advert, they got you an advert. You wanted some print done, they got you the print done. And it was a sort of one stop shop, if you like. And I suppose that's the way it was for quite a while. If you had enough money, you hired an advertising agency, and they got to work for you. And I remember my first business was called Geno's, which was a pizza business and pizza home delivery. And I remember us brainstorming one day at this advertising agency in Manchester, and we decided that we needed a jingle, and because we're doing a lot of radio advertising, so I said, Well, what about the dex is Midnight Runners tune, because that was a number one. It was called Gino and so, so anyway, so they reached out to they reached out to the Kevin, I can't remember his other name, but they reached out to the guy who'd written this song. And he said, No, he didn't, he didn't want to do it. So they said, Look, don't worry. All we've got to do. Do is drop one bar every six notes, and we can get around the copyright. So they did, and they got to work on this jingle. Completely butchered it, but somehow they worked the words, piping up pizza delivered direct to your door. Oh, gi knows. And having but. It and then smashing the airways with it. It was such a successful little jingle for us. But again, we never paid him a cent in royalty because they got ran it. But they would take care of us, and they would walk us through this kind of stuff and and now, coming up to date, we've we've got this, we had this digital revolution where we've now got, I don't know how many, but we've got 18 or 20 different disciplines in the marketing arena. So tell us a bit about that digital what happened with the smartphone and how that's affected marketing and evolved effectively and led to this fractional marketing solution that you've provided. Simon Dell: 10:47 Look, I just very quickly harp back on the 80s, because I grew up in the 80s, and one of the most memorable campaigns I still remember to this day was all the silk cut adverts. And I wasn't a smoker. My dad wasn't a smoker. My mum, nobody smoked in my household. My my grandfather did. But I just remember all the incredibly clever silk cut adverts because they couldn't use the name. They couldn't put the cigarette names on the actual billboards. So you just had this piece of silk with a cut through it. But of course, everybody then knew what it was. So there was, I think there was some incredibly, incredibly clever, clever ideas back then. And I think, you know, when you watch old episodes of Mad Men and stuff like that, and watch that happening, you know, in a fictional environment, you you kind of understand how it all worked and the power that those creative people had, but you're absolutely right. It all changed. Well, it all changed with with two things was, you know, the iPhone, which was 2007 and then Facebook, and Facebook wasn't the first, first social network, but that was because that was Facebook was three years before the iPhone, so that was 2000 2004 but it didn't. It took a good two or three years, and those kind of things both happening at the same time. Suddenly just exploded. The opportunities for people, for people, for basic human communication. All of a sudden you were dealing with this capacity that you could one to one without needing to, you know, pick up a phone or, you know, it just, it just blew that opportunity for communication completely into 1000 pieces. And it took a lot of time to settle down, for people to understand how it was going to work, and for, you know, Facebook, to understand how they were going to monetize and everything but that 2007 to 2010 was just like, revolutionary, Michael McGrath: 13:07 yeah, yeah, I suppose what, what I'd seen, I'd come through that early digital period where everyone had a website and and then, you know that originally, you know, we, we, it was slow, And it was effectively a brochure online, and they were threatening that commerce would be done. But for years and years, it never imagined. All of a sudden, for some reason, over the space of two or three years, we became comfortable with with doing business online and buying stuff online, and now you know that that has evolved to Yeah, I mean, the last podcast we did, we talked about a guy we talked with a logistics business in the US that's doing last mile and the speed of delivery now that you're getting deliveries within two hours of pretty much whatever You want in the US at the moment, it's just sped up dramatically. Simon Dell: 14:04 But in terms of E commerce, I don't think a lot of us realize that eBay turned 30 years old this year. So you know when we when we you know when we think of eBay or the last time we bought something on, you know, Amazon, you kind of, you don't necessarily think that back that far and just go platforms, that eBay platform, which I think was one, again, one of the very first ones out there in terms of, you know, e Commerce and the change of the model direct to consumer. But that's, that's 30 years old. This year was 1919, 95 Yeah. Michael McGrath: 14:43 No. It's interesting. When you look at the top five companies in the world that might buy market cap, and they're all those digital global giants, which, although they've been around for 40 years, they weren't here 50 years ago. If you look at the top 540, or 50 years ago, they've taken a. 150 years to get to the top five status. So there's been a massive revolution. And, you know, we in business. We're just, we're wrestling with, well, what do we do with this, you know, and how does a typical small business have put some context on this? So there's a million businesses in Australia that operate, and about 700 and odd 1000 of them employ between one and four staff. About 300,000 employ between four and 200 staff, and only 5000 employ more than 200 people. And so that's the context, and your average mid sized businesses turning over 6 million and making 10% and they are, you know, they're having to get very creative around marketing. So I mean that, just on that point alone, I did a quick Oxford English dictionary definition of marketing, which says the activity, or busiest business of promoting and selling products or services, including market research and advertising. It's interesting, the corporates, the big lads, have separated marketing and sales years ago, effectively, to the point where a lot of the buyers companies we're dealing with, they don't even talk to each other. Sales and marketing. It's just like two disparate disciplines, but most of us in the in the humbler real world, are seeing sales and marketing as very much needing to be aligned and needing to work together. Simon Dell: 16:36 Yeah, and, and I would I say this to everybody? Sales, good sales, people make marketing easier. Good marketing makes sales easier, right? That is, is, it's a symbiotic relationship. Sometimes you need more marketing and less sales, and sometimes you need sales more sales and less marketing. But they both, if they're both done well, they both make each easier. And by easier, I mean better return on investment, quicker conversions, so on. So it they have to exist in parallel with each other. Michael McGrath: 17:11 Yeah, the old days, it used to be, you know, the the old adage was, you know, only 50% of your marketing budget works, but no one knows which 50% whereas we've moved into this hyper intensity around trying to measure everything, how do you think we're going on the measuring front? Simon Dell: 17:31 I absolutely terrible. And I think this is one of those things that marketing lets itself down with, incredibly badly, even just the basics of I work with a law firm, and we do some work with a wealth management company. Now, both of them are generating leads every day, but the law firm logs every single lead, irrespective of where it comes from. They log it in a register full details, who it is, what they're asking for, etc, etc, etc. The wealth management company don't do that. And I've been trying to explain to the wealth management company that they should do that so we can understand what's happening and where leads are coming from. But with the law firm doing that, we can sit there and go straight away, they sort of go, Hey, we're getting they're getting in 10 leads a day. It's absolutely insane. But they'll go, let's put more money into marketing, you know. Let's do that because they see the value in it. Because they see better, you know. And for them, the job then becomes refining the spend. Okay, yes, spend some more. But also, let's spend let's change the messaging. Let's try and get a few less tire kickers. Let's get some higher value clients with the marketing spend. But that's working for them. The wealth management company don't have that ability to track they're not tracking anything. So we can't sit there and go, Hey, this is what your money this is what your money delivered. And I think without that, irrespective of whether you're a company of three people, or 300 people, you should, you should essentially be recording how many new clients, how many new inquiries you get every week. Michael McGrath: 19:09 Yeah, yeah. Look, I agree. I mean, I've done a fair amount of consulting and strategy work over the years, and you know, I can tell you that 90% of business problems are typically sold by more sales. The difficulty with that is that if you don't put a process, a sales process in place, which includes a kind of, some kind of marketing machine that analyzes and measures you're you're really just, it's a hidden hope. And we see professional service firms are terrible at this that, you know, they're, they used to referral. They used to, you know, they used to, you know, not really having to worry too much about sales. But, you know, you talk about marketing being affected by AI, certainly, accountants have been massively affected by AI, which can do a really good job of crunching numbers, by the way. And so I think you know that ability to measure, monitor, figure out, have a strategy and a process and and then begin to get into the psychology, you know what, what we're dealing with. But the other thing is, is that discipline of running a pipeline and then running clothes lost. I mean, the amount of businesses I've been into where the, you know, we get older, if they've got a CRM and they've spent a lot of money on it, often it's full of junk, and no one's kept it clean. And then there's a pipeline which has got stuff in that's years old. Well, it's not effectively, a pipeline at that point. So that that lack of rigor around that sales, marketing area, I think, is a is a big problem for for many small businesses. And I think, you know, there, there is an opportunity to tidy that stuff up, I think, and make it happen. And you, you know, the law firms are classic, if there sounds like they're across, they're across. Simon Dell: 21:04 It look before I was in marketing, I spent 10 years in sales and, you know, from largely in the FM, FMCG space, so I kind of understand both sides and the importance of both things there. But you're absolutely right. Is that is data. Data is the lifeblood of a lot of businesses, and good data is, you know, is what makes businesses strong. And again, a good example of that. We started, this is a good six, seven years ago. We worked with a manufacturing business here in Brisbane that manufactured confectionery and she just got a new factory, she was starting to really scale up her operation. And for the previous two or three years, she'd been operating in like, pop up stores. And I said to her, I said, Well, how many sales have you made in the last two or three years? And she's like, hundreds and hundreds. We get people that are coming back all the time. They love our products. You know, we've been doing really well. And I said, okay, so where's the, where's the data of all your customers for the past three years? And she just looked at me blankly, and we're like, Well, we haven't recorded anything. And I was like, you know, look, and I'm good friends with her, and we have a we joke about that, you know, but I'm like to not, to not do the basics. Michael, of recording the data of the people that are buying from you properly, I think is still a massive problem across and that goes for whether you're making chocolate or whether you're an accountant. I just, I just don't think they do it well enough. Michael McGrath: 22:43 And look, you know, it's never been cheaper to collect data in terms of, we've got the technology and we've got the digital so the, you know, it really is time to, you know, sort that out. If you haven't sorted out in terms of, just bring yourself today, if you look at advertising agency the market in Australia, it's, it's worth about 3.9 billion and it employs 20,000 staff. Interestingly, they pay about 1.8 billion out in wages, which is about 46% of revenue. That's that's going in wages, and they make about 11% which is pretty much the average. The average is about 10 and a half percent for that mid market. Most of the agencies are mid market. There's some big guys, but most agencies are sub 50 people, or if you look at them by numbers, I mean, what do you say to a young marketing graduate these days? I mean, what you know that's either studying or finishing their studying, the amount of change that's lightly in the next five years. What do you tell them to Simon Dell: 23:47 my thought is, I think there's two types of Mark. I think when you're at that marketing graduate level, you need you go in one of two directions, right? Number one is, you go, you become a generalist, and you understand the whole marketing sphere that's online, offline, advertising, everything, right? Because I think those people are so extremely valuable for people that can look at the that look and can look at a problem from top down, and sit there and go, Okay, here's your here's your strategic solution. Now, is chat GPT going to replace some of that? Yes, quite possibly. But that doesn't mean to say these people still aren't hugely important for helping strategies become implemented. So getting someone that sits there and go, Hey, we're making sure these things are happening in the timescales that they're supposed to be happening. So I think that's that's one conversation I would have with a graduate. The other thing I would say is, go and really specialize in something that you're passionate about, right? Be that Google ads, be that copywriting, be that graphic design. Design be, and if you are really, really good at that, you can still be using AI to help speed your work up, produce some ideas and things like that. But taking a deep dive in a particular sector of marketing, I think, will still be extremely valuable. You know, we still, we still need, we still need bookkeepers. We thought 10 years ago, everyone thought zero was going to make every bookkeeper redundant, right? And it's simply not the case. What happened was the terrible bookkeepers got made redundant, and the good bookkeepers made more money and got more clients. Michael McGrath: 25:36 I mean, you, you're talking into some extent about these soft skills, or what we're always known as soft skills, right? This emotional intelligence and humans understanding human psychology and that, I mean that AI is not good at that. It's not good at strategy. It's not good at, you know, how do you influence stakeholders? How do you walk into a room and figure out what's actually going on? And I think that, you know, we're definitely seeing in the professional service world, those skills are going to come to the like, they're already at the top. Like, if you, if you track any, any accounting business, any accounting career, the guys with the EQ rose up the chain because, and, you know, I IQ. I mean, that's AI in a lot of ways. AI's figuring out technically what what to do. But it's interesting. I was with a CEO. I had coffee with a CEO, a former CEO of a large international advertising agency. He's now just got re skilled, but effectively he got made redundant through a recent merger. And he said to me, I was just having a coffee with him, and he said, Mike, everything we do in marketing can now be done by AI, and if it can't be done that, well, it's going to be done well, very quickly. He said, All we've got his soft skills. He said, All we've got is socializing strategy. And I thought that was a bit over the top, but since I've spoken to him a few weeks ago, I'm beginning to see that being reinforced. So it's interesting, you said about getting a good breadth of knowledge and then drilling into some things and getting really good at one or two things that you love, seems to be that's what I'm reading. It's saying Simon Dell: 27:27 because, because you're still going to need somebody to explain the results to somebody at the other end, right? And it's somebody that can empathize with the client and sit there and go, Yep, this is what we did, or this is what the AI tool did. Yeah, we can improve on that and those kind of things. So it still need, it still need that you're spot on. EQ is the, I think, is certainly in the marketing space, is the, is the currency moving forward, right? And I think that, and the other thing that I try and teach my kids, bear in mind, they're seven and nine. So it's, it's like, you know, flogging a dead horse sometimes. But to me, it's, it's the leadership. It's and leadership, not necessarily, hey, I'm in charge of a team, but it's leading, leading change, leading an implementation, leading a strategy. Because that AI won't do that. Ai won't lead. AI is a tool for implementation. So I think if you're in marketing today, become, become that leader, and that's what I think a CEO, or, you know, a business owner, will look for when it comes to employing someone and paying someone in the next 10 years. Michael McGrath: 28:45 I mean, you know, I speak to a lot of owners. I mean, we've got, we got, you My day job is running an M and A practice, and we're, well, what we see a lot of in our world is that owners are looking for problem solvers. They're looking for troubleshooters. They're looking for people with initiative that none of that's changed. You know, as a 10 year old kid delivering bread around Solio, the streets of Solio in Birmingham, I'd figured out that there was a problem. The problem was the baker had bad legs, and my legs were great, right? And and I went to work, and then I smiled at everyone, and I was pleasant, and then I got tips and I got encouragement. So it's no different. Now, you know, I looked to owners, and they're they're desperate for leaders. Like you're right, the leader is not always the guys in charge. Actually, the best leaders are often good followers, and what they do is they anticipate what might need doing, and they get busy with that. And that's often just a positive psychological mindset that says, I. Okay, how can I be useful and constructive? Anyone can go over the problems, but there's a much smaller group that can say, right, what can we do? What can we do about this? I think that's going to be true of marketing. It's going to be true of everything. Simon Dell: 30:12 Here's another little story, a friend of mine who's a dad at the same school as where my kids are, he jacked in his, I think, software, job, management job, about six months ago to go and become a to become a gardener, right? He wanted just to be outside more. He just didn't want to sit in an office. He's got four kids. His wife thought he was mad. He is absolutely inundated with work right now, because he does one thing better than 95% of the rest of the market out there is, he communicates with the customer better, right? He calls them back within an hour. He emails them back when they are when they email him, he's quoting them within 24 hours, he's turning up to the jobs on time. If you're going to be a success out there, irrespective of whether you're going to be a success in marketing or M and A or delivering pizzas, right? It all boils down to you doing doing that job really well, okay, and doing it as you said you would do it, or the client wanted you to do it. And I think those people will continue to succeed, even in the days of AI and advancement and all those kind of things. Michael McGrath: 31:23 Yes, it's a very good point that that you know, the delivery, the execution, just doing that from a customer's point of view, like one of the things that we're seeing, it's easy to put the boot into the corporates, and I quite enjoy it, to be honest with you, but, but, but, you know, the one thing that a small business, so one thing a small business has, a mid sized business has in the market, is it's flexible and it's it can be very responsive. Whereas, if you look at the, you know, I'm deal with Westpac, my bank, they're completely dysfunctional from a customer point of view, and have no recognition of that, right? So are the other three, by the way, like moving banks is a bit like changing from Coles to oasis. It's the same, same, really, but, but that challenge of you know, you know, I have to wonder why the senior guys at Westpac or NAB or whoever don't get on the phone and see what it's like to solve a problem for themselves. Because if they would, there's no way they could be happy with what's being delivered. Whereas, I think, as a small to medium sized enterprise, if you get customer centric, which is what you're talking about. You're going, what does this feel like for them? How can I make it better? Because if you do, you make friends. Because whatever the consumer, whatever product or service they're looking for, they're absolutely desperate for good service. Simon Dell: 32:58 And going off on a tangent. Here is i? When I went to university, I did a I did a degree. Well, I did two degrees, one in politics and one in law. When you, when you talk about the definition, I'm going to get deep here, when you talk about the proper definition of capitalism, right? It was all about making the best product that you could make for the market, right? So if you were making a sandwich, it was about using the best bread, the best ham, the best salad, the best sauce, the best salt, right? That's what core basic capitalism is. Was producing the best product, and in return, the consumer would pay you the best price for it. Okay, what? What's happened? I think, in the last 2030, years, that we've got this bastardized version of capitalism, which you which, as you said, you can see, you can see so obviously in the banks, is that their main concern is delivering the value to the shareholders rather than delivering the best service. So when you're a small business, when you're a medium sized business, your priority is service to your customer. You don't give a shit about there. You don't have shareholders. So that's why I think so many mid sized businesses do so well, because their focus is completely customer centric in the in the true original sense of what capitalism was supposed to be, you know, and not getting diverted by going, what dividends are we paying out to the shareholders this year? Michael McGrath: 34:30 Yeah, if you look at the top reasons for the failure of any business, and the stats vary, but it's as high as 80% in the first five years that 80% businesses don't survive the first five years. But if you look at the number one reoccurring reason for that is there was no proper evaluation of the market done in terms of the customer. What you know, what does the customer want? What does the customer need? And what will they. Like, what will they pay for it? And can I produce it? And so that idea is really at the heart of what you're talking about, which is what you know, what does the world need right now? You know, what does the market need, and can I provide that in a way that's eloquent and effective and he's going to produce a return. And I think that that's one of the critical roles of marketing, is to figure out, okay, what, what's the context here, and and then operate within the broader context. So if you look at my business, I got into m&a 17 years ago, the context for that was that of those 300,000 companies that are in the mid market that employ between five and 200 staff, 20% of them were owned by the baby boomers. Are going to exit over the next 15 or 20 years. That's just that's like the tide rising. That's just a fact. So the question then is, how do you, how do you, how do you get mobilize to be of certain genuine service to those people that clearly, you know, Oh, Father Time, you know you can run, but you can't hide. And there's the biggest shift of wealth going on in the M A market in terms of the transfer of ownership that we've ever seen and and that was, that's the curl of it. So whatever you're doing, what's the context, what's actually happening? And, you know, you look at marketing now, you know going forward now, with AI, certainly there's going to be some change for marketing, but there will be winners and losers, and the winners are going to figure out what the market needs. Simon Dell: 36:46 Yeah, it's to that exact point. My, my, my business partner had a quote that he made, I'm going to say, about five years ago, and I often repeat this all the time. It's the it's the only smart thing he's ever said. Let's hope he doesn't listen to this. He said, People don't buy the cheapest product. They buy the product that they understand the quickest, right? So when I look at, you know, like a business like yours, if the if your if your target market understands what you do quickly, they'll buy from you if you're if your messaging is confusing, if they can't see the value, they don't understand if they're dealing with the right person, they not quite sure who they're talking to, all those kind of things they don't buy from you. But if you can succinctly, and this is any business, if you can succinctly, get your message across to people quickly, and that's important, quickly, easily, and clearly, they'll buy from you, and they won't give a shit about the price. Michael McGrath: 37:49 Look, I think that that the natural default is is to be verbose and confusing, right, particularly in professional services, right? And the use of bid world, one of our values is Simplexity, because if you're going to explain something simply, it's not necessarily simplistic. You've got to actually be a master of what you're doing to be able to explain it simply. So it's not a dumbing down. It's actually an ability to communicate something that's quite complex, very simply. And I think that's one of the definitions for me of good marketing, is to cut through the clutter, be less verbose. What is it that you're trying to say? And I think that's, you know, I think that's where the value is in. I mean, you know, the objectivity of an agency, or the objectivity of a of a practitioner that's good at what they do can absolutely transform a business and its messaging. Simon Dell: 38:55 There's no the quote as a British, I've just looked it up. It was a British economist, EF Schumacher, German name, British economist. His quote is, any intelligent fool can make things bigger, more complex and more violent. It takes a touch of genius and a lot more courage to move in the opposite direction. And I think that's a key thing, is there is the courage, courage to make things simpler, right? We all sit there and go, if we add more features and if we add more messaging and we add more colors and more pictures, that's going to appeal to a bigger market, but it's there's a there's a courage in saying, No, that's our market. That little thin sliver there is our market. We've got a single message, and that's who we're going to go after. And I've made that mistake in the past, where you go, hey, I want to be all things to all people. You know, you can't be that. It, it's courage that you need to take to go. I'm just going to focus on that. Michael McGrath: 39:55 It's interesting. In those 17 years, we've rebranded twice. We've changed our. Name twice, albeit fairly modestly the last year, but, and that was the second time, was in early covid in 20 and it's probably time to rebrand and reposition again like it's never once and done like it's it's never is. And now to do that? Well, we have to put money aside, we have to get people in, and we have to do it properly, because it's so tempting to half ass it. Yeah, absolutely. And to cut corners, and, and, and, you know, one of the traits of the advertising agencies in the 80s, when I was in business, was they would always agree with you, because you paid the bills. And in the end, I was looking for people who were contrarian, who were prepared to go into bat and say, No, you're wrong, because it was no good having people agree with me. There's no point. Yeah, that's just silly, right? Simon Dell: 40:54 Yeah, well, again, there's that Steve Jobs quote about you don't, you don't employ people and tell them what to do. You employ people and get them to tell you what to do that. Yeah. You know, I've paraphrased that terribly, but it was something along those lines, Michael McGrath: 41:07 yeah, look, just perhaps finish on a positive note. I mean, we see enormous potential for AI to help us do what we're doing better. Like, unbelievable. Like it's almost heaven sent from our as was covid. By the way, covid completely transformed our business from a productivity point of view. We would never have guessed it right, what we were able to do online that we'd never really imagined prior to covid. So I remember us doing a transaction, our first transaction in the middle of covid, with a buyer from Dublin, a client in Melbourne, and us in Sydney, and we were all in lockdown, and that deal got done. And and then the idea of business development, none of us believe we could do business development remotely, and now we can very effectively, right? Not 100% but 90 plus percent. No problem now we it. Covid taught us that. Now what AI is going to do for us is we've got lots of Intel. We've measured everything for 17 years. I've got a digital guy who was involved at the beginning we were developing and measuring when we couldn't even afford it, and but what we've got is a lot of lost Intel in the system that AI is is beginning to just transform real time through the language model. It's we were used to be restricted to objects and fields, and now with the language model, it can sweep real time, and that data is is dynamic, and we're we're now figuring out, okay, how can we find it, how can we get it, how can we use it, how can we put it in front of the people that need it? And without AI, we couldn't, we couldn't contemplate that. Yeah, so tell us about some of the advantages of AI from a marketing point of view. Simon Dell: 43:06 Yeah. I mean, well, I'll tell you that. I'll tell you the pros and the cons. So the pros for me, I think Id, ideation, ideation and copywriting, the idea of saying to I mean, I've come up with tag lines for businesses using chat GPT that I would have never come up with. So that's not to say that every idea that chat GPT comes up with is good, but it all boils down to this idea of taste. It's about you as a professional, as someone in marketing, the ability to filter through the dross of what chat GPT can produce and go, actually, that's quite and it's the same for you with data. You know, chat GPT could throw you, you know, sheets and sheets of data. But to a degree, it's still got you to sit there and go Hold on. What's the important data here? What are the things that I still that I need that are actually going to influence my ongoing decisions. So I think data analysis, content creation, ideation, I think those are the huge opportunities with with AI in marketing space that said, I look at, I still do a lot of work with Google ads. It's one of the things that I still sort of get myself involved in. I watch Google ads, try and write a a description for a business, and it fails miserably. The AI just fails miserably, right? It doesn't produce anything that's even close to understanding what the business is about. The other thing is, when you leave those systems to then try and generate your business on their own at the moment, they send you a lot of pointless traffic, a lot of clicks and things that you're paying for but aren't necessarily valuable. All to you. So you do still have to stay on top of those kind of things. Will that change in the next couple of years? Quite possibly, quite possibly, they'll just get better and better at it. Mark Zuckerberg is talking about meta going you won't ever need to set up any ads anymore. Meta will just do it all for you, because it knows what customers you want and it knows how to target them. So there's, there's pros and cons, but I think really that if we were saying one fundamental aspect of AI that I think is is fantastic for marketing, is just ideas. It's the capacity, the capacity to produce just a whole range of ideas. Again, I would say that's not to say they're going to get every idea. I think there's still some left field ideas that come from the human brain that that chat GPT isn't going to get. But those are the, those are the sort of pros and cons that I see for marketing and AI at the moment. Michael McGrath: 45:59 No, I mean, certainly that the technical, creative output, campaign execution that that's probably under threat, you know, I look at, you know, I look at the wage bill for marketing agencies at 1.8 bill on revenues of 3.9 that's 46% I imagine the opportunity for them is to reduce the wages and maintain their try and try and maintain their revenue, which Simon Dell: 46:26 is, here's the contrasting opinion, Michael, is that Coca Cola did their Christmas advert this year, entirely on AI, right, entirely with AI, okay, it's the classic truck driving through the snow scene, blah, blah, blah, the one that We've all seen 1000 times, right? It's entirely done by AI. It took six people, 30,000 prompts, 30,000 prompts into the video creation tool. The argument that a lot of people in. And when you watch this video, you just go, this is not this is not great, right? The argument is, is that, yes, there's less people in this but there's also this undercurrent of things now, I think Amazon and Microsoft were in the news in the last couple of days by saying that their AI systems are now costing more than the people that they sacked. So I would say we're at this really interesting turning point where we sit there and go, which is better for us, the people or the AI. And I think we've gone too far in one direction. Michael McGrath: 47:36 I think you're right. I don't think anyone knows yet. I think that. I definitely think, in fact, you know, my my youngest daughter, I've got five kids. My youngest daughter, Emma, is contemplating uni next year. She's 18, and she's been looking at marketing. She's looked at counseling and psychotherapy. She's looked at a few things. And one of the things that she's been thinking about, we've been chatting about, is how AI is going to anticipate, or, you know, what's the anticipation of AI in these sectors? And there's plenty out there, but I don't think anybody really knows yet. And I think we're going to be surprised. I think we're going to be surprised on what happens to employment ultimately. And I certainly think we're going to be surprised. You know, I think the opportunity is the young people in our organization, they're getting, they're being elevated through AI so we're, we've been inundated by graduates who want to do their undergraduates, who are looking for internships? Well, we've always been inundated, and we're now, we're now trying to find a way to accommodate them, and because they're smart and they're all over this in a way that the senior guys aren't. And so we're trying to find a way to harness that and say, Okay, how can we give them some exposure as an intern? And how can they, how can we tap into their their tech savvy, frankly, and they're, they're native, you know, they're kind of digital native. It you can't reproduce that, even if you're 40. They've never not had a screen, many of them in front of them. Now, there's plenty of drawbacks and all the rest of it, but certainly from a business point of view, we're not sure where we're going. We do know it will be organic. We do know we're going to have to be nimble, and we do know we're going to have to figure out as we go, like it's not going to be a bureaucratic process this. It's, I think it's going to be quite nimble. So anyway, that's been a fantastic discussion, Simon, I'm very grateful for your time today. Simon Dell: 49:53 Absolutely, my pleasure mate. It's I, you know, I could talk about these things to the cows come home. And so yes, thank. Michael McGrath: 50:00 You look, we wish you well with CMO, we were, we wish you well in what you're doing in fractional marketing, we'll make sure that your details in the show notes. If there's any owners out there that are looking to try and navigate marketing, then you've heard about Simon bright smart. Just to declare an interest, we have begun to use Simo and we've, in fact, I think it's our first week we're using one of your digital creatives. So anyway, I've declared my interest once again. Thank you, Simon. Simon Dell: 50:30 My pleasure. Michael, thank you. Michael McGrath: 50:37 Well, there you have it. I hope you got something out of our look at marketing and AI today. Now if you want to talk to Simon Dell, the details will be in the show notes. Quick shout out to our sponsors, Oasis partners, corporate advice with a practical bias, over 500 deals done since 1984 if it's time for you to look at your exit options, be sure to reach out to the guys at Oasis partners. We'll be happy to chat with you about your options. Now, if you like this content, be sure to tell your friends, and if you'd like to leave us a comment, only nice ones, please. As you know, we're very sensitive until next time, stay safe. You. You.]]> https://www.oasispartners.com.au/wp-content/uploads/2026/03/TILE-PHOTO.png clean no 51:30 No no https://www.oasispartners.com.au/podcast/luke-petherbridge/?utm_source=rss&utm_medium=rss&utm_campaign=luke-petherbridge Tue, 09 Sep 2025 01:16:54 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17750 About Luke: As CEO of Link Logistics, Luke guides strategic direction with a particular focus on driving profitability and building a winning corporate culture for the largest U.S.-only operator of logistics real estate. With 5 percent of U.S. GDP – translating to $1.4 trillion – flowing through its facilities annually, Link sits at the nexus of consumption, supply chain and technology. Luke’s LinkedIn: https://www.linkedin.com/in/luke-petherbridge-a843b764/ Link Logistics website: linklogistics.com Luke's BIO: Luke J. Petherbridge Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me. Your host. Mike McGrath, now today's guest resides in Chicago and runs a very large logistics business called link. Luke Petherbridge hails from Australia, originally growing up in Sydney and forging his career locally at Rubicon and in Macquarie Bank during the GFC, our conversation provides a fantastic insight into a phenomenal success story Australia, as you know, punches well above its weight in both business and sports. So sit back and listen to how Luke from humble beginnings, rose to the top. Luke Petherbridge, welcome to the troubleshooters podcast. Thanks so much for having me. Michael. I really appreciate it. People won't know this, but this is the third time of you and I trying to connect. We've had some technical difficulties, but we've delighted that you can hear me and I can hear you now, and we can get this podcast underway, which I've really been looking forward to having this conversation with you now. Michael McGrath  01:11 I think it's fair to say that you're big in logistics, Luke, and ostensibly, what that means, I mean, you employ 1100 staff, just to put it in context. And I think you've got 9000 businesses that rent space from you. Tell us a bit about link. I know it's backed by Blackstone, and it actually was founded in 2019 remarkably. So tell us a bit about Blackstone and link and what you do at the moment? Luke Petherbridge  01:41 Yeah, no, absolutely. Well, you mean, you touched on a lot of great stats, then blink was really founded in 2019, we're one of Blackstone's many portfolio companies, so they're our equity and partner in growing this business. But you know, we're a real estate company. We are in US logistics warehouses. We're one of the largest owners and operators in the country. And to give you an idea of scale, we have a little over 3000 and a half thousand buildings. You mentioned 9000 customers, which can range from the largest e commerce provider or fortune 500 companies down to the smallest little incubator that you know, and which always make me wonder just about the breadth and depth of the US economy, 1100 people. We have 60 offices. And the stat, which sort of gives you an idea, around about 5% of US GDP will float link building or link customer in our building, which gives you an idea like, we really take our position in the US economy and supporting the growth of the US economy and our customers really seriously. So it's important, and I'm very fortunate to just be a little cog in what is a very, very incredible wheel. Michael McGrath  03:01 Link specializes in what they call the kind of last mile. So tell us what that means. Luke Petherbridge  03:06 Yeah, so if you think of, you know, everyone probably knows a warehouse. We think of warehouses, and I think the last mile really sort of accelerated here in the US, probably about a decade ago, warehouses, probably, you know, in the since the mid 1900s through, was very much just moving large goods around, putting it at a store. What really changed in sort of 2013 2014 was this phenomenon of E commerce, Amazon and Amazon Prime went past 50 million subscribers here in the United States, where we see a 22% to 24% is online. But the thing that's really shifted is speed. So for me, commerce really started when I was 30, and this whole notion of buying something online and it being delivered to your door in a week was like mind boggling. It's like, this is amazing, but now that in the here in the United States, in most big countries, most big cities, you can order it in the morning, and it's there that afternoon, like most delivered within 24 hours. That growth Amazon says is like 30% it fastest growing business. They call it sub same day. So speed and execution of E commerce has really meant you can't have a good sitting out in a large warehouse, way out in a in a rural location. It's got to be infill. So our thesis has been accumulating and owning these infill last mile, close to rooftop facilities where workers live, where buyers live, and close to the retail nodes that sort of serve communities. Michael McGrath  04:50 Yeah, it's been a phenomenal journey that that online. You know, I remember in 2000 I mean, I'm old. Luke, you're a lot younger than me, but I remember that, you know, everyone was predicting what was going to happen online. You know, we started out with websites, and then we were what was being predicted was all this e commerce, and it was massively over hyped for a long time. And then all of a sudden, the iPhone appeared, smartphone appeared, and everything changed. And it's like, Aha. Now I know what you're on about, and since then, well, you know, it's phenomenal, isn't it? I mean, did you How much did you say 25% is online? Luke Petherbridge  05:31 It depends on the Yes, 22 to 25% of the US is online. The real covid became a huge accelerant and a change of consumer patterns. And I think, if you'll agree, most research, it probably says by the end of the decade, that gets towards 30% online. It continues to grow. It's no other reason we spoke about briefly. I'm going to drop my eldest son to college so he's eight. He's more digitally native than I ever was, and I am, yeah, and just as we age, as demographics age, the biggest buyer in their 30s are millennials. They're going to buy more online than my era, than my parents era. So yeah, you know, time and aging will just mean this continues to swell, and the service has got dramatically better, like you can see where your packages are, gets delivered within 24 hours. That e commerce accelerant is just one of the many tailwinds that are sort of driving demand to last mile and logistics in general. Michael McGrath  06:37 Yeah, yeah, that's phenomenal. Look to those who are? I'm sure many of our listeners will have picked up the fact that you've got an Australian accent. So you hail from Australia. Yeah, we're so you we're talking today from Chicago. I presume that's HQ, is it for Link Chicago? We Yeah, New York and Chicago are too big. Okay, cool. So tell us then, before we come back to link and that story, tell us. Tell us how you got started in business. And, yeah, what was growing up like, and what were the first signs that you were good at business loop that emerged, and when did they emerge? Luke Petherbridge  07:15 Oh, wait for those first signs to appear. Now. Now, no false modesty. Luke, I grew up in Sydney. I grew up in Cherrybrook, so a suburb, it was awesome. I mean, you say the lucky country it is. I mean, I think Australia is just such a great place to grow up. I'm very much Australian still, and it's a place we love to visit. My family's there. My wife's been there. So we love it. I went to Macquarie University. I started working at a big investment manager in investor relations, like dealing with investors, and then I went and worked for a small business that was a hedge fund that got into real estate and grew rapidly, but I got to work with the founder there was exceptionally driven and smart, and taught me so much was this Rubicon. It was Rubicon, yeah, that's okay. And so you, you got there at 23 Yeah, in 2020 okay. And so you, you speak about a baptism of fire there. So tell us a bit about that, because I got into business at 23 and I had a different but similar baptism of fire, but talk to me about what that was like. Yeah, I think it's, you know, I got to work with a very driven, focused founder who was, you know, exceptionally bright. And then he built a business. And, you know, when I first joined, I mean, it was in a small suite in Double Bay. And, you know, I do everything from get the mail and collect coffees to help write PDFs to raise money to help, you know, do book builds on IPOs, which we got to do over time we listed a US, a Japanese and a European REIT in Australia. But it was really that the opportunity was just to be around the hoop with just all this activity that was going on. I was three away. It was such a great era of business. But, you know, it was like intense and you work long hours and the demanded. I mean, I remember Gordon would say things like, you know, a jack of all trades are a master of everything, and don't wait for tomorrow to do something today and everything matters, like everything from presentation style to format to wording to the way you these things that are instilled in you in very formative years. I probably honestly, didn't appreciate the lessons I was being taught as much now, and I don't think you ever do when you're grinding and shoulder to the wheel. I don't think you appreciate as much, but when you look back on it, it's those lessons that really are the foundation stones to how you run and how you do things. I'm sure it's the same is when you learn your lessons in your 20s, but I was very fortunate to have the opportunity. I had to make my own life being there and working hard, but I had a real opportunity to learn and 20 year olds my advice like, when you're there, absorb as much as you possibly can, ask questions, test yourself, push yourself. And Rubicon was a real opportunity for me for five years. Michael McGrath  10:24 Yeah, it's interesting, that concept of learning, getting in a place where you're going to learn a ton. It's almost like the salary is a bit academic, if you can get into a place around some people. Those, as you said, that's foundational, isn't it, really, and and, you know, everything I've done is really, you know, it's some way shape or form was born of that first five years, right? You said salary is academic. It's so interesting how you define that. I think if you said to a 20 year old, you get paid in learning and and money. And when you're in your 20s, you get paid a lot more in learning and not as much in money. Just value it. I, you know, Val the opportunity to learn. And, you know, I think I, at times, I absorbed it and I thought about it, but now I look back at it, it's like, wow. I there was so much that I that period in my life that I apply every day, even today, which has been really helpful for my career. Luke, I love that twist on that old saying, jack of all trades, master of everything. I really I can kind of a little like It's that constant, you know, pursuit of better is probably another one. Yeah. I mean, there's a bit of hyperbole there, but there's a truth in it. Isn't that in terms of, you know, and that, ready, fire, aim, that, because effectively, you were building a business more than doing a job. There was a business being built. And I think there's a distinction there. Luke Petherbridge  11:54 I think that's right. I think I was fortunate to be alongside the business builder and see the inner workings of how to build a business. And because, and not in this fail, you fail fast move on. But you know, just the the intent focus on everything matters, from the work using emails to the order to the full Manning of a person like these things are instilled. And by the way, so many great businesses in still listening, you go work at a big investment bank that's exceptional. They install these things into you that at the time feel like rope learning or a grind, and then when you're in your 40s, like I and you're like, Wow, all these things just instilled in me, but the you know, one, learn, but two, the other thing, which I've been fortunate in my career, just work around great people that challenge and inspire you. If you do that, like, I didn't sit there and say, I want to be in real estate. I didn't sit there and say, I want to live in Chicago, like I just yeah, my path with working with great and inspiring people. And that's, yeah, been very lucky in that sense. Michael McGrath  13:03 Yeah, so, so where was the love of business and commerce? Was that nurtured in you through your degree at Macquarie? Well, where was it? Where you went? Okay, I I'm good at it. This is what I'm I'm gonna do. Luke Petherbridge  13:17 Well, I wasn't, I wouldn't call myself a stellar student. I did it enough to get a degree. My dad, you know, he built his own accounting practice. He had 40 or 50 people like him, built a real business. I mean, he built and all my life, from where I remember as a kid, I could go on the weekend to get get things, or he was working on it, but he built a real business. So I think, yeah, just looking at the influence dad had on me and what he did my mom then work there for for a long period, and was really instrumental of my love of business. And, you know, commerce, I did commerce, Macquarie, but, you know, I think that's really where it started, and it's little things. And I would say even wanting to live overseas was my parents talking at a kitchen table about when they lived overseas and all these things. It's just, it's innate. When that, you know, earliest memories, I remember, you know, Dad building a business, talking about it, and hiring people, and it was, it was really interesting. So I think that's probably where it started from. Where did the opportunity to go overseas come and how difficult was that to jump out? I mean, was that, you know, big? I know it's a big move, but was that a big call, or were you just in? Do you know, so I worked, so I went from Rubicon to Macquarie Bank and worked on one of their satellite listed vehicles, and the partner was from Cleveland, called DDR, so a $15 billion shopping center rate. I joined Macquarie just before the GFC, I think two weeks before Lehman went under, is when I joined Macquarie. Macquarie. For those that aren't bankers, it's not a great time to join an investment bank right before a crisis. Great learning opportunity. I got to work out a vehicle and work with very smart people. Macquarie is exceptional. The board was great, but I got to know this partner, this JV partner, and their people. I used to travel to Cleveland a lot. And you know, when we sold it and wound it up, the CEO and the CFO, who I got to know really well, said, Would you ever think of moving to Cleveland? Now, for those that live in Sydney, I would say Sydney is the most beautiful city in the world. I'm a Sydney sider. I love it. It's awesome. My joke is, Cleveland's the second most beautiful Synod. It is not it's a great Midwestern town. It's nothing like Sydney. It's on a lake which is beautiful. It has great people, but it snows a lot. The weather's not like Sydney. But, you know, we just thought, why not? Let's give it a go. Like, I think a mantra in my life has been open to Yes. Like, what's the worst that happened? Try we had two little kids. Let's go live in Cleveland for a few years. And if you don't like it, we can come home, and then I'll give my wife Chantelle, little credit for this, that she was probably a little bit more she lived in the UK as a gap year. And like, why don't we do this? Let's give it a go. And so, you know, it's not easy to do. I'm not saying moving from anywhere is easy or anywhere, by the way. I mean your accent shows that you Moving is hard. It's worked out phenomenally well for our family, for our individual selves, for my career, it's been really great. Michael McGrath  16:40 It does indicate a certain spirit, doesn't it, of adventure and and so I get, I guess, a risk appetite. Where did the real estate expertise and kind of love a real estate where did that begin to germinate? Was that at Macquarie? Luke Petherbridge  16:56 It was at Rubicon. We did three twisted vehicles that were all real estate. Okay, I got into real estate. Then Macquarie, I got into retail real estate, and helped run a business with der, and then moved to der, which got into, like the true operating platform, indeed, yet seven or 800 people, but, you know, became the CFO there over time, but it was like a real operator. You had a leasing team and accounting and property management and development, and that's where, you know, that was a real opportunity to learn a real operating business and be fascinated by, you know, motivating people and working with great people and harnessing everyone's individual skillset for a common goal. That was a real opportunity for me to learn that. And yeah, that was the first time I'd really been I mean, I worked at a quarry, but I worked in a silo. It's where I had quite a large purview with a bunch of other I learned so much from a great number of just how to be a good leader and inspire people and communicate with people, I think was Michael McGrath  18:05 You mentioned that, you mentioned the GFC and not been a great time, you know, to do what you were doing. I started in M and A in the GFC as well. So I had a pretty lean couple first couple of years, let me tell you, but you mentioned that it was 2019 which is that sort of pre covid period where you got link going and you got the gig there. So tell me about that, that kind of, you know, from a troubleshooting point of view, right? I mean, coming back after Christmas in 2019 I remember it well. And the whole pandemic thing was emerging. We were googling the word pandemic. I mean, how did you tackle that, and what was the experience like? Luke Petherbridge  18:47 Yeah. So I, when I left DDR, I started a firm called SHOP Call with Blackstone, which is a retail real estate business. Then I moved to live call, which is multifamily, or built to rent, is what they call it in Australia. So I went into covid, running those businesses, and then a year into covid, maybe six months into covid, they, they asked me, Would I step into link? And I moved to link. It was a lot bigger. It was a real challenge, like even just think about managing a platform or a team. So forget about the issues of, are we collecting rent? Are we looking after customers? How do we lose space without seeing people in this pandemic world? Imagine trying to run a team. We hired 400 500 people during covid. All these everything was virtual. I think caught me, honestly, is the resilience of the human right, like just our ability resilient and resourceful and solve things and things we thought we'd never have to solve, like pricing rents or, you know, managing move ins with customers and, you know, unlike Australia, the US. Said various different covid protocols. Every state was very different, so you have to manage that. But what I found was, if you, if you hire great people and surround yourself with great people, they invariably come up with really unique solutions to big problems. But you know, for our business, being in industrial or warehouse and logistics. There was this first moment where everything became, wow, what does this mean for the world and GDP? And then it was this effectively a like a rocket ship, because everything went online. We need more inventory in the United States. You still remember that image of all those teams the court of Los Angeles trying to get in good. So it became this a massive accelerant for our business to onshore manufacturing, to serve safety stock. So our business went through like a two or three year Piper boom. So you're building a business and sort of caught fire in a very positive way. At, you know, we started finding, yeah, we got to really do some great things here. Michael McGrath  21:08 Yeah, that's amazing. I mean, there were definitely winners and losers. Weren't there. And, you know, if you were in the airline business, I remember virgin here had a billion dollars in cash in March. They were broke six months later. I mean, that there was some real kind of some real problems for certain sectors, and then other sectors, like you said, online, just went through the roof. Luke Petherbridge  21:29 Yeah, and then there was all these businesses that started trying to take advantage of that or serve the customer more. Amazon has been a leader. Walmart's been a leader. They're doubling down on this? They're growing still at, you know that last mile, some some sub same days, like growing at double digits, more than double digits, even today. So, yeah, really changed consumer patterns. It changed where people live, like this, Sun Belt acceleration happened during and post covid. So there's been big shifts in the US that, you know, we're now staying the test of time and so building a business around that Michael McGrath  22:09 As we come out of that now. I mean, I can't believe it's five years ago now already, but, and it almost seems like a blur,to be honest with you, but you don't have to be living in the US to observe the political polarization that's interesting, that we've got a second term of Trump and we've had a lot of choppiness around tariffs and stuff. So how's that affecting you? And how are you guys thinking about and managing the whole kind of tariff volatility? Luke Petherbridge  22:37 Yeah, I think you know, the thing I would say to that is, the world is dynamic. Things change, whether you have tariffs, whether you have a boat going sideways in the Suez Canal that shuts down GDP flow, whether it's port strikes. I think you know, the supply chain globally in every country, is a little fragile, and it's constantly trying to what we've tried to do is we try to help our customers navigate changing landscapes that could be consumer changes. It could be GDP change. It could be political changes. So we really just take the view of the long term, view of owning great real estate for our customers to operate in today and tomorrow, and then provide solutions wherever we can. As they Some businesses are going to grow in this like manufacturing is accelerating. You know, there's a lot of data centers being built, but those, all those components, need to sit in a warehouse, solar, batteries, EVs, and there'll be other businesses that need to shrink. So we constantly trying to toggle and I would say over the next decade, 2030, years, the last 50, there's just always cross currents and changes occurring. And we try to do, you know, work with our customers to navigate that the best we can. Michael McGrath  23:54 Yes, it's interesting that, I mean the in some ways, the mid market, which many of our listeners are running relatively small businesses that they kind of live with this choppiness and change. It's kind of part of the MO that you know that, in fact, one of the strengths of a small business is its ability to flex and change and adapt. And you know, if it can't lose that, because that's his greatest defense, I think, against these larger competitors, who are typically a bit they're stronger and bigger, but they're often slower, but it sounds like, you know, you guys are reasonably nimble, and you take a fairly pragmatic view of, I mean, change is the only constant, right? Luke Petherbridge  24:39 I think that's a great phrase, change is the only constant, and you try to be as nimble and as flexible. And really, we all have a customer work around our customer, but we try that doesn't mean we're perfect at it. As you get big, you end up with bureaucracy like you try to avoid that. You come up with rigidity, like you really try to be as nimble. And I do think. Luke Petherbridge  25:00 know, as you think of mid market terms, I think of the customers that are in our building, this is exactly the sort of people that your listeners are. These are these small to middle sized enterprises that are building a widget, whether they're fixing every bag, like, if your bag breaks on an airline, you ship it to a facility, a linked facility, there's a business that looks at it, fixes it, or replaces it, or every averse wrap is printed in a link facility. There's all these businesses, and this unifying thing is they're all these dynamic businesses that are constantly managing and flexing for changing conditions. And I think resiliency of small business, both in the US, in Australia, I'd say globally, is the backbone of a lot of our GDP. A lot of the global GDP is these small businesses. So we write our own buildings that they can operate in, and we try to make it as easy and user friendly, Michael McGrath  25:57 I suppose. I mean, I've had a 40 year career effectively, and, you know, I've kind of mapped the digital you know, we've gone from no computers on the desk, you know, no mobile phones, to we've, you know, we've mapped that. And we've now seen the largest five corporations in the world are all weren't around effectively 50 years ago, and now they're the largest five. So, I mean, that that's been a phenomenal thing to watch and observe, but many would say we're still at the beginning of this kind of digital age. And what are your thoughts on AI? Everyone's talking about AI at the moment as a as a huge catalyst for further dynamic change? Luke Petherbridge  26:39 Yeah. I mean, I think it's hard for any business not to think through it. I think we are trying to challenge ourselves with it and embrace it where we can. I have sort of my thinking probably will evolve as well, but I think of it in three broad buckets. I think of AI being able to support what or robotic process automation. So getting rid of the lower value tasks, automating those which we've been doing like this has been doing for a long time, whether it's using in your accounting software, Adobe, DocuSign, all of that stuff, and then using AI around that will just help you become more productive. As a firm focus on higher value components of what we do. So we're doing that. Then the next one would be cognitive engagement. So the way we sift through our data in the way we can deal with the customer, or the way we can actually get insights back to our employees. So how, how's the human interaction with the platform and what we do, whether it's our chat bot, whether it's the way you can bring up data or use an agent to help you work with the customer. And then the third one would be cognitive insights, which is where, you know, we are one of the largest owners of industrial real estate in the country. We have so much data from leases to customer insights to what they've said and to brag, these insights out to be a better partner and better real estate for our customers to do better at. So they're the three areas where I'd say early inning. I think you're exactly right. We're in the early innings of this sort of, I'd say, revolution, but we're constantly learning and testing and trying things, and things work really well. And some things, you know, we're sort of, we're waiting for technology, or, you know, a tool, to sort of catch up with us. Yeah, Michael McGrath  28:37 just reflect for us. On, on, you know, what would some of your big milestones be? I mean, at link, but generally that where you've you've made some good calls. And when you look back and you get that perspective you spoke about earlier, you go, wow, that that was a good call in a difficult situation Luke Petherbridge  28:56 when I was at McCoy, I think it'd be hard not to sort of saying, what was the lessons learned in the biggest financial challenge of my lifetime, the GFC? I think when I look back at that, you know, this business was under immense pressure. It was listed, there was a huge amount of pressure on it from banks. I think that the biggest thing there, which, we sort of hung in there and solved it and got the business sold. Eventually, it was like, just don't give up. I really, and I remember a board member, Bob Jos was on the board. He's got, I think he was on the board of city. He was the dean of Stanford at the time. I remember him calling me one night like crazy, late. He was in San Francisco, but it was late in Sydney, and he's like, character is forged in crisis. So these moments that are really hard is where you determine you can build your own character, and what can you do? So I think that was a huge opportunity there. I think one. I had the opportunity to lead DDR and go and build shock, or I can remember that distinctly, where they you know, I had a chance to build a firm. And really it was like you emerged a bunch of things together. I got to re architect everything. I didn't know if I could do it. I'd never been a CEO of an operating platform. But you know, I think that formative moment of learning and and being okay to fail like it's over, you get things wrong. I think leaders, and you know, particularly senior leaders, feel like they can't have errors. I'd say the things you learn in the most difficult situations is the ones that probably are most lasting. So being okay to test and fail on things and then where you sort of and shop. Core built a very customer centric business because we care about the retailer and the retailers customers and live core was very data centric. That's the way you can run 80,000 apartments. Is very data heavy, and then at Lincoln was trying to merge those two components together into a business that was very transactional. We've been, we've been fortunate on that. That doesn't mean I don't bump into things and get things wrong. And we have to backtrack and go down another fork in the road that, you know, we probably, you know, we've really sort of touched ourselves, but the commonalities surround someone with great people and great things will happen. Michael McGrath  31:27 It's interesting that you mentioned persistence there, because that's our number one value here at Oasis partners. And yeah, we're constantly reminded of the need to just keep at it. Yeah, I remember Churchill apparently spoke at the Oxford Union, and he just walked on the stage and just stood there and just said, Never, ever, ever, ever give up, and then walked off. Gosh, that innovation. That's all he said. Luke Petherbridge  31:54 He's, I mean, he's like one of the most inspirational leaders in history. But there is an element of truth to that. I think, you know, I think it's never give up or persistence, just keep keep at it. Keep moving, keep going. Sometimes you'll be going backwards. Just keep going. The other thing I would tell my 21 year old self, when that situation is happening, that is your best opportunity to learn the most, like keep your eyes wide open and learn the most. It's when things are really challenging is where you can learn the most. I'd say, you know, although the world was cool, we did so much. I remember kind of learn a lot. Macquarie taught me so much, because it was the worst cycle part of the cycle. But I think when things are really hard is when you can learn the most that that is probably the moment that you naturally are trying to just shelter and just keep your head down and be like, please let it go past. I think the greatest leaders that sort of eventuate are the ones that when the when they're in the teeth of the wind, are like, I'm not going to give up, and I'm actually going to learn more and outperform, because they're the lessons I'll use later in life in a different situation. I think they're the people that are. Michael McGrath  33:12 I mean, I think, you know, one of the illusions is that success is a straight line up and, you know, we, you know we, we get, you know, we get presented with these situations in the media where everything looks like it was an overnight success. And I think that, you know, we've got to teach our kids, and you know about resilience and about these the life is hard. You know, I remember the first line of Scott Peck's book The Road Less Traveled. His life is hard. And if I remember nothing else in that book, I remember that first line, which is, okay, I got to own that it's not it's not easy, and you don't have to speak to people for very long without coming in touch with the fact that life is hard. Luke Petherbridge  33:50 Yeah. I mean, you, you talk about all these mid market firms, if it was easy, everyone would do it. And I mean they, they every day. I mean, if you come around link and you and we toured our facilities, you get to see all these businesses, these companies that are in space from us. They're every day like these challenges every day in these businesses, and they turn up and they keep and that, that resilience, I think, is admirable, and it's what makes Australia great, what makes the US great, what makes businesses great, what makes leaders great. But yeah, it's it was really an easy everyone to do it and challenge, I think creates the opportunity. Like, when there's a challenge, like, you have the opportunity to outperform, do something different, create a new solution. I think the exciting time, Michael McGrath  34:43 Lou, you've got a one of the largest fund managers is your capital partner there at link, and I presume you report to them in some way, shape or form. You've got a board and stuff. Tell me how you manage when things haven't gone to plan and you're having to show up and. Fess up, really? Yeah. Luke Petherbridge  35:02 I mean, one Blackstone, you're right that they're one of the largest alternative asset managers in the world, one of the largest real estate owners that we sit in their real estate business is, I'd say we just be overly transparent, like we really, yeah, it's totally fine to say this. We tried this. It didn't work. They're integral in our business. I see them as partners. We all see them as partners. We make decisions jointly, together on things. They're very supportive in the business growth. They've been wonderful to work with. All three. I've really taken the view of they don't expect me to be perfect. We strive any better all the time, but we push to try to find new things to do, and we can fail and and we're very and then and then again, though, I think the thing they would impart on us would be that didn't work. Why didn't it work? Let's not forget the lesson and move forward. So I think they've been, I don't have like, I'd say giving them bad news has been relatively easy, because they're like, great. Now what, how do we learn from this? What was the lessons? How do we adjust the strategy going forward? Michael McGrath  36:11 You're clearly an outstanding operator, and congratulations to you. It's phenomenal to see an Australian go to the states and and run a business like this. We would love to see you back here, by the way, but I'm not sure that's going to happen anytime soon, but, but you've got a great humanity about you. Tell us a bit about CoreGiving, because what's incredible to me that in the US in 2025 as many as one in six children are kind of undernourished. Talk to us about that. Luke Petherbridge  36:42 You know, I think philanthropy globally is a big thing. It's huge in the US companies do it. I think all corporates, we as companies. Blackstone does, you know, we own real estate in communities. And I think it's our onus and our job to lead communities better than we found them. And at shop core, we sort of set up this foundation, or this philanthropy called CoreGiving, and we now have 14 portfolio companies that are partners, our vendors, our employees. And you're right, like the sad state of fact is like one in five children don't know where their next meal is coming from. So if, the way, I personally associate, because it's a very personal thing, when you think of this, if you if you think of like a long weekend, the Kings long weekend in Australia, now, not the Queen's long weekend, you'd be so I'd be so excited not to have to go to school on Monday. There's a number like one in six kids in the US don't want that week. They get fed at school, and that's a huge thing. So we built this foundation and this charity, and there's so many people that are involved in it, and over the last five years, years with local food banks, we've delivered 80 to 90 we funded 80 to 90 million meals around the country. We have like, three or 4000 people every year turn up to volunteer on call Giving Day. It's now coming to Australia, with our partner down there, 151, property, and we manage. But it's something that really the firms at link and then the other blacks have it. We've united against this one cause, this one common myth, but I think it really comes back to this is the one. There's so many great causes to get the whole but I just think we want to help our communities. We want to help those that need help. And this is just one of the ways that we've been able to do it, and it's something that we will again. Don't give up. We're going to persistently work to try to end childhood hunger. Michael McGrath  38:47 I mean, just because you can't solve it all doesn't mean you shouldn't try, does it? I mean, that's the point. We've got to do what we can. One of our guys, Derek, went to the Philippines recently, and we funded him and gave him some money, and he was helping a local minister there who's feeding 1100 kids a week just a bowl of rice and an egg, right? And it completely changed Eric. It's moved him. And we've we're now formalizing that charity here, and we're gonna we, we're just not prepared to to do it as a one off, like, that's a problem that Luke Petherbridge  39:24 that's amazing. One send me that charity. I'd love to support it, but it's awesome. And I think if, and by the way, it's not just link, and it's not just Python, like so many corporates and individuals give time and money and effort to sort of help this, and I think it makes it makes our communities better. It makes the world better, you know, and this is our little niche. We're really sort of working on it. And every year, more people give to the charity. More people want to volunteer with our charity through local food banks. It's like, call Giving Day. Is one of my favorite days of the year. It's. Good for my soul. It's good for our firm. It's really been very special. And I'm again, I'm being so lucky just to be part of it. It's been awesome. Michael McGrath  40:09 Excellent look, Luke, that's been fantastic. I know you're busy. I'm very grateful for your time today. Just a few quick questions before we sign off. So what's your favorite place in the world, Luke, Luke Petherbridge  40:18 it's hard not to say, Sydney Australia. I do like the IRA paid. It's Sydney Australia. It's home. I love it. I miss it. I miss Australia. I feel I miss you mom, like I miss Michael McGrath  40:29 hopefully she'll listen to this. I mean, my mom does as much of interest. But so what about a book? Have you read a book that's inspired you, that you'd recommend, if there's anything jump out, Luke Petherbridge  40:43 the two that sort of Good to Great is a great book. It really instills the first, The Who, then the what. So hire people. Great people do great things. That's been a theme. The other one, that's an easier read than that, which I think just shows humility, is Shoe Dog. Phil Knight story, right? What a great book. Yeah. Phil Knight, that one, it just when you think of Nike, and you just hear how he built this humbleness inside this building where they moved, like, I still remember, like they were a huge firm, and they'd all turn up and they move offices like the employees move to save money. Peter, they just the humility of this, I think is, like those two books have resonated. I'm read them for a long time, but two things that, Michael McGrath  41:33 no, no, it's a great read Shoe Dog, isn't it? Yeah, thanks for that. So and then, what would you say to 21 year old Luke, If you could go back and you had, I'm not sure 21 year old Mike would listen to Mike, but on the off chance you might listen, what would you say to him? Luke Petherbridge  41:51 I'd say what? I'm not sure if you'd listen. I think really three things. One, just be curious. Curious minds solve big problems, like just be curious learning. Always learn. The second one is, be open to Yes, like if someone offers you a job in Cleveland, Ohio, yes, don't say no straight away. But just be if someone offers you a lateral move, not a vertical move, be open to Yes. Be open to Yes. And then the last thing is, just be positive. Like, just be a positive, like, have a positive demeanor and an optimist and positive, you know, I just think of my kids or myself. You want to be around positive energy and positive people. And it's just, I think, so it's be curious, be able to Yes, be positive. Michael McGrath  42:40 Isn't that great? Look, you're right. You know, laughter is medicine for the soul. I think so. If I've done one thing, I've tried to make my kids laugh, they've heard most of the jokes these days. But I doesn't stop me. Doesn't stop me saying them, Luke. But look, I think the free market has been a great place to play for me, and it sounds like for you as well, Luke and I like the idea we've got to be positive. The free market isn't free, by the way, we stand on the shoulders of giants, don't we, and in the liberal democracies of the West, we get to play. And if we're positive and constructive and curious, like you said, good things can happen. That's right, Luke Petherbridge  43:21 You've got to work for it, but good things, you put yourself in a position to make good things happen Michael McGrath  43:25 For sure. Yeah, Luke, it's been a pleasure. Thank you. And when you're over in Australia, maybe at Christmas, I'd love to have a coffee with you. Michael McGrath  43:33 Absolutely look forward to it. That'd be great. Okay, take care, Luke. Thank you. Michael McGrath  43:41 So there you have it. I love Luke's positive have a go attitude with his emphasis on curiosity and persistence. And if that's not enough, it's okay to make mistakes. In fact, mistakes are somewhat inevitable, providing we take all the lessons from them. Now, a quick shout out to our show sponsor, Oasis partners find out why more and more owners of Australian private companies are choosing to have Oasis represent them, contact Don Hunton, the CEO, for a confidential chat. Finally, if you liked today's episode, be sure to share it with your friends and colleagues, and if you're feeling really generous, leave us a comment. Only nice ones please, as we're very sensitive, so until next time you. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 31 3 About Luke: As CEO of Link Logistics, Luke guides strategic direction with a particular focus on driving profitability and building a winning corporate culture for the largest U.S.-only operator of logistics real estate. With 5 percent of U.S. GDP – translating to $1.4 trillion – flowing through its facilities annually, Link sits at the nexus of consumption, supply chain and technology. Luke’s LinkedIn: https://www.linkedin.com/in/luke-petherbridge-a843b764/ Link Logistics website: linklogistics.com Luke's BIO: Luke J. Petherbridge Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me. Your host. Mike McGrath, now today's guest resides in Chicago and runs a very large logistics business called link. Luke Petherbridge hails from Australia, originally growing up in Sydney and forging his career locally at Rubicon and in Macquarie Bank during the GFC, our conversation provides a fantastic insight into a phenomenal success story Australia, as you know, punches well above its weight in both business and sports. So sit back and listen to how Luke from humble beginnings, rose to the top. Luke Petherbridge, welcome to the troubleshooters podcast. Thanks so much for having me. Michael. I really appreciate it. People won't know this, but this is the third time of you and I trying to connect. We've had some technical difficulties, but we've delighted that you can hear me and I can hear you now, and we can get this podcast underway, which I've really been looking forward to having this conversation with you now. Michael McGrath  01:11 I think it's fair to say that you're big in logistics, Luke, and ostensibly, what that means, I mean, you employ 1100 staff, just to put it in context. And I think you've got 9000 businesses that rent space from you. Tell us a bit about link. I know it's backed by Blackstone, and it actually was founded in 2019 remarkably. So tell us a bit about Blackstone and link and what you do at the moment? Luke Petherbridge  01:41 Yeah, no, absolutely. Well, you mean, you touched on a lot of great stats, then blink was really founded in 2019, we're one of Blackstone's many portfolio companies, so they're our equity and partner in growing this business. But you know, we're a real estate company. We are in US logistics warehouses. We're one of the largest owners and operators in the country. And to give you an idea of scale, we have a little over 3000 and a half thousand buildings. You mentioned 9000 customers, which can range from the largest e commerce provider or fortune 500 companies down to the smallest little incubator that you know, and which always make me wonder just about the breadth and depth of the US economy, 1100 people. We have 60 offices. And the stat, which sort of gives you an idea, around about 5% of US GDP will float link building or link customer in our building, which gives you an idea like, we really take our position in the US economy and supporting the growth of the US economy and our customers really seriously. So it's important, and I'm very fortunate to just be a little cog in what is a very, very incredible wheel. Michael McGrath  03:01 Link specializes in what they call the kind of last mile. So tell us what that means. Luke Petherbridge  03:06 Yeah, so if you think of, you know, everyone probably knows a warehouse. We think of warehouses, and I think the last mile really sort of accelerated here in the US, probably about a decade ago, warehouses, probably, you know, in the since the mid 1900s through, was very much just moving large goods around, putting it at a store. What really changed in sort of 2013 2014 was this phenomenon of E commerce, Amazon and Amazon Prime went past 50 million subscribers here in the United States, where we see a 22% to 24% is online. But the thing that's really shifted is speed. So for me, commerce really started when I was 30, and this whole notion of buying something online and it being delivered to your door in a week was like mind boggling. It's like, this is amazing, but now that in the here in the United States, in most big countries, most big cities, you can order it in the morning, and it's there that afternoon, like most delivered within 24 hours. That growth Amazon says is like 30% it fastest growing business. They call it sub same day. So speed and execution of E commerce has really meant you can't have a good sitting out in a large warehouse, way out in a in a rural location. It's got to be infill. So our thesis has been accumulating and owning these infill last mile, close to rooftop facilities where workers live, where buyers live, and close to the retail nodes that sort of serve communities. Michael McGrath  04:50 Yeah, it's been a phenomenal journey that that online. You know, I remember in 2000 I mean, I'm old. Luke, you're a lot younger than me, but I remember that, you know, everyone was predicting what was going to happen online. You know, we started out with websites, and then we were what was being predicted was all this e commerce, and it was massively over hyped for a long time. And then all of a sudden, the iPhone appeared, smartphone appeared, and everything changed. And it's like, Aha. Now I know what you're on about, and since then, well, you know, it's phenomenal, isn't it? I mean, did you How much did you say 25% is online? Luke Petherbridge  05:31 It depends on the Yes, 22 to 25% of the US is online. The real covid became a huge accelerant and a change of consumer patterns. And I think, if you'll agree, most research, it probably says by the end of the decade, that gets towards 30% online. It continues to grow. It's no other reason we spoke about briefly. I'm going to drop my eldest son to college so he's eight. He's more digitally native than I ever was, and I am, yeah, and just as we age, as demographics age, the biggest buyer in their 30s are millennials. They're going to buy more online than my era, than my parents era. So yeah, you know, time and aging will just mean this continues to swell, and the service has got dramatically better, like you can see where your packages are, gets delivered within 24 hours. That e commerce accelerant is just one of the many tailwinds that are sort of driving demand to last mile and logistics in general. Michael McGrath  06:37 Yeah, yeah, that's phenomenal. Look to those who are? I'm sure many of our listeners will have picked up the fact that you've got an Australian accent. So you hail from Australia. Yeah, we're so you we're talking today from Chicago. I presume that's HQ, is it for Link Chicago? We Yeah, New York and Chicago are too big. Okay, cool. So tell us then, before we come back to link and that story, tell us. Tell us how you got started in business. And, yeah, what was growing up like, and what were the first signs that you were good at business loop that emerged, and when did they emerge? Luke Petherbridge  07:15 Oh, wait for those first signs to appear. Now. Now, no false modesty. Luke, I grew up in Sydney. I grew up in Cherrybrook, so a suburb, it was awesome. I mean, you say the lucky country it is. I mean, I think Australia is just such a great place to grow up. I'm very much Australian still, and it's a place we love to visit. My family's there. My wife's been there. So we love it. I went to Macquarie University. I started working at a big investment manager in investor relations, like dealing with investors, and then I went and worked for a small business that was a hedge fund that got into real estate and grew rapidly, but I got to work with the founder there was exceptionally driven and smart, and taught me so much was this Rubicon. It was Rubicon, yeah, that's okay. And so you, you got there at 23 Yeah, in 2020 okay. And so you, you speak about a baptism of fire there. So tell us a bit about that, because I got into business at 23 and I had a different but similar baptism of fire, but talk to me about what that was like. Yeah, I think it's, you know, I got to work with a very driven, focused founder who was, you know, exceptionally bright. And then he built a business. And, you know, when I first joined, I mean, it was in a small suite in Double Bay. And, you know, I do everything from get the mail and collect coffees to help write PDFs to raise money to help, you know, do book builds on IPOs, which we got to do over time we listed a US, a Japanese and a European REIT in Australia. But it was really that the opportunity was just to be around the hoop with just all this activity that was going on. I was three away. It was such a great era of business. But, you know, it was like intense and you work long hours and the demanded. I mean, I remember Gordon would say things like, you know, a jack of all trades are a master of everything, and don't wait for tomorrow to do something today and everything matters, like everything from presentation style to format to wording to the way you these things that are instilled in you in very formative years. I probably honestly, didn't appreciate the lessons I was being taught as much now, and I don't think you ever do when you're grinding and shoulder to the wheel. I don't think you appreciate as much, but when you look back on it, it's those lessons that really are the foundation stones to how you run and how you do things. I'm sure it's the same is when you learn your lessons in your 20s, but I was very fortunate to have the opportunity. I had to make my own life being there and working hard, but I had a real opportunity to learn and 20 year olds my advice like, when you're there, absorb as much as you possibly can, ask questions, test yourself, push yourself. And Rubicon was a real opportunity for me for five years. Michael McGrath  10:24 Yeah, it's interesting, that concept of learning, getting in a place where you're going to learn a ton. It's almost like the salary is a bit academic, if you can get into a place around some people. Those, as you said, that's foundational, isn't it, really, and and, you know, everything I've done is really, you know, it's some way shape or form was born of that first five years, right? You said salary is academic. It's so interesting how you define that. I think if you said to a 20 year old, you get paid in learning and and money. And when you're in your 20s, you get paid a lot more in learning and not as much in money. Just value it. I, you know, Val the opportunity to learn. And, you know, I think I, at times, I absorbed it and I thought about it, but now I look back at it, it's like, wow. I there was so much that I that period in my life that I apply every day, even today, which has been really helpful for my career. Luke, I love that twist on that old saying, jack of all trades, master of everything. I really I can kind of a little like It's that constant, you know, pursuit of better is probably another one. Yeah. I mean, there's a bit of hyperbole there, but there's a truth in it. Isn't that in terms of, you know, and that, ready, fire, aim, that, because effectively, you were building a business more than doing a job. There was a business being built. And I think there's a distinction there. Luke Petherbridge  11:54 I think that's right. I think I was fortunate to be alongside the business builder and see the inner workings of how to build a business. And because, and not in this fail, you fail fast move on. But you know, just the the intent focus on everything matters, from the work using emails to the order to the full Manning of a person like these things are instilled. And by the way, so many great businesses in still listening, you go work at a big investment bank that's exceptional. They install these things into you that at the time feel like rope learning or a grind, and then when you're in your 40s, like I and you're like, Wow, all these things just instilled in me, but the you know, one, learn, but two, the other thing, which I've been fortunate in my career, just work around great people that challenge and inspire you. If you do that, like, I didn't sit there and say, I want to be in real estate. I didn't sit there and say, I want to live in Chicago, like I just yeah, my path with working with great and inspiring people. And that's, yeah, been very lucky in that sense. Michael McGrath  13:03 Yeah, so, so where was the love of business and commerce? Was that nurtured in you through your degree at Macquarie? Well, where was it? Where you went? Okay, I I'm good at it. This is what I'm I'm gonna do. Luke Petherbridge  13:17 Well, I wasn't, I wouldn't call myself a stellar student. I did it enough to get a degree. My dad, you know, he built his own accounting practice. He had 40 or 50 people like him, built a real business. I mean, he built and all my life, from where I remember as a kid, I could go on the weekend to get get things, or he was working on it, but he built a real business. So I think, yeah, just looking at the influence dad had on me and what he did my mom then work there for for a long period, and was really instrumental of my love of business. And, you know, commerce, I did commerce, Macquarie, but, you know, I think that's really where it started, and it's little things. And I would say even wanting to live overseas was my parents talking at a kitchen table about when they lived overseas and all these things. It's just, it's innate. When that, you know, earliest memories, I remember, you know, Dad building a business, talking about it, and hiring people, and it was, it was really interesting. So I think that's probably where it started from. Where did the opportunity to go overseas come and how difficult was that to jump out? I mean, was that, you know, big? I know it's a big move, but was that a big call, or were you just in? Do you know, so I worked, so I went from Rubicon to Macquarie Bank and worked on one of their satellite listed vehicles, and the partner was from Cleveland, called DDR, so a $15 billion shopping center rate. I joined Macquarie just before the GFC, I think two weeks before Lehman went under, is when I joined Macquarie. Macquarie. For those that aren't bankers, it's not a great time to join an investment bank right before a crisis. Great learning opportunity. I got to work out a vehicle and work with very smart people. Macquarie is exceptional. The board was great, but I got to know this partner, this JV partner, and their people. I used to travel to Cleveland a lot. And you know, when we sold it and wound it up, the CEO and the CFO, who I got to know really well, said, Would you ever think of moving to Cleveland? Now, for those that live in Sydney, I would say Sydney is the most beautiful city in the world. I'm a Sydney sider. I love it. It's awesome. My joke is, Cleveland's the second most beautiful Synod. It is not it's a great Midwestern town. It's nothing like Sydney. It's on a lake which is beautiful. It has great people, but it snows a lot. The weather's not like Sydney. But, you know, we just thought, why not? Let's give it a go. Like, I think a mantra in my life has been open to Yes. Like, what's the worst that happened? Try we had two little kids. Let's go live in Cleveland for a few years. And if you don't like it, we can come home, and then I'll give my wife Chantelle, little credit for this, that she was probably a little bit more she lived in the UK as a gap year. And like, why don't we do this? Let's give it a go. And so, you know, it's not easy to do. I'm not saying moving from anywhere is easy or anywhere, by the way. I mean your accent shows that you Moving is hard. It's worked out phenomenally well for our family, for our individual selves, for my career, it's been really great. Michael McGrath  16:40 It does indicate a certain spirit, doesn't it, of adventure and and so I get, I guess, a risk appetite. Where did the real estate expertise and kind of love a real estate where did that begin to germinate? Was that at Macquarie? Luke Petherbridge  16:56 It was at Rubicon. We did three twisted vehicles that were all real estate. Okay, I got into real estate. Then Macquarie, I got into retail real estate, and helped run a business with der, and then moved to der, which got into, like the true operating platform, indeed, yet seven or 800 people, but, you know, became the CFO there over time, but it was like a real operator. You had a leasing team and accounting and property management and development, and that's where, you know, that was a real opportunity to learn a real operating business and be fascinated by, you know, motivating people and working with great people and harnessing everyone's individual skillset for a common goal. That was a real opportunity for me to learn that. And yeah, that was the first time I'd really been I mean, I worked at a quarry, but I worked in a silo. It's where I had quite a large purview with a bunch of other I learned so much from a great number of just how to be a good leader and inspire people and communicate with people, I think was Michael McGrath  18:05 You mentioned that, you mentioned the GFC and not been a great time, you know, to do what you were doing. I started in M and A in the GFC as well. So I had a pretty lean couple first couple of years, let me tell you, but you mentioned that it was 2019 which is that sort of pre covid period where you got link going and you got the gig there. So tell me about that, that kind of, you know, from a troubleshooting point of view, right? I mean, coming back after Christmas in 2019 I remember it well. And the whole pandemic thing was emerging. We were googling the word pandemic. I mean, how did you tackle that, and what was the experience like? Luke Petherbridge  18:47 Yeah. So I, when I left DDR, I started a firm called SHOP Call with Blackstone, which is a retail real estate business. Then I moved to live call, which is multifamily, or built to rent, is what they call it in Australia. So I went into covid, running those businesses, and then a year into covid, maybe six months into covid, they, they asked me, Would I step into link? And I moved to link. It was a lot bigger. It was a real challenge, like even just think about managing a platform or a team. So forget about the issues of, are we collecting rent? Are we looking after customers? How do we lose space without seeing people in this pandemic world? Imagine trying to run a team. We hired 400 500 people during covid. All these everything was virtual. I think caught me, honestly, is the resilience of the human right, like just our ability resilient and resourceful and solve things and things we thought we'd never have to solve, like pricing rents or, you know, managing move ins with customers and, you know, unlike Australia, the US. Said various different covid protocols. Every state was very different, so you have to manage that. But what I found was, if you, if you hire great people and surround yourself with great people, they invariably come up with really unique solutions to big problems. But you know, for our business, being in industrial or warehouse and logistics. There was this first moment where everything became, wow, what does this mean for the world and GDP? And then it was this effectively a like a rocket ship, because everything went online. We need more inventory in the United States. You still remember that image of all those teams the court of Los Angeles trying to get in good. So it became this a massive accelerant for our business to onshore manufacturing, to serve safety stock. So our business went through like a two or three year Piper boom. So you're building a business and sort of caught fire in a very positive way. At, you know, we started finding, yeah, we got to really do some great things here. Michael McGrath  21:08 Yeah, that's amazing. I mean, there were definitely winners and losers. Weren't there. And, you know, if you were in the airline business, I remember virgin here had a billion dollars in cash in March. They were broke six months later. I mean, that there was some real kind of some real problems for certain sectors, and then other sectors, like you said, online, just went through the roof. Luke Petherbridge  21:29 Yeah, and then there was all these businesses that started trying to take advantage of that or serve the customer more. Amazon has been a leader. Walmart's been a leader. They're doubling down on this? They're growing still at, you know that last mile, some some sub same days, like growing at double digits, more than double digits, even today. So, yeah, really changed consumer patterns. It changed where people live, like this, Sun Belt acceleration happened during and post covid. So there's been big shifts in the US that, you know, we're now staying the test of time and so building a business around that Michael McGrath  22:09 As we come out of that now. I mean, I can't believe it's five years ago now already, but, and it almost seems like a blur,to be honest with you, but you don't have to be living in the US to observe the political polarization that's interesting, that we've got a second term of Trump and we've had a lot of choppiness around tariffs and stuff. So how's that affecting you? And how are you guys thinking about and managing the whole kind of tariff volatility? Luke Petherbridge  22:37 Yeah, I think you know, the thing I would say to that is, the world is dynamic. Things change, whether you have tariffs, whether you have a boat going sideways in the Suez Canal that shuts down GDP flow, whether it's port strikes. I think you know, the supply chain globally in every country, is a little fragile, and it's constantly trying to what we've tried to do is we try to help our customers navigate changing landscapes that could be consumer changes. It could be GDP change. It could be political changes. So we really just take the view of the long term, view of owning great real estate for our customers to operate in today and tomorrow, and then provide solutions wherever we can. As they Some businesses are going to grow in this like manufacturing is accelerating. You know, there's a lot of data centers being built, but those, all those components, need to sit in a warehouse, solar, batteries, EVs, and there'll be other businesses that need to shrink. So we constantly trying to toggle and I would say over the next decade, 2030, years, the last 50, there's just always cross currents and changes occurring. And we try to do, you know, work with our customers to navigate that the best we can. Michael McGrath  23:54 Yes, it's interesting that, I mean the in some ways, the mid market, which many of our listeners are running relatively small businesses that they kind of live with this choppiness and change. It's kind of part of the MO that you know that, in fact, one of the strengths of a small business is its ability to flex and change and adapt. And you know, if it can't lose that, because that's his greatest defense, I think, against these larger competitors, who are typically a bit they're stronger and bigger, but they're often slower, but it sounds like, you know, you guys are reasonably nimble, and you take a fairly pragmatic view of, I mean, change is the only constant, right? Luke Petherbridge  24:39 I think that's a great phrase, change is the only constant, and you try to be as nimble and as flexible. And really, we all have a customer work around our customer, but we try that doesn't mean we're perfect at it. As you get big, you end up with bureaucracy like you try to avoid that. You come up with rigidity, like you really try to be as nimble. And I do think. Luke Petherbridge  25:00 know, as you think of mid market terms, I think of the customers that are in our building, this is exactly the sort of people that your listeners are. These are these small to middle sized enterprises that are building a widget, whether they're fixing every bag, like, if your bag breaks on an airline, you ship it to a facility, a linked facility, there's a business that looks at it, fixes it, or replaces it, or every averse wrap is printed in a link facility. There's all these businesses, and this unifying thing is they're all these dynamic businesses that are constantly managing and flexing for changing conditions. And I think resiliency of small business, both in the US, in Australia, I'd say globally, is the backbone of a lot of our GDP. A lot of the global GDP is these small businesses. So we write our own buildings that they can operate in, and we try to make it as easy and user friendly, Michael McGrath  25:57 I suppose. I mean, I've had a 40 year career effectively, and, you know, I've kind of mapped the digital you know, we've gone from no computers on the desk, you know, no mobile phones, to we've, you know, we've mapped that. And we've now seen the largest five corporations in the world are all weren't around effectively 50 years ago, and now they're the largest five. So, I mean, that that's been a phenomenal thing to watch and observe, but many would say we're still at the beginning of this kind of digital age. And what are your thoughts on AI? Everyone's talking about AI at the moment as a as a huge catalyst for further dynamic change? Luke Petherbridge  26:39 Yeah. I mean, I think it's hard for any business not to think through it. I think we are trying to challenge ourselves with it and embrace it where we can. I have sort of my thinking probably will evolve as well, but I think of it in three broad buckets. I think of AI being able to support what or robotic process automation. So getting rid of the lower value tasks, automating those which we've been doing like this has been doing for a long time, whether it's using in your accounting software, Adobe, DocuSign, all of that stuff, and then using AI around that will just help you become more productive. As a firm focus on higher value components of what we do. So we're doing that. Then the next one would be cognitive engagement. So the way we sift through our data in the way we can deal with the customer, or the way we can actually get insights back to our employees. So how, how's the human interaction with the platform and what we do, whether it's our chat bot, whether it's the way you can bring up data or use an agent to help you work with the customer. And then the third one would be cognitive insights, which is where, you know, we are one of the largest owners of industrial real estate in the country. We have so much data from leases to customer insights to what they've said and to brag, these insights out to be a better partner and better real estate for our customers to do better at. So they're the three areas where I'd say early inning. I think you're exactly right. We're in the early innings of this sort of, I'd say, revolution, but we're constantly learning and testing and trying things, and things work really well. And some things, you know, we're sort of, we're waiting for technology, or, you know, a tool, to sort of catch up with us. Yeah, Michael McGrath  28:37 just reflect for us. On, on, you know, what would some of your big milestones be? I mean, at link, but generally that where you've you've made some good calls. And when you look back and you get that perspective you spoke about earlier, you go, wow, that that was a good call in a difficult situation Luke Petherbridge  28:56 when I was at McCoy, I think it'd be hard not to sort of saying, what was the lessons learned in the biggest financial challenge of my lifetime, the GFC? I think when I look back at that, you know, this business was under immense pressure. It was listed, there was a huge amount of pressure on it from banks. I think that the biggest thing there, which, we sort of hung in there and solved it and got the business sold. Eventually, it was like, just don't give up. I really, and I remember a board member, Bob Jos was on the board. He's got, I think he was on the board of city. He was the dean of Stanford at the time. I remember him calling me one night like crazy, late. He was in San Francisco, but it was late in Sydney, and he's like, character is forged in crisis. So these moments that are really hard is where you determine you can build your own character, and what can you do? So I think that was a huge opportunity there. I think one. I had the opportunity to lead DDR and go and build shock, or I can remember that distinctly, where they you know, I had a chance to build a firm. And really it was like you emerged a bunch of things together. I got to re architect everything. I didn't know if I could do it. I'd never been a CEO of an operating platform. But you know, I think that formative moment of learning and and being okay to fail like it's over, you get things wrong. I think leaders, and you know, particularly senior leaders, feel like they can't have errors. I'd say the things you learn in the most difficult situations is the ones that probably are most lasting. So being okay to test and fail on things and then where you sort of and shop. Core built a very customer centric business because we care about the retailer and the retailers customers and live core was very data centric. That's the way you can run 80,000 apartments. Is very data heavy, and then at Lincoln was trying to merge those two components together into a business that was very transactional. We've been, we've been fortunate on that. That doesn't mean I don't bump into things and get things wrong. And we have to backtrack and go down another fork in the road that, you know, we probably, you know, we've really sort of touched ourselves, but the commonalities surround someone with great people and great things will happen. Michael McGrath  31:27 It's interesting that you mentioned persistence there, because that's our number one value here at Oasis partners. And yeah, we're constantly reminded of the need to just keep at it. Yeah, I remember Churchill apparently spoke at the Oxford Union, and he just walked on the stage and just stood there and just said, Never, ever, ever, ever give up, and then walked off. Gosh, that innovation. That's all he said. Luke Petherbridge  31:54 He's, I mean, he's like one of the most inspirational leaders in history. But there is an element of truth to that. I think, you know, I think it's never give up or persistence, just keep keep at it. Keep moving, keep going. Sometimes you'll be going backwards. Just keep going. The other thing I would tell my 21 year old self, when that situation is happening, that is your best opportunity to learn the most, like keep your eyes wide open and learn the most. It's when things are really challenging is where you can learn the most. I'd say, you know, although the world was cool, we did so much. I remember kind of learn a lot. Macquarie taught me so much, because it was the worst cycle part of the cycle. But I think when things are really hard is when you can learn the most that that is probably the moment that you naturally are trying to just shelter and just keep your head down and be like, please let it go past. I think the greatest leaders that sort of eventuate are the ones that when the when they're in the teeth of the wind, are like, I'm not going to give up, and I'm actually going to learn more and outperform, because they're the lessons I'll use later in life in a different situation. I think they're the people that are. Michael McGrath  33:12 I mean, I think, you know, one of the illusions is that success is a straight line up and, you know, we, you know we, we get, you know, we get presented with these situations in the media where everything looks like it was an overnight success. And I think that, you know, we've got to teach our kids, and you know about resilience and about these the life is hard. You know, I remember the first line of Scott Peck's book The Road Less Traveled. His life is hard. And if I remember nothing else in that book, I remember that first line, which is, okay, I got to own that it's not it's not easy, and you don't have to speak to people for very long without coming in touch with the fact that life is hard. Luke Petherbridge  33:50 Yeah. I mean, you, you talk about all these mid market firms, if it was easy, everyone would do it. And I mean they, they every day. I mean, if you come around link and you and we toured our facilities, you get to see all these businesses, these companies that are in space from us. They're every day like these challenges every day in these businesses, and they turn up and they keep and that, that resilience, I think, is admirable, and it's what makes Australia great, what makes the US great, what makes businesses great, what makes leaders great. But yeah, it's it was really an easy everyone to do it and challenge, I think creates the opportunity. Like, when there's a challenge, like, you have the opportunity to outperform, do something different, create a new solution. I think the exciting time, Michael McGrath  34:43 Lou, you've got a one of the largest fund managers is your capital partner there at link, and I presume you report to them in some way, shape or form. You've got a board and stuff. Tell me how you manage when things haven't gone to plan and you're having to show up and. Fess up, really? Yeah. Luke Petherbridge  35:02 I mean, one Blackstone, you're right that they're one of the largest alternative asset managers in the world, one of the largest real estate owners that we sit in their real estate business is, I'd say we just be overly transparent, like we really, yeah, it's totally fine to say this. We tried this. It didn't work. They're integral in our business. I see them as partners. We all see them as partners. We make decisions jointly, together on things. They're very supportive in the business growth. They've been wonderful to work with. All three. I've really taken the view of they don't expect me to be perfect. We strive any better all the time, but we push to try to find new things to do, and we can fail and and we're very and then and then again, though, I think the thing they would impart on us would be that didn't work. Why didn't it work? Let's not forget the lesson and move forward. So I think they've been, I don't have like, I'd say giving them bad news has been relatively easy, because they're like, great. Now what, how do we learn from this? What was the lessons? How do we adjust the strategy going forward? Michael McGrath  36:11 You're clearly an outstanding operator, and congratulations to you. It's phenomenal to see an Australian go to the states and and run a business like this. We would love to see you back here, by the way, but I'm not sure that's going to happen anytime soon, but, but you've got a great humanity about you. Tell us a bit about CoreGiving, because what's incredible to me that in the US in 2025 as many as one in six children are kind of undernourished. Talk to us about that. Luke Petherbridge  36:42 You know, I think philanthropy globally is a big thing. It's huge in the US companies do it. I think all corporates, we as companies. Blackstone does, you know, we own real estate in communities. And I think it's our onus and our job to lead communities better than we found them. And at shop core, we sort of set up this foundation, or this philanthropy called CoreGiving, and we now have 14 portfolio companies that are partners, our vendors, our employees. And you're right, like the sad state of fact is like one in five children don't know where their next meal is coming from. So if, the way, I personally associate, because it's a very personal thing, when you think of this, if you if you think of like a long weekend, the Kings long weekend in Australia, now, not the Queen's long weekend, you'd be so I'd be so excited not to have to go to school on Monday. There's a number like one in six kids in the US don't want that week. They get fed at school, and that's a huge thing. So we built this foundation and this charity, and there's so many people that are involved in it, and over the last five years, years with local food banks, we've delivered 80 to 90 we funded 80 to 90 million meals around the country. We have like, three or 4000 people every year turn up to volunteer on call Giving Day. It's now coming to Australia, with our partner down there, 151, property, and we manage. But it's something that really the firms at link and then the other blacks have it. We've united against this one cause, this one common myth, but I think it really comes back to this is the one. There's so many great causes to get the whole but I just think we want to help our communities. We want to help those that need help. And this is just one of the ways that we've been able to do it, and it's something that we will again. Don't give up. We're going to persistently work to try to end childhood hunger. Michael McGrath  38:47 I mean, just because you can't solve it all doesn't mean you shouldn't try, does it? I mean, that's the point. We've got to do what we can. One of our guys, Derek, went to the Philippines recently, and we funded him and gave him some money, and he was helping a local minister there who's feeding 1100 kids a week just a bowl of rice and an egg, right? And it completely changed Eric. It's moved him. And we've we're now formalizing that charity here, and we're gonna we, we're just not prepared to to do it as a one off, like, that's a problem that Luke Petherbridge  39:24 that's amazing. One send me that charity. I'd love to support it, but it's awesome. And I think if, and by the way, it's not just link, and it's not just Python, like so many corporates and individuals give time and money and effort to sort of help this, and I think it makes it makes our communities better. It makes the world better, you know, and this is our little niche. We're really sort of working on it. And every year, more people give to the charity. More people want to volunteer with our charity through local food banks. It's like, call Giving Day. Is one of my favorite days of the year. It's. Good for my soul. It's good for our firm. It's really been very special. And I'm again, I'm being so lucky just to be part of it. It's been awesome. Michael McGrath  40:09 Excellent look, Luke, that's been fantastic. I know you're busy. I'm very grateful for your time today. Just a few quick questions before we sign off. So what's your favorite place in the world, Luke, Luke Petherbridge  40:18 it's hard not to say, Sydney Australia. I do like the IRA paid. It's Sydney Australia. It's home. I love it. I miss it. I miss Australia. I feel I miss you mom, like I miss Michael McGrath  40:29 hopefully she'll listen to this. I mean, my mom does as much of interest. But so what about a book? Have you read a book that's inspired you, that you'd recommend, if there's anything jump out, Luke Petherbridge  40:43 the two that sort of Good to Great is a great book. It really instills the first, The Who, then the what. So hire people. Great people do great things. That's been a theme. The other one, that's an easier read than that, which I think just shows humility, is Shoe Dog. Phil Knight story, right? What a great book. Yeah. Phil Knight, that one, it just when you think of Nike, and you just hear how he built this humbleness inside this building where they moved, like, I still remember, like they were a huge firm, and they'd all turn up and they move offices like the employees move to save money. Peter, they just the humility of this, I think is, like those two books have resonated. I'm read them for a long time, but two things that, Michael McGrath  41:33 no, no, it's a great read Shoe Dog, isn't it? Yeah, thanks for that. So and then, what would you say to 21 year old Luke, If you could go back and you had, I'm not sure 21 year old Mike would listen to Mike, but on the off chance you might listen, what would you say to him? Luke Petherbridge  41:51 I'd say what? I'm not sure if you'd listen. I think really three things. One, just be curious. Curious minds solve big problems, like just be curious learning. Always learn. The second one is, be open to Yes, like if someone offers you a job in Cleveland, Ohio, yes, don't say no straight away. But just be if someone offers you a lateral move, not a vertical move, be open to Yes. Be open to Yes. And then the last thing is, just be positive. Like, just be a positive, like, have a positive demeanor and an optimist and positive, you know, I just think of my kids or myself. You want to be around positive energy and positive people. And it's just, I think, so it's be curious, be able to Yes, be positive. Michael McGrath  42:40 Isn't that great? Look, you're right. You know, laughter is medicine for the soul. I think so. If I've done one thing, I've tried to make my kids laugh, they've heard most of the jokes these days. But I doesn't stop me. Doesn't stop me saying them, Luke. But look, I think the free market has been a great place to play for me, and it sounds like for you as well, Luke and I like the idea we've got to be positive. The free market isn't free, by the way, we stand on the shoulders of giants, don't we, and in the liberal democracies of the West, we get to play. And if we're positive and constructive and curious, like you said, good things can happen. That's right, Luke Petherbridge  43:21 You've got to work for it, but good things, you put yourself in a position to make good things happen Michael McGrath  43:25 For sure. Yeah, Luke, it's been a pleasure. Thank you. And when you're over in Australia, maybe at Christmas, I'd love to have a coffee with you. Michael McGrath  43:33 Absolutely look forward to it. That'd be great. Okay, take care, Luke. Thank you. Michael McGrath  43:41 So there you have it. I love Luke's positive have a go attitude with his emphasis on curiosity and persistence. And if that's not enough, it's okay to make mistakes. In fact, mistakes are somewhat inevitable, providing we take all the lessons from them. Now, a quick shout out to our show sponsor, Oasis partners find out why more and more owners of Australian private companies are choosing to have Oasis represent them, contact Don Hunton, the CEO, for a confidential chat. Finally, if you liked today's episode, be sure to share it with your friends and colleagues, and if you're feeling really generous, leave us a comment. Only nice ones please, as we're very sensitive, so until next time you. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> https://www.oasispartners.com.au/wp-content/uploads/2025/09/Picture1-1.png clean no 44:35 No no https://www.oasispartners.com.au/podcast/nicole-stanners-cycling-entrepreneur/?utm_source=rss&utm_medium=rss&utm_campaign=nicole-stanners-cycling-entrepreneur Wed, 23 Jul 2025 01:52:50 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17715 From Nicole’s LinkedIn: “I'm the Founder and CEO of Muze Women, an innovative women's cycling apparel company, and a consultant to entrepreneurs, SMEs, and large corporate clients. After spending 25 years honing my skills in business, marketing, and innovation leadership across local, regional, and global levels, I decided to channel my passion for sport, equality, and sustainability into creating a brand that champions gender balance and empowers female cyclists through meticulously designed, sustainable apparel. Muze Women specifically focuses on addressing the unique challenges women face in cycling—particularly in fit, practical design features, and environmental impact. In addition to leading Muze Women, I consult with innovative entrepreneurs and corporate clients on business and marketing initiatives. This includes business, category, innovation, and marketing strategy; organization structure and capability development; and all aspects of the marketing mix from idea to execution. I believe in using business as a platform for social change. Inspired by my love for cycling and a vision of a more inclusive cycling environment, Muze Women is committed to transforming the landscape for women—making it more inclusive, comfortable, and enjoyable.” Nicole’s LinkedIn: https://www.linkedin.com/in/nicole-stanners/ Muze Women Website: www.muzewomen.com Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now Nicole stanners is the founder of Muze, a cycling apparel brand that she launched in 2023 which is going gangbusters. Like most great business ideas, this came to Nicole, who's a keen cyclist, seeing a problem with poorly fitting cycling apparel for women, and then she took some action. Sit back as I learn how Nicole went from marketing executive to online entrepreneur. Michael McGrath  00:46 So Nicole, welcome to the troubleshooters podcast. Nicole Stanners  00:49 Thanks for having me. Michael McGrath  00:51 I feel like I know you, even though it's the first time we met this morning, because just to declare an interest, I know your dad quite well, and he's he's been keeping me up to date on your progress since you launched your business, and the last time we had a chat, I said, we must get Nicole. And so here you are. Thank you. Now, Moose is a female cyclist apparel, so that's the thing that's emerged, right? And so, like most great businesses, your business started when you identified a problem. So you're a very keen cyclist, and you were presumably having trouble getting decent female cyclists apparel. Is that how you conceive the idea? Nicole Stanners  01:28 Yeah, I think I've always been into sport and really passionate about it. A lot of running team sports when I was younger, but I first started in triathlon and cycling about 14 years ago, and I remember I was really excited to get my first club kit, and I tried it on and looked at it in the mirror and just thought to myself, Oh, my god, is this as good as it gets? You know, it didn't fit. It didn't look great, didn't compliment the body. Yeah, it was pretty bad. So Michael McGrath  01:57 was it largely? Had it been produced for males, or was it? I mean, what was the deal those days? Nicole Stanners  02:02 I think, you know, probably back then, everything was pretty standardized. And, you know, there's this term in the industry that's called shrink it and pink it. So I think what happened is they would just have smaller male cut sizes and try to put a bit of a female design on it. Things have improved, but there's still a bit of that going on, and not a lot of catering for women. You know, designing from the ground up, I suppose, Michael McGrath 02:27 okay. I mean, it's interesting. I mean, many great businesses start from that premise of, you know, someone's got an interest in an area, they see a problem, and they say, like, how can we fix it? But it takes, you know, many of us identify those problems, but not many of us do something about it. So it stands to me, what did you do about it? What was your first action around okay, maybe I'm going to do something about this. Nicole Stanners  02:52 Well, that was the seed. And I think that kept germinating away in my head because I was working in marketing and corporate, and kept thinking to myself, is this an opportunity, and certain things I experienced over the next probably, gosh, you know, five to seven years just cemented that in my mind. So I remember going, I used to work for Campari, and I was in Italy, and actually stumbled across an Italian cycling race just for amateurs one day when I was there and they were wearing the worst kit ever. And I thought, How can this be happening in Italy? And then I did lots of different cycling events in particular, one called Race Across America, which is a cycling race from one side of the US to the other. Michael McGrath  03:34 5000 is it 5000 kilometers? Nicole Stanners  03:36 Yeah, 5000 kilometers. Crazy, six times Everest in climbing. Is that right? Yeah. So it's pretty so you is it west to east? It goes from Oceanside in California to Annapolis in Maryland, yeah. And just, you know, experiencing six and a half days in cycling kit day after day also just reinforced that. So, yeah, I started initially, just looking at, you know, the size of the market was it growing, how many females were in that space. And then started to do a little bit of research on factories and suppliers while I still have my corporate jobs, Michael McGrath  04:11 yeah, so let's go back a bit. So you're a marketing person. I mean, you, I mean, you were the marketing director at Campari group, I mean, and you were there eight years or so. I mean, that was a big gig, really. And then you'd previously worked for Diageo and Arnotts, and then you Unilever, so you're a thoroughbred marketing corporate, really. Yeah. So did that help? Did that my perspective around, okay, what's the market opportunity here. Did that help? Nicole Stanners  04:43 Yeah, I think, I think my background in marketing and innovation really, really helped to I suppose, you know, I had my consumer head on looking at, you know, what it felt like to be a cyclist, but also from a marketing perspective. And I think. Going back to your point of lots of people have good ideas, but it's about executing it. You know, I wasn't the first person to come up with that insight that things aren't great for women. So yeah, that that definitely got me moving, I suppose. Michael McGrath  05:13 And so that was germinating, you were kind of prosecuting your corporate career. So what, when did you begin to take some take some steps, maybe some more concrete steps, because most of us start moonlighting a bit, you know, before we jump. So what? What was going on there? Nicole Stanners  05:31 Once I had the idea, I think I started to do the research. I also started to do some prototyping of kit that I thought would be good, also looking at partners to work with, and suppliers, which was extremely hard because it's quite a protected industry. People protect their factories, the people they work with, so it's hard to Michael McGrath  05:51 so it's hard to break into that kind of supply chain area. You're a startup. No one knows you okay, and I suppose you're upsetting the upper car, but with some of the ideas, maybe, Nicole Stanners  06:02 yeah, a lot of, I mean, a lot of factories. I prefer to work with people that are already established. Plus, if you want to do any variation on a standard cut of kit, that's a bit of a headache for them as well. Michael McGrath  06:12 So what was the solution? In essence, I mean, clearly, the female body is different to the male body. Well, I'm not sure I can say that anymore, but anyway, I've said it so, but I presume that you had to do some real research and some real testing around that. So how did you go about fixing the problem? Nicole Stanners  06:34 I guess I think I had some intuition myself, and also just talking to friends. And then initially, what I did is did the common marketing thing. I did some focus groups with some friends, triathletes and also cyclists. Michael McGrath  06:47 You'd be amazed how many people don't do that though. Yeah, I mean, that is just your marketing background would have helped with that, because, yeah, that's not as common as you might think. Nicole Stanners  06:58 No, exactly. You don't want to be just basing it on your own thought. And then once I had some decent prototypes, I actually did some fit testing, just to see how it fit on the body for women of different sizes and body shapes. And then also just pedaling on an indoor bike. What did that look like? What did it feel like? I worked with a designer for that, and also someone called an anthropometric expert. Michael McGrath  07:22 I read that. I'm not sure I could say it, but I had a crack at it in my head. Nicole Stanners  07:26 And they're an expert on body measurements, you know, mapping of sizes and patterns and things. So she was really useful in helping me look at patterns, how things needed to be shaped and sit on the body in order to establish my first proper prototypes. Michael McGrath  07:44 So there's that combination between comfort and looks, I guess, isn't it? That sort of, how can we make it comfortable? How can we make it look? Okay, Nicole Stanners  07:51 Yeah. And she can also help you commercially looking at, you know, if you're going to do six sizes, right, the best breadth for each of those size to make it commercially viable and get less returns as well. Yeah. So yeah, when I launched Muze, I think the three big things I wanted to focus on, besides technical performance, was getting a flattering fit, so making sure women felt good. They felt comfortable. They could forget about it and just perform even things down to where the zipper sat and where the prints sat on women. That makes a difference in making you look good as well. The second area was practical design features, so things that are important to men, but mostly to women. So I've got things like a ponytail holder in your cap or a heart rate monitor sleeve in your crop top. So different things like that. And then lastly, just making sure that it's as sustainable as possible. You know, fashion is one of the biggest contributors to climate issues, yeah, so you want to take a step in the right direction. It can't be perfect from day one, but really trying to do that, and then just creating a brand that really supports women, so helping to overcome barriers and inspiring them to get on the bike. Michael McGrath  09:00 Yeah, so how did you come up with the name Muze? Nicole Stanners  09:05 It was funny, because I think, I think the marketing perfectionist in me wanted to absolutely nail it, so I was procrastinating quite a lot. And actually, initially, one of my friends, I had a catch up with her, and she said, Muze, sounds really cool. What about that? And she owned her own business, so she suggested it. And then I thought, actually, that fits really well, because the brand is about inspiring women, having women as the Muze for creating the brand, not men. So yeah, I quite like it. Michael McGrath  09:34 Yeah. Okay, cool. I like it so memorable. Yeah, you'd be amazed how many tech companies I come across with the most extraordinary names so unmemorable? And I'm like, that is not you've not spoken to a marketing person about this. Okay, that's interesting. So you've got your brand. You've got and so when did you leave your corporate role? Nicole Stanners  10:00 Uh, yeah, it was interesting because I was trying to do stuff on the side, and, you know, had had a pretty busy corporate role. And, you know, talking to people now, they always say, you know, you sort of got to jump at some stage, because while you're trying to do everything, you're just not putting 100% in. So I was actually at the point at the beginning of 2020 or even 2019 thinking about if I jumped out. Now, could I do consulting on the side or something? AndI was lucky enough that Campari restructured Asia PAC in 2020 so I was able to get a redundancy. So that was a really nice step to move into actually taking it on full time. Michael McGrath  10:43 So I suppose, essentially, you're starting with a whole prototyping and then beginning to get products. And that's all money out the door. Yeah, did you squirrel some money away? Did you have to borrow anything? Well, how did you get it funded? Nicole Stanners  10:58 Now, everything for me is bootstrapped. So, so, yeah, tried to often, the way, isn't it? Yeah, I think it has to be. And even looking back now, I think I could have bootstrapped a lot better, you know, I'd have sage advice to give to some people, but, yeah, that's definitely what I'm doing. I think it's great, like you really, you know, you come from corporate where you've got millions of dollars for budget, and you have to think about every dollar when you're in your own business. Michael McGrath  11:24 Yeah, it's so true that, I mean, necessity is a mother of invention, so if you haven't got access to capital and cash, you've got to find another way. And that's often part of the part of the testing proving process, I think, with a new business. Yeah. I mean, bearing in mind that 60 or 70% fell within five years. I mean, and you know, over 20% fell in the first year. So you know the odds, you know the odds are stacked against you, so the less you borrow, probably the better. Yeah, yeah, okay, so, and then, how did you go about placing your first order. I mean, that would have been quite a sort of, I don't know, it's a big moment, that isn't it. When you're, you're actually, it's the moment where you say, Okay, can I, can I sell this stuff? Nicole Stanners  12:12 Yeah, exactly. Yeah. That's quite the quite scary. I think I had a couple of bumps along the way. So my intention was to launch 12 months earlier than I did. In the end, it's always better to launch coming into the summer season. You know, springtime for a cycling brand, Michael McGrath  12:29 and that's springtime in Australia. Yeah. So, yeah. So you're Australian, selling to Australian market Nicole Stanners  12:34 Yeah, initially, when you're global, it's a little bit different. But yeah, I was working with a factory. I'd prototyped a lot of stuff here in Australia, and then gone to a factory to really perfect it. And when we went to so we were perfecting me as the prototype size, which is like a size eight. And then what we did, we wanted to do, luckily, was we did a size set, so from six to 16 of certain items just to see how the grading had worked and how the pattern worked in different sizes. And that should have worked really well, but it was a disaster. And so something had happened in how the factory had interpreted the grading, and basically the sizes as you got bigger were not fitting in the right places, so, particularly on the bibs. So I had to take a deep breath and say, this is terrible, but it could have been worse. Imagine if I'd gone into production. So it really only cost me the prototypes. But what that also meant is we missed the window launch that year. Interesting. Yeah. So what I did more is sort of pivot and focus on a pre launch phase so that I could then launch the next year. And, yeah, I think Michael McGrath  13:46 so that was your first major setback. Really, yeah, really. And so, I mean, that was just get back on the bike and start pedaling again, wasn't it? To use a metaphor, Nicole Stanners  13:55 I've had a few moments since I've started where I go. You know, there's a sense of urgency to push things through, but it's like, no, do the right thing. You know, what could be the worst scenario of either decision is what I say to myself now, and in that case, it was like, No, take the time and do it in 12 months. Michael McGrath  14:11 Okay, yeah, no, that's interesting. Sometimes you've got to kind of play the long game, haven't you? You sort of, yeah, it's not, it's never, it's not a five minute job building a business. I mean, it can look like that when we pick the paper up and we see a success story, which looks like an overnight success, but in reality, it's often taken years. I mean, I would even, I would even say that yours has taken a lot longer than it looked because all that marketing experience you're putting in every day, aren't you one way or another you're pulling on it. Nicole Stanners  14:41 Yeah, exactly. And I think I probably got a little more patience, because my background in I've worked in various marketing product categories, but in spirits, when you grow a spirits brand, you the best formula is to grow it slowly, so establishing a core community, getting members involved. Influences, and then sort of growing from there, you know, starting in the on premise environment, and then bringing it into the off premise environment. So that's sort of the mentality I've had in growing Michael McGrath  15:09 as well. So that's, that's very interesting, because that's a sort of, sort of a gorilla approach, in a way, isn't it? Where you get your early adopters that then become the fans, and so just knowing and understanding that conceptually, and then use it. You've used that, I guess, with Muze, Nicole Stanners  15:24 yeah, yeah, having a spiritual home, etc, yeah, leveraging community, so using a lot of Michael McGrath  15:29 that, and then being a keen cyclist, yeah, is essential, isn't it, I guess, in a way, because you know, you're otherwise, it's just a product, Nicole Stanners  15:38 yeah, exactly. And I think you just, you know, whilst you try to listen to everybody else, I think understanding that market as a consumer yourself is always really important, and being connected to the community, knowing, Michael McGrath  15:50 okay, so that's interesting. So you've, you've got a factory, they're being supportive. Bit of a blip costs you 12 months. Not easy. You eventually get that right, and you put an order in, and then, I presume that's in the Far East, and then the gear arrives, right. So what? So what was the next step? Nicole Stanners  16:12 Yeah, well, actually, I produced in Italy. Did you Okay? Wow, yeah. So I think there's, there's sort of big hubs of, Michael McGrath  16:19 yeah, there is, like a reaction. I mean, that's how the Coronavirus spread, isn't it? Apparently, though, all the Yeah, exactly, from Wuhan, all the flights for to Nicole Stanners  16:30 Italy. To Milan, yeah, yeah. So that you know that was one of the challenges when you first start, is a lot of people won't work with startups, no matter how polished you look and then also the minimum orders high. So I just looked at lots of different options, and I ended up in Italy there. Also, from a sustainability perspective, it's quite good. Michael McGrath  16:52 Okay, now that's interesting. So you've got, you're getting Made in Italy. It's a big order you've put. I had to put your cash out, no doubt. So it arise, I presume you had a plan at that point of how you're going to sell it, but, but that's a plan at that stage. So what actually happened? Yeah, Nicole Stanners  17:10 Actually that part wasn't too bad, because I think, because I'd had 12 months, I was like, Okay, now I'm going to focus on building the community before and teasing everything before it arrived. So the day I launched, I did a pre launch out to the community. So I'd really focused on building a database and, you know, email, social media following so yeah, day one of pre launch, and then the next couple of days was actual launch. Yeah, when I was really, really happy with that cycle. Michael McGrath  17:39 So this is online you've got, yeah, you've got a website which you'd spend time on, yeah, you got an E commerce element to that, and, and so you, you know, you were using social media, I guess that was, you were familiar with what that was going to take. And I suppose is relatively cost effective that, Nicole Stanners  17:58 yeah, I think, um, I mean, the elements I used were, you know, building my database, so sending out an email, social media, PR ambassadors, you know, connecting into cycling clubs. I think the heyday, really, of E commerce brands was probably around 2013 14, when you didn't have all the algorithms and things happening. It's still good, and you still should focus on an organic community. But something that I'm doing more now is, you know, paid advertising in that area. You just can't get the scale and the reach that you used to, so that has to be part of it as well. Michael McGrath  18:33 So what was the reception like? It was Nicole Stanners  18:36 really great. Yeah, you know, a lot of support and and it's funny, you you, you go through ups and downs, sort of along the journey, and then little things happen that just make your day. I remember, it's probably about three months ago, a lady, because I'm a new brand, I'm really focused on fit. I do a free fit exchange if you get the wrong size. And a lady had exchanged a pair of bibs, and she sent me a beautiful card back with a beautiful note, just thanking me for what I was doing to cater for women's cyclists. Yeah, you know, stuff like that just makes you Yes, Michael McGrath  19:11 I suppose. I mean, we need that kind of encouragement, don't we, because it sort of endorses what you're doing, because you can get lost in the detail, and that what fast becomes, that sort of mundaneness of it all, yeah. Nicole Stanners  19:26 And also you go through, you know, roller coaster initially, of like, no donut days, you know, no sales to start with, and then you'll get great sales. And, you know, just trying to really understand also what's going to work as as a marketing lever to bring people in. Michael McGrath  19:41 So, so you the website is going well. So what are you doing? Are you getting out to the community? Do you go? Are there any kind of trade shows? I mean, what? What are the other avenues that you were looking Nicole Stanners  19:54 at? Yeah, so I'm doing this is obviously all the online activity. But one of the. Other things I've been doing is events. So going to cycling events or triathlon events, I think the most important thing with events is to look at the types of people that are attending. You know, for me, I'm a female brand, so I have to have good representation of women. And I've also found events that cater for serious right down to, you know, sort of the amateur. So a really great event for me has been Brisbane cycling festival, okay, you know, they've traditionally had a professional series race, a qualifier for World Championships for amateurs right down to a family ride. So you get a lot of females in that Expo. Also who you're working with as well. Are they establishing a really good flow of athletes through to the expo as well? Yeah, okay, so yeah, they've been fantastic. Because I think people your E commerce brand fits really important. People want to try things on. They also get quite excited about meeting the founders and hearing the story as well. Michael McGrath  21:04 Yeah, okay, and so that. So do you find that? Have you ventured into sponsorship? Yeah. I mean, if you got any other leading female cyclists that you know are endorsing Muze or, I mean, Nicole Stanners  21:19 at this stage, I mean, I'm working sort of, you know, I've got, actually, a retired professional cyclist, Chloe Hosking, who owns her own bike brand as well. She started up. She has been wearing the Muze kit, and we've done some things together. We did a collaboration, right a couple of weeks ago. So that's been great. My focus, though, has been mostly on people that are micro influencers, or they can influence the local community at this stage to get that grassroots happening, and then also doing some community rides and sponsoring those. So in Queensland, I work with a couple of female groups, and so they're a female tri triathlon group and a cycling group, and so we do collaboration rides with them. Michael McGrath  22:05 And I know that, you know, cycling is dominated in Europe, right in terms of, perhaps the US, and I know it had a big spike in the UK after the Olympics, but we, how are we doing in Australia with our cycling, and particularly a female cycling we got some good cyclists. Nicole Stanners  22:23 Yeah, we have, I think, yeah. Australia really punches above its weight in terms it does in so many sports, doesn't it? Yeah. I mean, you look at, I think, traditional or historically, you, if you're an Australian, you wanted to cycle professionally, you had to pack your bags up and go off to Europe, sort of solo, no support, right? Whereas these days, you know, there's more of a transition for athletes to go professional over there, and Australian, Australian teams like J covalula, for example, men and women are Australian. So I think Australia does really well. Cadell Evans is obviously one of France. And you've got, you know, Grace Brown won a gold medal at the Olympics last year as Michael McGrath  23:05 well. Okay, so it's, it's happening. It's important that, isn't it? That for a sport, it's the trickle down effects quite phenomenal when you get local successes. Nicole Stanners  23:15 Yeah, I think the interesting thing about cycling that I've found I spoke to, I've spoken to many people in the industry as I've been developing the brand, just to try to get some learnings for them, to mentor me a little bit in the business journey. And someone said to me, the interesting thing about cycling is that the amateur, everyday weekend warrior doesn't always even know who some of those professional cyclists are, whereas if you're in soccer or something like that, you've probably got a better sense of that. That's interesting. Then that's why sometimes it's hard if you just focus on endorsing and sponsoring those professional teams, because actually, it's not going to resonate at that local level with everyone. If you're a super passionate cyclist, absolutely. But people that ride socially, not often. So what's important, I think, is to make sure that you really connected at that grassroots level. Michael McGrath  24:04 Where do you go from here? So, so you, you know, starting to get some traction, you've got sales online, I presume. I mean, just before we go to the future, how you have you got over the whole distribution side of things? So, you know, you get the, you know, your your apparel arrives in Australia, and then you've got to get it to customers, right? So the challenge with online is that that whole cost of distribution, how's that? And Australia is a big country, so yeah, you can be sending it all over the place, yeah. So how have you figured that out? Nicole Stanners  24:37 I think the good thing about launching an E commerce business these days is there's a lot of templating that happens. So you can set up a Shopify website, which is a platform I'm on, you've got plugins that can take you to that distribution and last mile. So at this stage, I work with a plugin called ShipStation, and then also with Australia Post they. Might be a bit more expensive, but at least you know that your package is going to get to the end consumer. So to be honest, that's probably been an easier part. I think the challenging thing is, I'm getting orders overseas now, so you really need to start thinking about tariff situations, duties. You can put all those disclaimers if you're shipping from Australia, which I am at the moment, but once you start to get bigger, you need to think about three, pls, where you're going to base things. So, yeah, Michael McGrath  25:27 okay, that's interesting. And I mean, do you have plans internationally? Do you think that's what you know, that you can end up doing a lot overseas? Nicole Stanners  25:35 Yeah, I think so. I mean, the beauty of having an E commerce business these days is you can go overseas. And I think to scale, you need to, Michael McGrath  25:44 okay, and so what's the future? For me is we're going to sell it to Adidas for you one day, or May, what I'd love to do, Nicole Stanners  25:53 I think it's interesting you look at, I think, the journey of an E commerce business, of most businesses, it's like you get set up, and now, what I mean, you set up, calibrate scale and, you know, take it into the future, or sell it, or whatever. I'm definitely in calibration stage. So I think a few things, I'm actually changing factories, just looking at something that's more cost effective and streamlined and can help me in the innovation space and improve cogs. Then the other piece is just really understanding what marketing levers are working best for you. And just I'm in a stage of really tightening everything up. The other thing I've done, I think, in terms of the stock, is looking at the sizing that works for me. I was probably surprised that women sort of size 12 upwards, haven't been catered for very well. So that's where I'm selling out the sizes so reorientating the whole business in the next stage. I think it's definitely, you know, growing overseas, and scaling and, yeah, if I could sell the business one day, that would be fantastic. But Speaker 1  26:59 I suppose the key thing is, is that I just want to talk to you a little bit about the differences between your corporate career and what you're now seeing. So what, what was it? Do you miss anything about the corporate line? Nicole Stanners  27:16 I do miss some things. I miss working with people probably more I find myself it's, it's, you know, a solo journey could be working from home a lot. So I missed that part of it. It's interesting, because I'm still doing consulting into FMCG and alcohol, and I do consulting projects, which gives me a little taste of that. But then when I see all the bureaucracy, I don't, I don't miss Michael McGrath  27:41 that. What was the big shock for you? Like, you know, you can simulate working for yourself, but then when you jump and you you jump in and you hold your nose, so what? What were the things that you weren't expecting in the first 12 or 18 months that you were Nicole Stanners  27:55 You hear all the people say these things about going out on your own. You hear it, but you don't really understand it, which I think, until you're in that space. For me, it's like there's always something to do. The other surprising me is probably, you know, I've always been quite motivated and determined and everything. But I think what's been flexed more in this space is my hustle, yeah, like, I'm not scared of, well, I still scared, but I just do more of negotiating, asking people for help, which I probably wasn't good at before, also just being, you know, running and making decisions with not as much information or time To ponder. You just have to go. Or, you know, ask yourself a quick question, is this going to change the trajectory, trajectory of the business tomorrow, in the future, Michael McGrath  28:48 or not? So you're moving, you're moving faster, would you say, than in years? Yeah, exactly. I think we see that a lot. We hear that a lot, but it's just faster Nicole Stanners  28:59 and less ready. Yeah. Hey, less perfect. I was a bit of a before, Michael McGrath  29:04 yes. Okay, now that's that's interesting, and you're developing those hustle skills. That's part of the necessity, isn't it? You know, if you asking for discounts and yeah, you know, changing minimum orders and yeah, being cheeky, I guess. Yeah, yeah, Nicole Stanners  29:19 they can always say, No, yeah, Michael McGrath  29:21 yeah, yeah. And so are you enjoying it? Nicole Stanners  29:27 Yeah, I do. I do love it. Okay? I think over my corporate journey, I think, you know, I when I started, or even say 10 years ago, I didn't think I wanted to start my own business, okay? But I think along that journey, I've ended up in probably more entrepreneurial roles or situations in corporate. Yeah, that really gave me a buzz, and so that started to direct me to this space. And yeah, I'm loving it. I'm loving the part of learning new skills. I really like seeing the. Immediacy with things as well. And you know, if I can create a brand that's remembered for challenging the status quo or the orthodoxy that is in cycling at the moment, and really support the women who buy me, it's Michael McGrath  30:16 interesting. You know, we, you know, we talk to lots of business owners and, you know, have built, who've built businesses over 20, 3040, years. And, you know, we, we, the last thing that an owner wants to think about is selling it, because that's a daft idea, really, especially when you're building it. Yeah. And now cancer takes care itself, if that's the thing. But I think the main thing is enjoying it. And then, you know, de risking a bit as you go. You don't want to be living on the edge all your life, right? And that's what you're saying, really, that you're in that phase of tidying it up and and stiffening up a bit, and, you know, making it, making sure it's sustainable and stuff. And I think if you're enjoying it, there is a sense of achievement and and also, there can be a sense of freedom. There's always something to do, but you you're not actually reporting in anymore and writing reports for other people, are you? Yeah, Nicole Stanners  31:13 and you can set, set things to your vision. I think probably at times I was trying to be too challenging. You know, I could see opportunities I felt were worthwhile going after, but then when it gets into the corporate space, it's too risky. So, you know, being an entrepreneur, you can start to satisfy, yeah, that need. So Michael McGrath  31:34 how would you develop your vision for moving overseas? Where do you go first? What do you you know, how does that? I mean, I presume you try and repeat what you've done here. Do you? Nicole Stanners  31:46 Yeah, I think that the I'm not saying this is my intention. I've done a little bit of testing, you know, I've got an ambassador in New Zealand, and we've started to talk about things there. I think it's important to understand the structure a little bit there. I mean, I've worked in regional and global roles within corporate and I know, you know, there might be, say, 60% of it that you can plug and play into different places, but you need to know how to adapt it to that market. I think the easiest first step is to go somewhere that's most similar. So New Zealand, UK, you know, maybe one state of the US. So, for example, in California, I'm talking to someone at the moment who has a marketplace website she's taking to physical that's female focus. Okay, so that's a really nice step in the water to see how that might work. Yeah. Michael McGrath  32:32 And do you, do you ship direct from your manufacturer to them, or do you shipping out of Australia? What at the Nicole Stanners  32:39 moment, I'm just shipping out of Australia. I think I need to ship from Australia to get proof of concept. I mean, my whole idea on the whole thing is proof of concept, then scale and solution. Michael McGrath  32:50 And I mean, how your money? I mean, I've done a fair bit of that sort of consumer product, you might say. And the perennial challenge is inventory, right? My God, the ultimate crystal ball gaze, right? How many Shall I order, right? And how many can I sell? Which is more important? So, I mean, I presume you're kind of managing that the best you can really, Nicole Stanners  33:16 yeah. I mean, that's really hard. I'd add another one to the mix is, how many will the factory let me make or not? How many are they make? Going to make me make? Yeah, I think that would be another big learning. You never know you like you start with this product range, and you don't necessarily know what's going to sell. Like a good example, a couple of things that I've probably tweaked over time when I did research with my mates and different people on colors. Lots of women say I don't want to wear pink. Yeah, pink has sold its socks off. Yeah. Also, my other point before about, you know, the sizing, you know, you do see the majority of cyclists are probably those smaller sizes, but that's like the red ocean, where everyone's focusing, whereas women of bigger sizes. They're not being catered for. So I Michael McGrath  34:03 must say, I mean, you don't see many fat cyclists, right? And that's for sure. And if you do, they're not fat for very long normally. So I presume there is a predominance to smaller sizes. But you're saying, No, you're seeing larger size. I think that's, yeah. Nicole Stanners  34:17 I go back to, I really love a book called Blue Ocean Strategy, yeah. And basically, that's all about, you know, not fishing in the red ocean, where the sharks are looking for blue ocean, where you can create your own rules. I think it's really competitive in that, you know, in the cycling market. And, you know, I think women that are smaller sizes are probably reasonably well catered for by unisex brands. You know, issues with with pattern making doesn't come into play until you grade it, and then the issues get bigger. So I think a lot of women that are bigger aren't catered for. So that's going to be a big focus for me, and sort of blue ocean, I suppose, Michael McGrath  34:59 as some. Cycling is growing, and female sports growing. I suppose the trick is trying to tap into that, you know, and that's for the sport itself. Is, you know, how can we get more people cycling that aren't, aren't doing much movement? I mean, the great benefit of cycling is it's, it's easy on your joints, isn't it, relative to running, say, yeah, and particularly for a bit Nicole Stanners  35:22 bigger Yeah. And you can look at the stats like I had a good look at there's participation surveys that are done on cycling. And women that cycle once a week. There's about 330,000 of those. So they're regular, whereas women who actually ride, it's about 780,000 a year. So you know, could you get more of those casual cycles? And that's, Michael McGrath  35:43 that's in Australia, is it? Yeah, Nicole Stanners  35:45 that's yeah. Michael McGrath  35:46 So they're, they're quite big numbers, aren't they? Yeah. Excellent. Look. That's been such fun to find out about your journey. Look before we kind of let you go. So tell us a key attribute that you've had to draw on to really get this thing going and and keep keep yourself moving forward. I mean, what? What attribute? Is it persistence, or is it something else? Nicole Stanners  36:12 Yeah, I'd say persistence and resilience. Yeah, yeah, persistence that, I think you, you know, we talk about business failure, but I think they probably just give up too early. You've got to go through the roller coaster, learn from it, and be persistent. And also, I think be resilient, because there's some tough days, but then there's some good days, like when you get a card from a customer, for example. Yeah, Michael McGrath  36:36 no, isn't that true? So, yeah, Persistence is key, and a re key and reoccurring theme. Really, you've got to keep at it. It takes much longer to to build something good. Takes much longer than you'd like it to Yeah, definitely. Interestingly, before we go, there's about 22% of female founders in Australia. So if you look at the million businesses, about 22% of them are have been founded by females. And you know that probably needs to rise, and maybe people can look to you and look to others and jump in, hold your nose and see what happens. Michael McGrath  37:18 Yeah, thanks for coming in. Nicole Stanners  37:19 Thanks for having me Michael McGrath  37:24 So there you have it. Nicole saw a problem, verified it, mused on the idea, then, after biding her time, took some action, more power to her and others like her. Quick piece of trivia, the country with the most female entrepreneurs is Ghana, at 47% Come on, ladies, there's work to do. If you want some great female cycling apparel, be sure to check out Muze. The details will be in the show notes. Now, before I go, a shout out to Oasis Partners who sponsor this podcast. The corporate advice for the practical buyers. Call the guys at Oasis Partners. Now if you like this content, be sure to tell your friends. And if you're feeling really generous, leave us a review until next time you. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 30 3 From Nicole’s LinkedIn: “I'm the Founder and CEO of Muze Women, an innovative women's cycling apparel company, and a consultant to entrepreneurs, SMEs, and large corporate clients. After spending 25 years honing my skills in business, marketing, and innovation leadership across local, regional, and global levels, I decided to channel my passion for sport, equality, and sustainability into creating a brand that champions gender balance and empowers female cyclists through meticulously designed, sustainable apparel. Muze Women specifically focuses on addressing the unique challenges women face in cycling—particularly in fit, practical design features, and environmental impact. In addition to leading Muze Women, I consult with innovative entrepreneurs and corporate clients on business and marketing initiatives. This includes business, category, innovation, and marketing strategy; organization structure and capability development; and all aspects of the marketing mix from idea to execution. I believe in using business as a platform for social change. Inspired by my love for cycling and a vision of a more inclusive cycling environment, Muze Women is committed to transforming the landscape for women—making it more inclusive, comfortable, and enjoyable.” Nicole’s LinkedIn: https://www.linkedin.com/in/nicole-stanners/ Muze Women Website: www.muzewomen.com Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now Nicole stanners is the founder of Muze, a cycling apparel brand that she launched in 2023 which is going gangbusters. Like most great business ideas, this came to Nicole, who's a keen cyclist, seeing a problem with poorly fitting cycling apparel for women, and then she took some action. Sit back as I learn how Nicole went from marketing executive to online entrepreneur. Michael McGrath  00:46 So Nicole, welcome to the troubleshooters podcast. Nicole Stanners  00:49 Thanks for having me. Michael McGrath  00:51 I feel like I know you, even though it's the first time we met this morning, because just to declare an interest, I know your dad quite well, and he's he's been keeping me up to date on your progress since you launched your business, and the last time we had a chat, I said, we must get Nicole. And so here you are. Thank you. Now, Moose is a female cyclist apparel, so that's the thing that's emerged, right? And so, like most great businesses, your business started when you identified a problem. So you're a very keen cyclist, and you were presumably having trouble getting decent female cyclists apparel. Is that how you conceive the idea? Nicole Stanners  01:28 Yeah, I think I've always been into sport and really passionate about it. A lot of running team sports when I was younger, but I first started in triathlon and cycling about 14 years ago, and I remember I was really excited to get my first club kit, and I tried it on and looked at it in the mirror and just thought to myself, Oh, my god, is this as good as it gets? You know, it didn't fit. It didn't look great, didn't compliment the body. Yeah, it was pretty bad. So Michael McGrath  01:57 was it largely? Had it been produced for males, or was it? I mean, what was the deal those days? Nicole Stanners  02:02 I think, you know, probably back then, everything was pretty standardized. And, you know, there's this term in the industry that's called shrink it and pink it. So I think what happened is they would just have smaller male cut sizes and try to put a bit of a female design on it. Things have improved, but there's still a bit of that going on, and not a lot of catering for women. You know, designing from the ground up, I suppose, Michael McGrath 02:27 okay. I mean, it's interesting. I mean, many great businesses start from that premise of, you know, someone's got an interest in an area, they see a problem, and they say, like, how can we fix it? But it takes, you know, many of us identify those problems, but not many of us do something about it. So it stands to me, what did you do about it? What was your first action around okay, maybe I'm going to do something about this. Nicole Stanners  02:52 Well, that was the seed. And I think that kept germinating away in my head because I was working in marketing and corporate, and kept thinking to myself, is this an opportunity, and certain things I experienced over the next probably, gosh, you know, five to seven years just cemented that in my mind. So I remember going, I used to work for Campari, and I was in Italy, and actually stumbled across an Italian cycling race just for amateurs one day when I was there and they were wearing the worst kit ever. And I thought, How can this be happening in Italy? And then I did lots of different cycling events in particular, one called Race Across America, which is a cycling race from one side of the US to the other. Michael McGrath  03:34 5000 is it 5000 kilometers? Nicole Stanners  03:36 Yeah, 5000 kilometers. Crazy, six times Everest in climbing. Is that right? Yeah. So it's pretty so you is it west to east? It goes from Oceanside in California to Annapolis in Maryland, yeah. And just, you know, experiencing six and a half days in cycling kit day after day also just reinforced that. So, yeah, I started initially, just looking at, you know, the size of the market was it growing, how many females were in that space. And then started to do a little bit of research on factories and suppliers while I still have my corporate jobs, Michael McGrath  04:11 yeah, so let's go back a bit. So you're a marketing person. I mean, you, I mean, you were the marketing director at Campari group, I mean, and you were there eight years or so. I mean, that was a big gig, really. And then you'd previously worked for Diageo and Arnotts, and then you Unilever, so you're a thoroughbred marketing corporate, really. Yeah. So did that help? Did that my perspective around, okay, what's the market opportunity here. Did that help? Nicole Stanners  04:43 Yeah, I think, I think my background in marketing and innovation really, really helped to I suppose, you know, I had my consumer head on looking at, you know, what it felt like to be a cyclist, but also from a marketing perspective. And I think. Going back to your point of lots of people have good ideas, but it's about executing it. You know, I wasn't the first person to come up with that insight that things aren't great for women. So yeah, that that definitely got me moving, I suppose. Michael McGrath  05:13 And so that was germinating, you were kind of prosecuting your corporate career. So what, when did you begin to take some take some steps, maybe some more concrete steps, because most of us start moonlighting a bit, you know, before we jump. So what? What was going on there? Nicole Stanners  05:31 Once I had the idea, I think I started to do the research. I also started to do some prototyping of kit that I thought would be good, also looking at partners to work with, and suppliers, which was extremely hard because it's quite a protected industry. People protect their factories, the people they work with, so it's hard to Michael McGrath  05:51 so it's hard to break into that kind of supply chain area. You're a startup. No one knows you okay, and I suppose you're upsetting the upper car, but with some of the ideas, maybe, Nicole Stanners  06:02 yeah, a lot of, I mean, a lot of factories. I prefer to work with people that are already established. Plus, if you want to do any variation on a standard cut of kit, that's a bit of a headache for them as well. Michael McGrath  06:12 So what was the solution? In essence, I mean, clearly, the female body is different to the male body. Well, I'm not sure I can say that anymore, but anyway, I've said it so, but I presume that you had to do some real research and some real testing around that. So how did you go about fixing the problem? Nicole Stanners  06:34 I guess I think I had some intuition myself, and also just talking to friends. And then initially, what I did is did the common marketing thing. I did some focus groups with some friends, triathletes and also cyclists. Michael McGrath  06:47 You'd be amazed how many people don't do that though. Yeah, I mean, that is just your marketing background would have helped with that, because, yeah, that's not as common as you might think. Nicole Stanners  06:58 No, exactly. You don't want to be just basing it on your own thought. And then once I had some decent prototypes, I actually did some fit testing, just to see how it fit on the body for women of different sizes and body shapes. And then also just pedaling on an indoor bike. What did that look like? What did it feel like? I worked with a designer for that, and also someone called an anthropometric expert. Michael McGrath  07:22 I read that. I'm not sure I could say it, but I had a crack at it in my head. Nicole Stanners  07:26 And they're an expert on body measurements, you know, mapping of sizes and patterns and things. So she was really useful in helping me look at patterns, how things needed to be shaped and sit on the body in order to establish my first proper prototypes. Michael McGrath  07:44 So there's that combination between comfort and looks, I guess, isn't it? That sort of, how can we make it comfortable? How can we make it look? Okay, Nicole Stanners  07:51 Yeah. And she can also help you commercially looking at, you know, if you're going to do six sizes, right, the best breadth for each of those size to make it commercially viable and get less returns as well. Yeah. So yeah, when I launched Muze, I think the three big things I wanted to focus on, besides technical performance, was getting a flattering fit, so making sure women felt good. They felt comfortable. They could forget about it and just perform even things down to where the zipper sat and where the prints sat on women. That makes a difference in making you look good as well. The second area was practical design features, so things that are important to men, but mostly to women. So I've got things like a ponytail holder in your cap or a heart rate monitor sleeve in your crop top. So different things like that. And then lastly, just making sure that it's as sustainable as possible. You know, fashion is one of the biggest contributors to climate issues, yeah, so you want to take a step in the right direction. It can't be perfect from day one, but really trying to do that, and then just creating a brand that really supports women, so helping to overcome barriers and inspiring them to get on the bike. Michael McGrath  09:00 Yeah, so how did you come up with the name Muze? Nicole Stanners  09:05 It was funny, because I think, I think the marketing perfectionist in me wanted to absolutely nail it, so I was procrastinating quite a lot. And actually, initially, one of my friends, I had a catch up with her, and she said, Muze, sounds really cool. What about that? And she owned her own business, so she suggested it. And then I thought, actually, that fits really well, because the brand is about inspiring women, having women as the Muze for creating the brand, not men. So yeah, I quite like it. Michael McGrath  09:34 Yeah. Okay, cool. I like it so memorable. Yeah, you'd be amazed how many tech companies I come across with the most extraordinary names so unmemorable? And I'm like, that is not you've not spoken to a marketing person about this. Okay, that's interesting. So you've got your brand. You've got and so when did you leave your corporate role? Nicole Stanners  10:00 Uh, yeah, it was interesting because I was trying to do stuff on the side, and, you know, had had a pretty busy corporate role. And, you know, talking to people now, they always say, you know, you sort of got to jump at some stage, because while you're trying to do everything, you're just not putting 100% in. So I was actually at the point at the beginning of 2020 or even 2019 thinking about if I jumped out. Now, could I do consulting on the side or something? AndI was lucky enough that Campari restructured Asia PAC in 2020 so I was able to get a redundancy. So that was a really nice step to move into actually taking it on full time. Michael McGrath  10:43 So I suppose, essentially, you're starting with a whole prototyping and then beginning to get products. And that's all money out the door. Yeah, did you squirrel some money away? Did you have to borrow anything? Well, how did you get it funded? Nicole Stanners  10:58 Now, everything for me is bootstrapped. So, so, yeah, tried to often, the way, isn't it? Yeah, I think it has to be. And even looking back now, I think I could have bootstrapped a lot better, you know, I'd have sage advice to give to some people, but, yeah, that's definitely what I'm doing. I think it's great, like you really, you know, you come from corporate where you've got millions of dollars for budget, and you have to think about every dollar when you're in your own business. Michael McGrath  11:24 Yeah, it's so true that, I mean, necessity is a mother of invention, so if you haven't got access to capital and cash, you've got to find another way. And that's often part of the part of the testing proving process, I think, with a new business. Yeah. I mean, bearing in mind that 60 or 70% fell within five years. I mean, and you know, over 20% fell in the first year. So you know the odds, you know the odds are stacked against you, so the less you borrow, probably the better. Yeah, yeah, okay, so, and then, how did you go about placing your first order. I mean, that would have been quite a sort of, I don't know, it's a big moment, that isn't it. When you're, you're actually, it's the moment where you say, Okay, can I, can I sell this stuff? Nicole Stanners  12:12 Yeah, exactly. Yeah. That's quite the quite scary. I think I had a couple of bumps along the way. So my intention was to launch 12 months earlier than I did. In the end, it's always better to launch coming into the summer season. You know, springtime for a cycling brand, Michael McGrath  12:29 and that's springtime in Australia. Yeah. So, yeah. So you're Australian, selling to Australian market Nicole Stanners  12:34 Yeah, initially, when you're global, it's a little bit different. But yeah, I was working with a factory. I'd prototyped a lot of stuff here in Australia, and then gone to a factory to really perfect it. And when we went to so we were perfecting me as the prototype size, which is like a size eight. And then what we did, we wanted to do, luckily, was we did a size set, so from six to 16 of certain items just to see how the grading had worked and how the pattern worked in different sizes. And that should have worked really well, but it was a disaster. And so something had happened in how the factory had interpreted the grading, and basically the sizes as you got bigger were not fitting in the right places, so, particularly on the bibs. So I had to take a deep breath and say, this is terrible, but it could have been worse. Imagine if I'd gone into production. So it really only cost me the prototypes. But what that also meant is we missed the window launch that year. Interesting. Yeah. So what I did more is sort of pivot and focus on a pre launch phase so that I could then launch the next year. And, yeah, I think Michael McGrath  13:46 so that was your first major setback. Really, yeah, really. And so, I mean, that was just get back on the bike and start pedaling again, wasn't it? To use a metaphor, Nicole Stanners  13:55 I've had a few moments since I've started where I go. You know, there's a sense of urgency to push things through, but it's like, no, do the right thing. You know, what could be the worst scenario of either decision is what I say to myself now, and in that case, it was like, No, take the time and do it in 12 months. Michael McGrath  14:11 Okay, yeah, no, that's interesting. Sometimes you've got to kind of play the long game, haven't you? You sort of, yeah, it's not, it's never, it's not a five minute job building a business. I mean, it can look like that when we pick the paper up and we see a success story, which looks like an overnight success, but in reality, it's often taken years. I mean, I would even, I would even say that yours has taken a lot longer than it looked because all that marketing experience you're putting in every day, aren't you one way or another you're pulling on it. Nicole Stanners  14:41 Yeah, exactly. And I think I probably got a little more patience, because my background in I've worked in various marketing product categories, but in spirits, when you grow a spirits brand, you the best formula is to grow it slowly, so establishing a core community, getting members involved. Influences, and then sort of growing from there, you know, starting in the on premise environment, and then bringing it into the off premise environment. So that's sort of the mentality I've had in growing Michael McGrath  15:09 as well. So that's, that's very interesting, because that's a sort of, sort of a gorilla approach, in a way, isn't it? Where you get your early adopters that then become the fans, and so just knowing and understanding that conceptually, and then use it. You've used that, I guess, with Muze, Nicole Stanners  15:24 yeah, yeah, having a spiritual home, etc, yeah, leveraging community, so using a lot of Michael McGrath  15:29 that, and then being a keen cyclist, yeah, is essential, isn't it, I guess, in a way, because you know, you're otherwise, it's just a product, Nicole Stanners  15:38 yeah, exactly. And I think you just, you know, whilst you try to listen to everybody else, I think understanding that market as a consumer yourself is always really important, and being connected to the community, knowing, Michael McGrath  15:50 okay, so that's interesting. So you've, you've got a factory, they're being supportive. Bit of a blip costs you 12 months. Not easy. You eventually get that right, and you put an order in, and then, I presume that's in the Far East, and then the gear arrives, right. So what? So what was the next step? Nicole Stanners  16:12 Yeah, well, actually, I produced in Italy. Did you Okay? Wow, yeah. So I think there's, there's sort of big hubs of, Michael McGrath  16:19 yeah, there is, like a reaction. I mean, that's how the Coronavirus spread, isn't it? Apparently, though, all the Yeah, exactly, from Wuhan, all the flights for to Nicole Stanners  16:30 Italy. To Milan, yeah, yeah. So that you know that was one of the challenges when you first start, is a lot of people won't work with startups, no matter how polished you look and then also the minimum orders high. So I just looked at lots of different options, and I ended up in Italy there. Also, from a sustainability perspective, it's quite good. Michael McGrath  16:52 Okay, now that's interesting. So you've got, you're getting Made in Italy. It's a big order you've put. I had to put your cash out, no doubt. So it arise, I presume you had a plan at that point of how you're going to sell it, but, but that's a plan at that stage. So what actually happened? Yeah, Nicole Stanners  17:10 Actually that part wasn't too bad, because I think, because I'd had 12 months, I was like, Okay, now I'm going to focus on building the community before and teasing everything before it arrived. So the day I launched, I did a pre launch out to the community. So I'd really focused on building a database and, you know, email, social media following so yeah, day one of pre launch, and then the next couple of days was actual launch. Yeah, when I was really, really happy with that cycle. Michael McGrath  17:39 So this is online you've got, yeah, you've got a website which you'd spend time on, yeah, you got an E commerce element to that, and, and so you, you know, you were using social media, I guess that was, you were familiar with what that was going to take. And I suppose is relatively cost effective that, Nicole Stanners  17:58 yeah, I think, um, I mean, the elements I used were, you know, building my database, so sending out an email, social media, PR ambassadors, you know, connecting into cycling clubs. I think the heyday, really, of E commerce brands was probably around 2013 14, when you didn't have all the algorithms and things happening. It's still good, and you still should focus on an organic community. But something that I'm doing more now is, you know, paid advertising in that area. You just can't get the scale and the reach that you used to, so that has to be part of it as well. Michael McGrath  18:33 So what was the reception like? It was Nicole Stanners  18:36 really great. Yeah, you know, a lot of support and and it's funny, you you, you go through ups and downs, sort of along the journey, and then little things happen that just make your day. I remember, it's probably about three months ago, a lady, because I'm a new brand, I'm really focused on fit. I do a free fit exchange if you get the wrong size. And a lady had exchanged a pair of bibs, and she sent me a beautiful card back with a beautiful note, just thanking me for what I was doing to cater for women's cyclists. Yeah, you know, stuff like that just makes you Yes, Michael McGrath  19:11 I suppose. I mean, we need that kind of encouragement, don't we, because it sort of endorses what you're doing, because you can get lost in the detail, and that what fast becomes, that sort of mundaneness of it all, yeah. Nicole Stanners  19:26 And also you go through, you know, roller coaster initially, of like, no donut days, you know, no sales to start with, and then you'll get great sales. And, you know, just trying to really understand also what's going to work as as a marketing lever to bring people in. Michael McGrath  19:41 So, so you the website is going well. So what are you doing? Are you getting out to the community? Do you go? Are there any kind of trade shows? I mean, what? What are the other avenues that you were looking Nicole Stanners  19:54 at? Yeah, so I'm doing this is obviously all the online activity. But one of the. Other things I've been doing is events. So going to cycling events or triathlon events, I think the most important thing with events is to look at the types of people that are attending. You know, for me, I'm a female brand, so I have to have good representation of women. And I've also found events that cater for serious right down to, you know, sort of the amateur. So a really great event for me has been Brisbane cycling festival, okay, you know, they've traditionally had a professional series race, a qualifier for World Championships for amateurs right down to a family ride. So you get a lot of females in that Expo. Also who you're working with as well. Are they establishing a really good flow of athletes through to the expo as well? Yeah, okay, so yeah, they've been fantastic. Because I think people your E commerce brand fits really important. People want to try things on. They also get quite excited about meeting the founders and hearing the story as well. Michael McGrath  21:04 Yeah, okay, and so that. So do you find that? Have you ventured into sponsorship? Yeah. I mean, if you got any other leading female cyclists that you know are endorsing Muze or, I mean, Nicole Stanners  21:19 at this stage, I mean, I'm working sort of, you know, I've got, actually, a retired professional cyclist, Chloe Hosking, who owns her own bike brand as well. She started up. She has been wearing the Muze kit, and we've done some things together. We did a collaboration, right a couple of weeks ago. So that's been great. My focus, though, has been mostly on people that are micro influencers, or they can influence the local community at this stage to get that grassroots happening, and then also doing some community rides and sponsoring those. So in Queensland, I work with a couple of female groups, and so they're a female tri triathlon group and a cycling group, and so we do collaboration rides with them. Michael McGrath  22:05 And I know that, you know, cycling is dominated in Europe, right in terms of, perhaps the US, and I know it had a big spike in the UK after the Olympics, but we, how are we doing in Australia with our cycling, and particularly a female cycling we got some good cyclists. Nicole Stanners  22:23 Yeah, we have, I think, yeah. Australia really punches above its weight in terms it does in so many sports, doesn't it? Yeah. I mean, you look at, I think, traditional or historically, you, if you're an Australian, you wanted to cycle professionally, you had to pack your bags up and go off to Europe, sort of solo, no support, right? Whereas these days, you know, there's more of a transition for athletes to go professional over there, and Australian, Australian teams like J covalula, for example, men and women are Australian. So I think Australia does really well. Cadell Evans is obviously one of France. And you've got, you know, Grace Brown won a gold medal at the Olympics last year as Michael McGrath  23:05 well. Okay, so it's, it's happening. It's important that, isn't it? That for a sport, it's the trickle down effects quite phenomenal when you get local successes. Nicole Stanners  23:15 Yeah, I think the interesting thing about cycling that I've found I spoke to, I've spoken to many people in the industry as I've been developing the brand, just to try to get some learnings for them, to mentor me a little bit in the business journey. And someone said to me, the interesting thing about cycling is that the amateur, everyday weekend warrior doesn't always even know who some of those professional cyclists are, whereas if you're in soccer or something like that, you've probably got a better sense of that. That's interesting. Then that's why sometimes it's hard if you just focus on endorsing and sponsoring those professional teams, because actually, it's not going to resonate at that local level with everyone. If you're a super passionate cyclist, absolutely. But people that ride socially, not often. So what's important, I think, is to make sure that you really connected at that grassroots level. Michael McGrath  24:04 Where do you go from here? So, so you, you know, starting to get some traction, you've got sales online, I presume. I mean, just before we go to the future, how you have you got over the whole distribution side of things? So, you know, you get the, you know, your your apparel arrives in Australia, and then you've got to get it to customers, right? So the challenge with online is that that whole cost of distribution, how's that? And Australia is a big country, so yeah, you can be sending it all over the place, yeah. So how have you figured that out? Nicole Stanners  24:37 I think the good thing about launching an E commerce business these days is there's a lot of templating that happens. So you can set up a Shopify website, which is a platform I'm on, you've got plugins that can take you to that distribution and last mile. So at this stage, I work with a plugin called ShipStation, and then also with Australia Post they. Might be a bit more expensive, but at least you know that your package is going to get to the end consumer. So to be honest, that's probably been an easier part. I think the challenging thing is, I'm getting orders overseas now, so you really need to start thinking about tariff situations, duties. You can put all those disclaimers if you're shipping from Australia, which I am at the moment, but once you start to get bigger, you need to think about three, pls, where you're going to base things. So, yeah, Michael McGrath  25:27 okay, that's interesting. And I mean, do you have plans internationally? Do you think that's what you know, that you can end up doing a lot overseas? Nicole Stanners  25:35 Yeah, I think so. I mean, the beauty of having an E commerce business these days is you can go overseas. And I think to scale, you need to, Michael McGrath  25:44 okay, and so what's the future? For me is we're going to sell it to Adidas for you one day, or May, what I'd love to do, Nicole Stanners  25:53 I think it's interesting you look at, I think, the journey of an E commerce business, of most businesses, it's like you get set up, and now, what I mean, you set up, calibrate scale and, you know, take it into the future, or sell it, or whatever. I'm definitely in calibration stage. So I think a few things, I'm actually changing factories, just looking at something that's more cost effective and streamlined and can help me in the innovation space and improve cogs. Then the other piece is just really understanding what marketing levers are working best for you. And just I'm in a stage of really tightening everything up. The other thing I've done, I think, in terms of the stock, is looking at the sizing that works for me. I was probably surprised that women sort of size 12 upwards, haven't been catered for very well. So that's where I'm selling out the sizes so reorientating the whole business in the next stage. I think it's definitely, you know, growing overseas, and scaling and, yeah, if I could sell the business one day, that would be fantastic. But Speaker 1  26:59 I suppose the key thing is, is that I just want to talk to you a little bit about the differences between your corporate career and what you're now seeing. So what, what was it? Do you miss anything about the corporate line? Nicole Stanners  27:16 I do miss some things. I miss working with people probably more I find myself it's, it's, you know, a solo journey could be working from home a lot. So I missed that part of it. It's interesting, because I'm still doing consulting into FMCG and alcohol, and I do consulting projects, which gives me a little taste of that. But then when I see all the bureaucracy, I don't, I don't miss Michael McGrath  27:41 that. What was the big shock for you? Like, you know, you can simulate working for yourself, but then when you jump and you you jump in and you hold your nose, so what? What were the things that you weren't expecting in the first 12 or 18 months that you were Nicole Stanners  27:55 You hear all the people say these things about going out on your own. You hear it, but you don't really understand it, which I think, until you're in that space. For me, it's like there's always something to do. The other surprising me is probably, you know, I've always been quite motivated and determined and everything. But I think what's been flexed more in this space is my hustle, yeah, like, I'm not scared of, well, I still scared, but I just do more of negotiating, asking people for help, which I probably wasn't good at before, also just being, you know, running and making decisions with not as much information or time To ponder. You just have to go. Or, you know, ask yourself a quick question, is this going to change the trajectory, trajectory of the business tomorrow, in the future, Michael McGrath  28:48 or not? So you're moving, you're moving faster, would you say, than in years? Yeah, exactly. I think we see that a lot. We hear that a lot, but it's just faster Nicole Stanners  28:59 and less ready. Yeah. Hey, less perfect. I was a bit of a before, Michael McGrath  29:04 yes. Okay, now that's that's interesting, and you're developing those hustle skills. That's part of the necessity, isn't it? You know, if you asking for discounts and yeah, you know, changing minimum orders and yeah, being cheeky, I guess. Yeah, yeah, Nicole Stanners  29:19 they can always say, No, yeah, Michael McGrath  29:21 yeah, yeah. And so are you enjoying it? Nicole Stanners  29:27 Yeah, I do. I do love it. Okay? I think over my corporate journey, I think, you know, I when I started, or even say 10 years ago, I didn't think I wanted to start my own business, okay? But I think along that journey, I've ended up in probably more entrepreneurial roles or situations in corporate. Yeah, that really gave me a buzz, and so that started to direct me to this space. And yeah, I'm loving it. I'm loving the part of learning new skills. I really like seeing the. Immediacy with things as well. And you know, if I can create a brand that's remembered for challenging the status quo or the orthodoxy that is in cycling at the moment, and really support the women who buy me, it's Michael McGrath  30:16 interesting. You know, we, you know, we talk to lots of business owners and, you know, have built, who've built businesses over 20, 3040, years. And, you know, we, we, the last thing that an owner wants to think about is selling it, because that's a daft idea, really, especially when you're building it. Yeah. And now cancer takes care itself, if that's the thing. But I think the main thing is enjoying it. And then, you know, de risking a bit as you go. You don't want to be living on the edge all your life, right? And that's what you're saying, really, that you're in that phase of tidying it up and and stiffening up a bit, and, you know, making it, making sure it's sustainable and stuff. And I think if you're enjoying it, there is a sense of achievement and and also, there can be a sense of freedom. There's always something to do, but you you're not actually reporting in anymore and writing reports for other people, are you? Yeah, Nicole Stanners  31:13 and you can set, set things to your vision. I think probably at times I was trying to be too challenging. You know, I could see opportunities I felt were worthwhile going after, but then when it gets into the corporate space, it's too risky. So, you know, being an entrepreneur, you can start to satisfy, yeah, that need. So Michael McGrath  31:34 how would you develop your vision for moving overseas? Where do you go first? What do you you know, how does that? I mean, I presume you try and repeat what you've done here. Do you? Nicole Stanners  31:46 Yeah, I think that the I'm not saying this is my intention. I've done a little bit of testing, you know, I've got an ambassador in New Zealand, and we've started to talk about things there. I think it's important to understand the structure a little bit there. I mean, I've worked in regional and global roles within corporate and I know, you know, there might be, say, 60% of it that you can plug and play into different places, but you need to know how to adapt it to that market. I think the easiest first step is to go somewhere that's most similar. So New Zealand, UK, you know, maybe one state of the US. So, for example, in California, I'm talking to someone at the moment who has a marketplace website she's taking to physical that's female focus. Okay, so that's a really nice step in the water to see how that might work. Yeah. Michael McGrath  32:32 And do you, do you ship direct from your manufacturer to them, or do you shipping out of Australia? What at the Nicole Stanners  32:39 moment, I'm just shipping out of Australia. I think I need to ship from Australia to get proof of concept. I mean, my whole idea on the whole thing is proof of concept, then scale and solution. Michael McGrath  32:50 And I mean, how your money? I mean, I've done a fair bit of that sort of consumer product, you might say. And the perennial challenge is inventory, right? My God, the ultimate crystal ball gaze, right? How many Shall I order, right? And how many can I sell? Which is more important? So, I mean, I presume you're kind of managing that the best you can really, Nicole Stanners  33:16 yeah. I mean, that's really hard. I'd add another one to the mix is, how many will the factory let me make or not? How many are they make? Going to make me make? Yeah, I think that would be another big learning. You never know you like you start with this product range, and you don't necessarily know what's going to sell. Like a good example, a couple of things that I've probably tweaked over time when I did research with my mates and different people on colors. Lots of women say I don't want to wear pink. Yeah, pink has sold its socks off. Yeah. Also, my other point before about, you know, the sizing, you know, you do see the majority of cyclists are probably those smaller sizes, but that's like the red ocean, where everyone's focusing, whereas women of bigger sizes. They're not being catered for. So I Michael McGrath  34:03 must say, I mean, you don't see many fat cyclists, right? And that's for sure. And if you do, they're not fat for very long normally. So I presume there is a predominance to smaller sizes. But you're saying, No, you're seeing larger size. I think that's, yeah. Nicole Stanners  34:17 I go back to, I really love a book called Blue Ocean Strategy, yeah. And basically, that's all about, you know, not fishing in the red ocean, where the sharks are looking for blue ocean, where you can create your own rules. I think it's really competitive in that, you know, in the cycling market. And, you know, I think women that are smaller sizes are probably reasonably well catered for by unisex brands. You know, issues with with pattern making doesn't come into play until you grade it, and then the issues get bigger. So I think a lot of women that are bigger aren't catered for. So that's going to be a big focus for me, and sort of blue ocean, I suppose, Michael McGrath  34:59 as some. Cycling is growing, and female sports growing. I suppose the trick is trying to tap into that, you know, and that's for the sport itself. Is, you know, how can we get more people cycling that aren't, aren't doing much movement? I mean, the great benefit of cycling is it's, it's easy on your joints, isn't it, relative to running, say, yeah, and particularly for a bit Nicole Stanners  35:22 bigger Yeah. And you can look at the stats like I had a good look at there's participation surveys that are done on cycling. And women that cycle once a week. There's about 330,000 of those. So they're regular, whereas women who actually ride, it's about 780,000 a year. So you know, could you get more of those casual cycles? And that's, Michael McGrath  35:43 that's in Australia, is it? Yeah, Nicole Stanners  35:45 that's yeah. Michael McGrath  35:46 So they're, they're quite big numbers, aren't they? Yeah. Excellent. Look. That's been such fun to find out about your journey. Look before we kind of let you go. So tell us a key attribute that you've had to draw on to really get this thing going and and keep keep yourself moving forward. I mean, what? What attribute? Is it persistence, or is it something else? Nicole Stanners  36:12 Yeah, I'd say persistence and resilience. Yeah, yeah, persistence that, I think you, you know, we talk about business failure, but I think they probably just give up too early. You've got to go through the roller coaster, learn from it, and be persistent. And also, I think be resilient, because there's some tough days, but then there's some good days, like when you get a card from a customer, for example. Yeah, Michael McGrath  36:36 no, isn't that true? So, yeah, Persistence is key, and a re key and reoccurring theme. Really, you've got to keep at it. It takes much longer to to build something good. Takes much longer than you'd like it to Yeah, definitely. Interestingly, before we go, there's about 22% of female founders in Australia. So if you look at the million businesses, about 22% of them are have been founded by females. And you know that probably needs to rise, and maybe people can look to you and look to others and jump in, hold your nose and see what happens. Michael McGrath  37:18 Yeah, thanks for coming in. Nicole Stanners  37:19 Thanks for having me Michael McGrath  37:24 So there you have it. Nicole saw a problem, verified it, mused on the idea, then, after biding her time, took some action, more power to her and others like her. Quick piece of trivia, the country with the most female entrepreneurs is Ghana, at 47% Come on, ladies, there's work to do. If you want some great female cycling apparel, be sure to check out Muze. The details will be in the show notes. Now, before I go, a shout out to Oasis Partners who sponsor this podcast. The corporate advice for the practical buyers. Call the guys at Oasis Partners. Now if you like this content, be sure to tell your friends. And if you're feeling really generous, leave us a review until next time you. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> https://www.oasispartners.com.au/wp-content/uploads/2025/07/Picture1.png clean no 38:18 No no https://www.oasispartners.com.au/podcast/richard-turner/?utm_source=rss&utm_medium=rss&utm_campaign=richard-turner Tue, 08 Jul 2025 00:58:12 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17707 The Essential Entrepreneur: What it Takes to Start, Scale and Sell a Successful Business, Australia's leading guide for entrepreneurs. Richard’s LinkedIn: https://www.linkedin.com/in/rhturner/ Australian Centre for Business Growth website: https://centreforbusinessgrowth.com/people/richard-turner/ Coraggio: https://coraggio.com.au/coraggio-team/richard-turner/ Points of interest:

1. [0:01:19 - 0:02:08] Entrepreneurship Definition
2. [0:12:21 - 0:17:01] Early Business Experience
3. [0:22:22 - 0:28:19] Food Distribution Innovation
4. [0:40:10 - 0:44:39] Zen Energy Origin Story
5. [0:47:49 - 0:54:28] Solar Industry Challenges
6. [0:55:14 - 0:56:33] Entrepreneurial Growth Advice
7. [0:58:51 - 1:03:50] Business

Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:00 Welcome to the troubleshooters podcast with me, your host. Mike McGrath, so here we are, episode one of season three. We are back after a short break, and back by popular demand. That's both my mom and my niece that asked when the next one was coming out. So today's guest is Richard Turner. He's an experienced entrepreneur with a wonderful track record of starting and scaling businesses. Sit back as I get Richard to unpack his 40 year journey in business. So Richard Turner, welcome to the troubleshooters podcast. Yep. Thanks, Mike. Looking forward to it now. You are the entrepreneurs. Entrepreneur, if you don't mind me saying, in fact, not only are you an entrepreneur, but you're an award winning entrepreneur. And my understanding is you're Entrepreneur of the Year, not just once, but twice. Is that the case? Richard Turner  00:57 Well, South Australian entrepreneur of the year, twice, 14 years apart, for two different companies. But Australian entrepreneur of the year in 2010 Richard. Michael McGrath  01:05 That's very impressive. Now, the French came up with the word entrepreneur, right? Like to complicate things, I think the French, but, but what do you how do you describe an entrepreneur? Richard Turner  01:19 I think someone who's missing that risk gene, someone who's just willing to give something a crack and make a better life for themselves? Yes, yeah, that's something I've done all my life. You know, I've probably never had a real job. It's Michael McGrath  01:34 Interesting that, isn't it? That sort of risk profile, there's a higher, higher risk tolerance, I think in an entrepreneur Absolutely, Richard Turner  01:43 Absolutely, it's all about taking a risk, and it's about trying to get a better return for yourself than what you would get elsewhere if you're working for someone or investing or doing something. It's about backing yourself in with an idea that you validate against a potential market. You know, there's some demand. The timing is right, and you rally the courage to give it a go. Michael McGrath  02:08 Yes. So, I mean, on that point right, are entrepreneurs born, or can we make them? Richard Turner  02:17 Look I think there's a bit of both. You know, we see tremendous entrepreneurs that come from the most unlikely backgrounds, immigrants coming into the country, that are very poor, that are just so determined to make a better life for themselves and their families. They find mentors. It's about largely, it's about having mentors. You know, whether it's inside the family, if you've come from a business family, quite often, you have mentors inside the family. You sort of seen businesses start and grow, or you haven't. And then if you haven't had that experience, you've got to find those mentors and and it's amazing how giving people are. When you go and approach people, you find someone in an industry that you're interested in, and you somehow contact their Office or Office, or get through to them and ask if you can have a coffee or a talk with them. And it's amazing how giving a lot of people are. I mean, you'll always find those who aren't, but it's just a matter of persistence, and you get a chance to go and have a coffee with someone, ask them. You might find someone who's willing to be a bit of a mentor for you and guide you through. Or maybe it's a it's a group of people with different skills that help guide you through, but people find ways and means of doing it. As I said, there's entrepreneurs that come from the most unlikely backgrounds that are now millionaires or billionaires that just yeah, just determine people Yeah. I mean in terms of the being born, yes, a lot of entrepreneurs are probably on the spectrum. They're very focused people who who can apply themselves. So there's certainly genes. I mean, you look at the most well known entrepreneurs around the world, the Mark Zuckerbergs, the Elon Musk, the Bill Gates. I mean, they're obviously very well, they're on the spectrum, and and most are. And I would, I'm sure I am too, but it's just that ability to focus and be determined and probably not be so scared of the risk involved. But that all comes down to planning as well, making sure you're taking educated risks, not just doing something that there's no plan or no research done. I mean, I see so many companies develop products out there that they think is a good idea themselves, and they take it to market only to five there's no customer for that product. And I've seen people spend hundreds of 1000s of dollars developing things that there's no market for. So you've got to do the practical things. You've got to have the fundamentals in place, which we can talk about today. Michael McGrath  04:40 Look, I mean, I think you're right. There's something about our backgrounds. Perhaps there's something about what happened when we grew up, who was around, maybe who inspired us, maybe what we read. But certainly, there are some fundamentals that we can apply to that. So you're not born an entrepreneur insofar as. Know, you know everything about business. There's, there's some fundamentals you've got to come in touch with. You're either going to come in touch with them the hard way or the easy way, but you are going to come in touch with them, that's for sure. I mean, we came of age at a similar time. I left school in 1980 and I think you graduated with a BA in business in 84is that right? Richard Turner  05:20 Yeah, yeah. I did my year 12 and 81 so I'm just okay. Michael McGrath  05:23 So it was a very different world back then. And maybe we can, we can give the listeners today a little bit of the perspective around the fact we've had four decades between us Richard Turner  05:33 It's interesting looking back on that experience, because Yes, times are different, but the fundamentals don't change. I mean, I chair two boards of CEOs. I've mentored hundreds of people. I've been the entrepreneur in residence at UniSA recently. So I've mentored and seen hundreds of recent companies coming through, and the things that caused them to succeed and the things that caused them to fail are the same fundamentals. They don't change. In business, no matter how much technology progresses and things progress, the fundamentals don't change Michael McGrath  06:08 No, no, you're right. I mean, essentially, businesses is an attempt to solve a problem, whether it's a product or a service or both. Fundamentally, what's the problem with addressing and you know, is the, is there an economic, viable solution to bring that to the market, and will people pay for that, that problem being solved? And I think that, I mean, it's rarely couched in those terms, but effectively, we're, we're solving problems really, yeah, so look, on that subject, I want to mention your book. So you've written a book called The essential entrepreneur, which I'm, as I mentioned earlier, I'm a third of the way through, and it's terrific. I really think it's, it's great. And I'm a bit of a reader. And effectively, I mean, you went to university. I went to University of life, I'm afraid. And the only thing that set me apart and enabled me to get the education I didn't really get at school in a secondary modern comprehensive system in the 70s was reading. So somehow, for some inexplicable reason, at age 18, why I didn't read at school is still a mystery to me. I mean, I got a Grade B in English Literature having left Huckleberry Finn halfway down the Mississippi not not knowing what, how that story ended, because I hated reading. But for some reason, 18, I started to read mostly non fiction, lots of autobiographies. Because what became clear to me is that in the space of a week, I could get distilled 20 or 30 years of experience, and that just seemed like a really good use of time to me. So your book, which I'm enjoying a lot, talks about how you start a business, how you scale a business, and ultimately, how you sell a business. And what I really like about it is, right off the bat, you started talking about other entrepreneurs outside. I mean, you've got great experience yourself. You've started and scaled and exited four pretty large enterprises, which is pretty unusual in itself, but you also tapped into some of the entrepreneurs, some other very successful entrepreneurs that you knew. So tell us about the book and the genesis of that, and what you know who it's aimed at, because I really do. I really do many when I say I'm enjoying it. Richard Turner  08:31 So yeah, well, I've written, written it in very basic language, because I really wanted to be to be read by anyone in anyone who's had no education, who's just got an idea or a good idea, we all stand around the barbecue on weekends and talk about how we're going to solve the world's problems, but very few people wake up the next morning and do anything about it. So this is really for everyone to read and understand. I've got rid of all the jargon out of the book. And the other reason I wrote it is there's very little entrepreneurial books that come out of Australia. Most of the stuff we get comes from the US or other cultures where the legal frameworks different, the accounting principles are different, the whole culture of doing business is different. I see a lot of young companies coming through, and young people coming through that have read literature or read books on entrepreneurship out of different countries. And I have to sit them down and say, Look, unfortunately, you cannot do that in Australia. It's actually illegal. So yeah, or the market won't accept it. It won't Yeah, these things don't work here. You need to, you need to understand how the Australian market works, and that's really a big reason as to why I wrote this book. Michael McGrath  09:50 Yeah. I mean that that cultural variance is important, isn't it? I've done business in a few places around the world. For the more discerning listener, you'll realize I wasn't from Australia originally. Yeah, but I did business in China. I had a wholly owned foreign enterprise there with another couple of guys, and I literally spent two years getting my ass kicked in China because I just thought that, you know, we could write contracts, write agreements, shake hands and get on with it. And I realized that there's a completely different legal system there, and there probably isn't really much of a commercial legal system, as we would recognize. So I was signing these wonderful agreements, sticking in a drawer, thinking that that I'd done a good job, but actually with largely unenforceable. And I mean, that's one of a number of cultural own goals that you know I was I was engaged, and eventually I realized that I was going to have to do things differently, and I was going to have to slow down. It was much more personal relationship stuff. What would have taken me three hours in London was was going to take three days, and it was a dance that I had to do. Is just one example of the cultural variance. And it is a big mistake to think that the US is, again, I've done business in the US, and they're extremely entrepreneurial as a as a country. It's not an accident. They're the number one. But what's interesting to me about the Americans is they're so bloody optimistic. So you come away from a conversation American businessman, you think that that you know you're going to do business together, everything is going to be great. They're going to buy, what, you've got to sell, and then you never hear from them again. Richard Turner  11:24 No, yeah. I mean, still, and you can liken it to humor. You know, we're an English colony. We understand the English humor probably a lot better than we do the American humor. So you can, and there's very slapstick over there. We're just a different culture in that way. So you can liken that to business. We're just different and and where you say they're very bullish and very optimistic in the US, and you get very excited coming away from conversations in the US. And I've spoken to many companies that have done that, and same experience that really you walk away thinking, I've got this I've got this contract, and you know this is going to work, and you never hear from them again. It's just, they're very positive, optimistic people. But it's, it's the culture is different, the Connect is different. Michael McGrath  12:07 So coming back to that, your journey for a minute. So you came from a pretty entrepreneurial family. Your father was in business in in a in the kind of meat processing world. Tell us a little bit about what that was like growing up with that, yeah. Richard Turner  12:21 So I was the youngest of three boys. And look, growing up in a business family, so dad had this company called Holbrook Meats back in the, probably the late 60s, early 70s. That was, was very successful, started pretty much from the dining room table. So I remember that from the very early days. And during primary school, I'd, you know, we would all be sent in there, and, you know, washing the walls and cleaning the drains and packing the offal, doing all the great jobs. But as much as you look back on that, and you think, Geez, that was like child slave labor, like most family businesses, but you think, wow, I learned the value of hard work. I learned the value of money. And as you could imagine, in a workplace like that, the melting pot of cultures that that would be there. I learned at a very young age how to have a conversation with pretty much everyone, and playing table tennis at lunchtime. And it was, it was such a tremendous opportunity to grow up in a business like that. And then so I was, as I said, the youngest of three boys, but I was also the first luckily enough to have the chance to go to university. So my two older brothers got, you know, sucked into the business at a younger age, and they went straight into into work, but I had the chance to go and do a bachelor of business back in the early 80s at University of South Australia, or even before it was the University of South Australia was the Institute of Technology. But technology back then, and I was one of the first to go through, one of the first, first cohorts to go through to actually learn computer coding, which was quite remarkable. And yeah, after, after doing that on punch cards at school, to start coding on a on a screen and keyboard, and at work at that time, this company was sort of in the early 80s, growing rapidly. And back in those days, for those listeners who were old enough to remember, we had an Old Wang computer with a five inch floppy drive that just did our accounts payable and accounts receivable, and we'd just purchased this big Hewlett Packard 3000 that was in a full room, air conditioned room, and people will just be awestruck with this now, but the CPU was the size of a washing machine. We had two, 256 megabyte disk drives that were the size of suitcases. You know, the tape big reel to reel tape drives, the long printers and my job we it was to come in and take control of this machine and start automating all the big processes within the business. And at a young age, just, you know, in university, learning, coding, completing that course and coming into the business, I thought, Okay, I've got to make this machine work for the business. Business. So I need to find what are the biggest, most complex processes we do in this business that I can automate. And our livestock buying process or system was, you know, that drove our cost of goods for the business. And the way that worked at that point was completely manual. We had lots of cattle buyers all around the country buying 1000s of head of cattle a week, writing all the cost information and where they were from, the breeds and who bought them all on scrappy bits of paper that ended up in the office that had to be manually tallied up, that took sometimes weeks, and yet, that was our cost of goods. So our sales people often were working in the dark. So I thought, Okay, I need to try and develop a system here where our cattle buyers could key in that information directly, and we could have it available almost immediately. But you could imagine the cultural change that had to happen to get our cattle buyers around the country to start using computers and keying this information in was a huge challenge, but I persisted with it, developed the system, got it happening, and what I remember is just the impact it had, not only on the company, but on the industry. It completely disrupted the industry. It catapulted the business to the top of the tree. And as a young lad, still thinking this, this is quite remarkable. You know, it really lit a fire inside of me that what I had done, I had actually disrupted an industry. And I thought, wow, you know, that's what I want to do for the rest of my life, is go into industries and change the way those industries work. And anyway, that company became a public company in 1986 and and then two of our cattle buyers bought the export division out of the public company. Continued it on, and that company is now known as Thomas foods International. It's a multi billion dollar business here in Australia and but to see that come from, again, pretty much the dining room table, through to a public company through to what now? Michael McGrath  17:01 Yeah, it's interesting. I mean that. I mean you just articulated, really, the start of the digital revolution. I mean that, yes, yeah, that early 80s period. I mean, I got into business in 86 that period was PC started turning up on desks. Well, Richard Turner  17:18 We had the very first Macintoshes doing word processing. Yeah, back then in the early 80s, Michael McGrath  17:24 I remember when we got our first computer, we got it from all football club because they'd bought it and that no one knew how to work it. So my uncle at the time, stuck it in his car and drove it to us. And then we got Tony, one of the lads in accounts, and said, Can you see what you can do with that, and away you went. Richard Turner  17:43 I remember going into the Powerhouse Museum in Sydney a few years ago, and some of the early computers we used to use are in the museum. And I'd say to my wife, I can't believe that I'm going to the museum to see stuff that I grew up with Speaker 1  17:54 I mean, but that 40 year journey has been incredible, and in terms of the transformation that digital revolution, which is, I mean, for those Gen Z is among us, who we probably put to sleep by now, let's, let's just chat about AI for a second. I mean, that we've now got a new frontier opening up, effectively, Richard Turner  18:15 Unbelievable. Yeah, the opportunity for AI in terms of assisting the productivity of our people. You know, it shouldn't be a threat to jobs, but what it should enable our businesses to do is be five to 10 times more productive. You know, every individual within that business can do their research in an instant, get jobs done in an instant. You know whether it's presentations or any form of information gathering. You've got it at your fingertips, and you can use it immediately, and you can even go to the point of preparing those presentations or or whatever you need to do. So the the application of AI coming up is extraordinary, something we certainly didn't have the benefit of, yeah, any more than a few years ago, Michael McGrath  19:04 There's certainly a lot of fear. And, you know, I mean, the media love a bad news story. I mean, you know, if they can make it catastrophic, they will, but effectively, I'm definitely on the half glass, half full side of the equation around AI, we're beginning to see some great utility units. And, you know, we don't see it taking over the world, frankly, and but we do see it being able to do lots of things that we just couldn't do. I mean, the whole language model, the ability to interrogate information in a in a much more meaningful way than than we were bound effectively by, you know, objects and and, you know, the way information was stored. Now, all of a sudden, we can start through the language models just interrogating our own data and getting more intelligence from it. Richard Turner  19:58 Yeah, well, in terms of fund. Fundamentals we were talking about before. You know the big fundamental, once you get past starting a business and validating a business and validating your products, and you've got demand, and your business starts to grow, and if you've got something that is hot in the market, like with my last company, Zen energy, we basically pioneered the solar industry in Australia back in the early 2000s and we knew we had a hot product, we had to create a platform for rapid growth, which I learned how to do in my previous company, Regency food, which we're sort of getting a bit out of order, but developing that platform for growth. Because if someone asked me, What's the key to success in business, it's consistency. You've got to be consistent in everything you do, so the customer experience is the same, no matter who they engage with or what channel they engage with, with your company. And to be able to create a platform for growth that is consistent, you need to create processes and procedures and utilizing a quality management system, training your staff. But the application of AI to assist in that process is tremendous, you know. But in terms of training, like all our customer facing staff is in energy, one of the biggest recruits I made for that company was nothing to do with energy. He was the franchise manager for Baker's delight, you know, but I he came into the business, and for hours after work each day, we would role play with all our customer facing staff, the conversations we'd have, the terminology they'd use, the language they would use. So the customer conversation was the same with every customer that connected with the company, so that that consistency in terms of what you expect from a company is is absolutely critical. Michael McGrath  21:47 You know, I look at your sort of background and I go, wow, you know, you skip past that. But to get into that energy disruptive area so early, I mean, if I look what's happened since then with the carbon credit schemes and goodness knows what, and, yeah, I mean that that was, that was very early in that area, and, and, you know, to make a success of that. And did you get your timing right? Were you too early? What? What? What enabled you to see that when you saw it. Richard Turner  22:22 Yeah, well, the timing is everything in business, and I'll just lead into the Zen energy story. I'll just quickly give a quick overview of the second business, because after the meat processing business, Holbrook Meats, which became Thomas foods, my brother and I went and set up a food distribution company called Regency food services, which was a journey of if you had a restaurant or a caterer or a hotel or a hospitality outlet, in those days, you had probably 20 or 30 suppliers coming in the back door from all over the place, largely based on temperature zones of the products required. So you had frozen food suppliers, you had grocery suppliers, you had packaging suppliers, you had confectionery, chilled goods, small goods, you know, you had supplies for everything. The big trend that we saw coming in from overseas was from the US in particular, was around being able to provide all of that from one supplier. So a bit like Coles or Woolworths are now, but in food service, wholesale size quantities, and being able to set up a complex multi temperature warehouse and have vehicles that were multi temperature zone that we could deliver this product. So we started this company. We grew this company very rapidly, we did about five big innovations and disruptions in the industry, which I'll get to later in the conversation, but completely disrupted that industry to the point where by 1998 and 1999 we'd won Australian food service distributor of the year twice in a row. And when? When Bidvest, and you'll see the bid food trucks driving around all capital cities. Now, when Bidvest, the parent company, which is a South African company, went to the UK in the 90s, they basically rationalized the food service distribution business in the UK, bought the biggest food distributors, and then created the first national company, and then brought that model to Australia. So when they came to Australia, they were looking for a company that was who they deem to be like the model business they wanted to base their Australian business on. And saw our company, and we even had the same phone number as what they had in the UK. It was like one three food or one 300 food or something. And they said, You're the company that made no secret about it. You're the company we want to buy in Australia. And then they approached us five times in 1999 to buy our company. And my brother, Greg and I said, Well, look, we're both pretty young. Still. We're not really ready to sell. And they just kept coming back. And you know, it got to a got to a silly. Account, and we said, okay, maybe it's time to go surfing or do something else. So, so we sold that business, but, but the young, and I will say, the young girl I employed as my receptionist when she was 20, is now the CEO of that multi billion dollar business. And a very good lesson there in employing people, that when you employ people. You should always envisage them. Could they be part of my leadership team? Can they go two or three levels up? Michael McGrath  25:27 She's a CEO of Australia, isn't she? For bidves. That's a 2.7 Richard Turner  25:31 It has been for 10 or 15 years now, and is a real gun. But yeah, it started as a receptionist. Michael McGrath  25:38 I mean, I mean, just to put that in context, bidves are $2.7 billion organization in Australia now. I mean, it's, that's pretty impressive, isn't it? Yeah, Richard Turner  25:46 Yep. Well, that's that started, you know. And, I mean, I can take you through some of the innovations we did there that might be good for your listeners to hear. Because, you know, a lot of people think of innovation or disruption as being technology based. It it doesn't always come from technology. And, in fact, none of our innovations in that industry came through technology. So the second thing we did there was, I said to my brother one day, you know, we're a hospitality business. We're supplying hospitality outlets, you know, restaurants and caterers and hotels, and we were working almost opposite hours of the clock. So we started off that business running traditional warehouse hours from sort of early morning, four or five in the morning through till sort of early afternoon, mid afternoon, and we'd shut down, but our but our customers were working from lunchtime through till 10 or 11 o'clock at night. And and the chefs who would order the food would just pick up the phone and they get an answering machine. Chefs are grumpy people at the best of times, and they they would say, You know what I freaking want, and let's slam the phone down. And of course, we'd get the order wrong, and and we have to send out couriers the next day, and that would cost us money, and that would blow the profit on the orders. And we thought, well, this we need to think of how we can do things differently here to match the operating times of our customers. So we embarked on setting up the first 24 hour distribution center in Australia, and also we commenced that with running three tele sales teams from early morning right through to about 10 or 11 o'clock at night so we could talk to our customers in the takeaways, in the restaurants, in the in the hotels, talk to our chefs who order the food. We've developed a relationship with them. We confirmed, confirmed the orders with them. Through our quality management system, we got the orders right. Warehouse staff came in at midnight, our computer systems, we were all always on the leading edge of technology, or probably bleeding edge of technology, but we printed the picking sheets per vehicle, where they could do one lap of the warehouse pick the stock. They went into a staging area. Big telescopic loaders went into the truck. We had the trucks loaded and out the door by four o'clock. So we were last to take orders. We spoke to our customers, we built a relationship. We got the orders right. We were first on the road in the morning and first to deliver. So who do you think got the business and the company like that? And I remember that year getting the Qantas business, getting the Olympic Dam business. You know, all the big accounts in Australia were starting to come to us. Michael McGrath  28:19 I mean, it sounds like common sense, doesn't it? But I suppose that's the trouble with common sense. It's not that common often. Richard Turner  28:25 It's just intensely listening to your customer. What are we not doing? What are the latent needs that you need? How we can how can we make your business better? And you know, so by having one key delivery coming in the back door rather than 20 made a huge difference to their business and the convenience, so the business took off. The next thing you have to do is always ask yourself, What business Am I in? And again, these are the fundamentals. Like, when you get a business to that sort of size, often you're running multiple businesses within a business. So when I say that we were running we're very good at sales. We were very good at purchasing. We were very good at managing this complex warehouse. But one of the big problems, and was always a distraction for us, was managing this big fleet of by that time, we had about 14 trucks on the road. Drivers would be sick. Trucks would break down. Air conditioning units had broke down. The trucks had to be cleaned and maintained and and as employees, these drivers only seem to be able to do about 20 or 25 deliveries a day. Yep. But there was always a problem, something going on that would take my brother and I away from where we added the most value to the business, to do stuff that didn't add value to the business. We were just fixing up problems that should, you know, you shouldn't need to keep doing. But these things kept happening. So we asked ourselves, okay, how can we fix this? Is there a way maybe the owner, the drivers, could take ownership of their rounds? You know? How would that work? So we, we looked at the value of product on average. Which they'd take out. We calculated that as a percentage of what the drivers would cost us in salary, plus their own costs and insurance cost to the trucks, etc. And I remember this figure because it was burned into my head. It was 4.75% was what we had to pay them to give them a good salary, and all the the extra cost they needed to run their trucks. And of course, if you're going to have that conversation with your staff, you know you're going to get a very wary response from them. And of course we did, but you've only got to get one or two to say, yeah, we'll give that a go, as long as we can go back to the old way. And we did that. We got a couple to say, yep, we'll give it a go. And these guys turned into Supermen overnight. They were doing 50 deliveries a day. They were rotating the stock in the customers freezers. They were upselling the customers on new stock lines. Our customers basically became their customers. Their trucks were always the best looking trucks on the road. We'd have customers ring us up saying what the hell's got into your drivers. They are incredible. And of course, the company just took off. So, you know, always ask yourself, What business Am I in? Where am I adding the most value to this business? What am I doing that I shouldn't be doing? And make those clear cut decisions coming back to fundamentals. Michael McGrath  31:14 I mean, it's interesting. Is it that, that empowerment, Richard, that sort of idea, that we can find some kind of win win, just that idea of, how can we both do better, right? That's, that's a very innovative thought, isn't it? Really? Yeah, we're all Richard Turner  31:32 In business because there's something we know that we can bring to the market personally that creates value, and if we start doing all these other things that take us away from that. We start devaluing our own business. And so that was a key one. Then another thing, another thing towards the end of the business that was very innovative was, as I said, the people who order the food are the chefs and the people in the kitchen. But back in the late 90s, there was a cafe explosion, and, you know, street dining and cafe started going everywhere and and there was a real shortage of hospitality staff, much like there is now. And food sales staff who were going into these places and selling were being approached by the managers of these venues saying, Oh, can you go and talk to the chef down the road? I want him to work for me. Or can you go and talk to that food and beer? Food and beverage manager? I want him to work for me. And so us food sales staff were being used like recruitment people by play art customers. And this came up at a sales meeting, and I remember thinking, Oh, maybe the timing's right to provide a flexible workforce for our customers and set up a hospitality staffing agency. And we had a young woman at the time, Christy. Her name was that was helping us recruit our own staff, and I knew she had a background in hospitality, and I said to Christy one day, you know, I think there's an opportunity for a hospitality staffing agency. What do you think? If you think it's the timing's right as a good idea, let's set up Regency staffing, and you run it for us. And she came back in a couple of days and said, Yep, I think you're right. We did it, and she ran it, and I think we did two or $3 million in staff placements that year, but also had 300 chefs working for us, including 10 shifts in a Qantas and but the thing that we didn't actually plan on, you know, the idea was to create a flexible workforce for our customers. But who orders the food? The chefs. Now, if we owned the chefs, who were they going to order the food from? So we created this circular economy within our own industry, which was incredible. So, yeah, all these innovations just completely set us apart. And the companies, when we started the business that we aspired to be as good as we thought, Oh, we could ever be as good as them? That would be amazing. We surpassed those companies in two or three years, and we were just in clear air, doing things that no one had ever dreamt of changing the industry, making it really hard for people to catch us. And of course, we ended up being the target as Yeah, and being very public about the journey, being very public about the journey, is something I always tell young entrepreneurs, because I get people saying to me, Oh, we want to fly under the radar. We don't want to be seen or noticed. And I said, Well, that's great, until you fall off the radar. You try and find investors and try and find staff when no one knows who you are and what you're doing, and that's why most people can't find staff. They're not they're not good about telling their story to the media, being public about their successes, their rewards, their recognition, and giving people and being very clear on the vision again. I come back to your Elon Musks and your Mark Zuckerbergs and your Bill Gates is, I mean, they're half crazy people, but it's half crazy people that change the world. And it's, you never not know what those guys are doing. You know, they're very they're talking to the media all the time. They're envisioned. What the world's going to look like this is, this is where we're going. People get a chance to fall in love with these businesses, and they're just an example, yeah? I mean, no, no, I think, yeah, as a local example. You mean I, I interviewed Flavia Tata Nadi for the book, who founded fleet space, which is Australia's leading space company. I mean, her mission is to put a fleet of satellites around the Earth, Moon and Mars for mineral exploration. So what young kid's not going to want to be a part of that company? It's just an attraction. And what investors are not going to want to be a part of that business going forward? And for my own companies, we've never had to look for staff. They've been knocking on our door because people want to work for us. We've never had to find investors because people were knocking on our doors wanting to buy the company and but you've got to be very public. Someone's got to be, as I talk about these days, someone's got to be the Mick Jagger in your business, and get out there and dance and talk to the media and talk to the public and be very clear on what, where this company is going, what we're going what we're going to look like in a few years time, where the market's going, and what we're doing. Michael McGrath  36:04 So it's interesting. One of the examples you use in your book was The Haigh Chocolatier company. I think they're fifth generation, yes, yeah. So in your research there, what, what is it about a business that goes four or five generations? What? What? What was the essence and the fundamentals there that allowed that longevity. Richard Turner  36:22 Yeah, look, with multi generational businesses, the fundamentals still don't change. Like in talking to Simon Hague, who's current fourth generation owner, and Simon and his brother Alistair are joint managing directors, and they're in the process of retiring now and and and then the fifth generation. You know, there's no one standing up looking like the next, next owner at this stage, because some of them are still quite young. But you know, their board is managing that that transition. However, going back over the previous four generations, every generation of that family has done something unique and entrepreneurial to give that company new life and grow the business. So the company, in the first couple of generations was were doing very basic, low quality chocolate for the armed forces, you know, in the early wars. And it wasn't till the third generation, John Haig that went over to Austria, and I think did work with the Lindt family over there, and taught the children how to speak English, in exchange for learning how to make chocolate and brought and also in that process and working in the factory, learned where all the good cocoa beans were coming from, learnt the supply chain and sources, and brought that experience back to Australia and really reinvented The Hague's chocolate making process. He also went to the US and learned from the US retailers how to retail confectionery properly and between the making of quality chocolate and developing a retail concept, that was a huge change for the business, so you know, and that was in the third generation. And then Alistair and Simon have taken it a step further, expanding that business, taking it across Australia, continuing to develop the retail storefronts, continuing to develop and scale the manufacturing and distribution process and but even Simon said himself, he read my book and he said, Oh, that distribution thing, we need to consider that, because our Special, our speciality is making chocolate and running retail distribution is something we need to think about as well, you know. So it's what what are you good at? And what are you potentially is a distraction Michael McGrath  38:50 That brings out an important point around took me a while, but I eventually got the hang of talking to competitors, not in an adversarial way, but just in a kind of humble what can we learn? What can we share? And I find small businesses are reluctant to do that, but it's been such a rich source of information for me to just speak to others and tell them who I am and what we're doing, and ask them how things they're finding things. And there's been an incredible explosion of insight that's come to me, particularly when every five years I'm moving to a new area, it's just kind of the way I'm wired. And the fastest way to get across it is to speak to others who've been doing it for ages. And you know, you look at what they're doing well, and you look at perhaps, what they're not doing so well. And you know, you mentioned that. I mean, it's quite humbling, you know, for for the Hague family to go and spend time talking to a competitor in Switzerland, for them to go to the US and figure out what they were doing well, in retail there, that's and then bring that back and harness it, you know, leverage it. It's good and so. So coming out of food, then that's a big jump in. In terms of sector to move into Zen energy. And that's what was my question earlier, was, you know what was going on there? Because that was extremely ahead of its time. Richard Turner  40:10 I get asked all the time, how did you go from food to distribution to energy and and it was a simple story. I was just one night playing with the kids in the backyard, in the cubby house, and the sun was going down, and they wanted to put a little light and a little radio in the cubby house, and we had no power at the back of the yard. And this was early 2000s like about 2003 and I said, Okay, jump in the jump of the car. We'll go down the hobby shop and we'll see what we can find. Thinking I was going to come back with a car battery, 12 volt battery or something. Can? I was just going to power it from that. And anyway, I so this is before there was any solar industry or any commercial solar installers at all. So I found this little panel in the hobby shop, and I said to the guy, what's that do? And he said, Oh, that's a solar panel. And I said, oh, so what does that do? And I enjoyed maths and physics at school, so I was quite intrigued. And he said that converts sunlight to electricity. And I said, Ah, that's interesting. So I said, could that charge this battery over here, this 12 volt battery? And he said, yeah, if you matched it up. And then he wrote Ohms law on the whiteboard, or what's equals volts times amps. And so we we started matching the solar panel to the battery, and we got this little regulator and inverter, and this the cable and the switch gear and all that had to be matched as well, because it had to be proper DC cable. And other, you know, all the switch gear had to match. And brought all this home, and had a lot of fun putting it together with the kids, and we got this cubby house system working, and the battery never went flat, and it was fantastic. And my father in law was a senior electrician, and I said to Peter, I said, Can you see any technical barriers in this powering a house? And he said, No. He said, You might there'd be a lot of regulatory barriers, but the I can't see any actual technical barriers in scaling the components. So that was enough for me. And I thought, Okay, I'll start just researching around the world in who's who could potentially make these things. And there was a company in Germany called SMA that had just come out of the railway sector and made these big inverters for the railway yards. And they just started making these small inverters, though, that I could use in the home. And then I found a company in China called et solar that were an very early solar panel manufacturer had one production line started the same year. We started in 2004 and they were always lined up making these little solar panels, hand making them. So I went and met with the the chairman over there. And it was funny, we had a young, three month old baby at the time and and a Caucasian baby in the middle of China back then. Was a real novelty. You know, everyone would have their picture taken the baby. So it was like an open door to get to the get to the chairman straight away, and had this conversation with them. And I said, Look, I want to create a matching solar panel to these inverters in Germany, so and I want to brand the whole thing as a integrated system. Because the challenge we had if I was going to take this to market. And at that time, no one knew what a solar panel did, and no one knew what an inverter did. We all know that now, but back then was a different time, so I thought the only way I can take this to market where people needed to trust the brand. So the brand was really important, and they needed to trust what the system was going to do. So we took it to market on a very simple proposition, that this would power from a quarter of the average home to all of the average home. We came up with this brand called Zen. So Zen was an acronym back then for zero energy. Was about balancing generation and demand and the mission statement in those early days was to show our customers how to live free in a zero energy environment. So what we were selling weren't bits and pieces, weren't solar panels and converters and cables and switch gear. It was the whole concept of having energy independence at a time when no one could ever conceive you could ever be energy independent. So we introduced this whole thing of energy independence that people just fell in love with. And it was just at a time when John Howard, who was prime minister, was starting to talk about climate change. We were reading about climate change in the newspapers. Michael McGrath  44:39 So this is 2004 Richard Richard Turner  44:42 Yeah just Yeah. Starting to there was talk of the first subsidies for conserving energy in the home. And timing was perfect. So, but I thought, I can't sell these solar panels and inverters and bits and pieces. So I put it all together in a. System package called a Zen home energy system. So we knew we were going to be be very disruptive in the market. And if you're going to do something different and disrupt any market, whatever you're doing given a new name, you know it's the quickest and easiest way to cut through. So we coined this term home energy back then. You know, it's quite ubiquitous. Now, you hear Home Energy mentioned a lot, but we started that terminology back in 2004 and so we released this system as the Zen home energy system. Didn't want to call it a solar system or a business, a solar company, because we wanted to keep the door open for other forms of energy that we could, we could tap into, but we launched it as the Zen home energy system. People fell in love with it. The business went from 1 million to 5 million to 20 million to 70 million. Yeah, in the first four years, and then just kept going. And it was just a remarkable journey, and everything we learned in those previous businesses about developing a platform to enable rapid growth we put into the last business from day one. So we created all those systems, procedures, everything from day one, so we knew we could scale consistently. We developed a positive cash flow model. Cash flow is critical when you're starting a business, so you want to be cash positive or cash neutral, at least not cash negative. So which most businesses are, by the way, so cash negative is when you incur the costs before you get the money come in. So most people have 14 days credit or 30 days credit before they get paid, but you've already paid your staff and paid your wages, so you have to find money to make those payments. So but because this was such a hot, hot industry, and people were prepared to pay upfront or pay a deposit for the system that could fund our supply chain, the more we sold, the more cash we had in the bank. So we were a cash positive company, and we won the fastest growing company in South Australia two years in a row, which they said was technically impossible. I don't think anyone's ever done it since, but we're growing at a rate of 437% for on average over four years. We maintain that growth for four years was supposed to be impossible. Michael McGrath  47:22 So, Richard, what were you charging? You know, back in the day early on, for those systems, what was a household paying for you for the system? Richard Turner  7:30 I think some of the most popular systems were around the sort of $15,000 mark. You know, they were there. They cost a lot more, and they were a lot smaller systems, but they did the job we had. We had much bigger feed in tariffs then. So any surplus energy you got paid a lot more money for. So the economic still stacked up. You know, we'll Michael McGrath  47:49 So still get so these would have been early adopters. They would have these would have been people who were nuanced around environment. And, yeah, that's interesting, Richard Turner  47:58 Largely retirees, who are retiring who didn't have future income and wanted to invest their superannuation in something that could make them self sufficient. So it just, it just was the perfect timing for that market to produce that product. However, that journey wasn't without its problems, you know, and we should talk about the problems that we had, because it was, you know, we were always up against the fossil fuel companies, you know, the the old energy producers that really didn't want to see this technology take off, who were continually lobbying the government to change subsidies and change the framework and, you know, The renewable, renewable energy certificates as part of the subsidies were a big part of it back then. So that whole framework changed completely between 2012 and 2015 because the renewable energy certificates for every system that we installed, and we had 1000s of these that we would get all the time that would offset the cost of the systems for our customers. These were valued at $60 as a set price, and then the government removed that framework and took it to an open market through a clearinghouse, and almost overnight, these things became worthless for a period of time, until the market adjusted and the normal supply and demand processes kicked in, but these were sitting on all the solar companies balance sheets, and their balance sheets just crashed, and nearly every solar company in the country went broke between 2012 and 2015 some people may remember that, yeah, yeah. And the subsidies were designed to come off, but not come off in a very clunky way. They did, because as the industry scaled, costs were coming down, so we didn't need the same level of subsidy. But the way they took the subsidies off was just done in a terrible way, and it just destroyed the industry virtually overnight. But. But yeah, so our board did a lot of soul searching. I had some remarkable people on my board, and we decided the economic still made sense that we would pursue it. Professor Ross garno came onto our board in 2015 and I had another chap, Raymond Spencer came onto our board in 2010 Raymond had already done extremely well with his own business globally. Was he was headquartered in Chicago with a big financial services company that had gone public. He was already technically a billionaire, but he had invested in the company that was developing the first lithium ion battery management system to enable these big grid batteries that we see these days. So we were very early into the battery technology. And then Professor Ross Garneau, who is our preeminent economics professor in Australia, based out of the Melbourne University, who advised our federal government back in 2008 and 2011 what the impact of climate change was going to be on our economy. He also initiated the Clean Energy Finance Corporation. He initiated arena, the Renewable Energy Agency. He developed our first carbon pricing mechanism. He was looking to not just be the architect of change, he wanted to be part of the change. And he was looking for a company to join. And saw our company and said, Well, you've got the people, you've got the technology. Can I go on that journey with you? Just as Raymond said, he saw the company, saw what we were doing, can I go on the journey with you? That's where I said, all these people got to see our company, heard the story, saw what we were doing, fell in love with the business. And when We said to Ross, we need you to come on board, because we to put these big batteries and solar farms and wind farms into the grid. You can't just plug them into a grid that was designed for coal and gas, because coal and gas is a constant thermal source of energy, whereas renewables are intermittent, you know. So we needed batteries to smooth that energy supply and make make it look like big solar and gas plants in the grid, but the rules had to change on how the grid operated. So it was a very complex time. But what Ross wanted to do when he joined the company, straight away, he said, We need to own both sides of the energy meter, not just the household side. So when you put solar on your house, you reduce your house's energy consumption on the household side, but you still have to buy in power from the street, from AGL or origin or one of the big retailers. Ross said, straight away, we need to be a retailer like AGL and origin and a generator, and own these big solar farms and wind farms and big batteries in the grid. So we transitioned to become a generator and retailer in 2015 and that's what we've been doing for the last 10 years. So Zen is now about the third or fourth biggest generator and retailer in the country, after AGL and origin. You don't hear so much about Zen because we don't do residential energy. We only do commercial and industrial but we supply the states with their power. The lot of the councils, like half the councils in Sydney, with their power. Lot of the big all the big mining companies, the big retailers, like your Bunnings, your office works. We supply all their energy. CSIRO, even with their Deep Space Center, we supply all their energy so and also buc gasses recently, so we're actually trying to reduce the emissions from the gas industry by all their pumping and stuff. So Zen is a very large generator and retailer, and I'm very proud of the journey that business has gone on and the challenges we've had to deal with and in 2015 when we transitioned from a generator, from a solar and battery company to being a generator and retailer was very confronting for me personally, because I had to say to the board, look, you know, they were talking about the journey going forward. And I said, Look, that's understanding the complex energy markets is not my skill set. You know, I love the maths and the science behind the solar and the batteries, but where we're going, I'm not the right person for your CEO. You know, I needed to step down. We brought in an interim CEO from AGL guy called Jeff Titus, who was fantastic. He took us through that interim period, and we now have Anthony Garneau. Ross Garneau, son is our CEO, and just doing a remarkable job and really leading the transition to clean energy in Australia. So very proud of that business. Yeah. Michael McGrath  54:28 So do you step down? Did you? Are you not exactly? Richard Turner  54:32 Yeah. I stepped down in 2015 as I was CEO for the first 12 years, and then stepped down to being innovation director and and did some other roles I've now, basically, I'm not in the business day to day at all. Haven't been since more the last five years. So just a very happy shareholder watching what they're doing at the moment. But, but again, very different business, right product, right time. Fundamental, fundamentals. In place, Michael McGrath  55:00 very different. And there's a highly regulative environment in terms of the framework and the governments involved, and that becomes very choppy. And there's a need for lobbying. God knows what? There's a very, you know, brings its own volatility, that doesn't it. Richard Turner  55:14 Yeah, so you just got to bring the right people into the company, and you've got to be, you know, an entrepreneurs biggest mistake, often is holding onto 100% of nothing, rather than having a small percentage of something huge. It's about the vision, which is entrepreneurs are great at seeing an opportunity in the market, getting it going, growing, but a company and I teach CEOs how to grow companies these days, and companies are often like children growing up. You know when, when the company is young, and it's in startup mode and initial growth mode, you're doing everything, you're validating the market, you're doing all these things. But then the company gets into rapid growth mode where you've got to have a leadership team, and you've got to be able to delegate responsibility, and you've got to have systems and procedures, and you've got to start letting go of those things, because if you don't let go, you become the bottleneck for growth in the company. And I see so many companies, particularly family businesses, get to five or 10 million in revenue and can't grow beyond that, because they just can't let go of the company. And that is the biggest barrier to growth. So yeah, you've got to create value in the company, not value in yourself. And so many people struggle with that. You know, not all entrepreneurs make it. Michael McGrath  56:33 Yeah it's interesting that we call them glass ceilings. So you look at any particular sector or vertical that we're operating in, and we we see various glass ceilings that emerge. 5 million might be one, 8 million or 10 million, and a whole bunch of businesses get stuck around those levels because of some of the reasons that you're talking about, which is the current thinking has got them to that point, and that's often the most difficult bit of the journey, often, not always, but often. And yet, that inability to put it under management systematically and get some some bigger thinking and skills, and that's a very it's got to be right size that Richard, because if you bring a corporate guy in, he wants to smother it. But if you bring anyone into entrepreneur, you end up with the same problem that got you to the glass ceiling. So it's, it's matching those skills, isn't it? And it sounds like you did a great job of that at Zen, by the way, was identifying those, those people that could, you know, move it, move it to the next level, yeah Richard Turner  57:43 For that to get to where it is. Now, I just had, we just had to bring in the right people, you know, the specialists in that area. And, yeah, I mean, I played my role, got it to where it was. And we've built an amazing leadership team, an amazing board, and, yeah, we've had people from all over the world now you know coming into our board that have run massive power companies. Michael McGrath  58:09 Yeah, look fascinating story, Richard, I'm so grateful just to let's just wrap up talking a little bit about the role of vision and values and planning in that business mode that starts, particularly that startup early stage mode. Often, I think this is under done. The need for a clear vision, the need for values, because the values won't change, the business will change. The people might check, but the values invariably, you know, a reflection of the management, this the ownership. And I think they can be really important, particularly if they're embraced, I think, and and then planning, obviously, yeah, well, Richard Turner  58:51 Let' talk about both of those things, because the vision, as I said before, just telling the story, articulating the story, talking to the media, using public relations, which is often the dark hearts of marketing. I would spend half my marketing budget on public relations, because otherwise advertising is you talking about you. Public Relations is other credible people talking about your business and the success of your business, so much value comes in other people talking about it, but to tell the story of your company, you've got to have this aspirational mission statement. You've got to be able to tell the world how you're going to change the world within your sector through your mission statement. That needs to be front and center of your business. Your vision statement is what your company is going to look like in three years time. So by 2028 we're going to be doing this, and we're going to be this company by doing these things. And yeah, so it's the whole how and what the business is going to look like in three or four years time. And the values is the culture that you set within your company. It's how the communications work internally. Externally. You. With all your stakeholders in and out of the company. You know that culture and that vision and that mission is not only important for your customers, it's critical for your employees to know the journey they're on. That's how you get them to stay with your company. Otherwise, they'll go and join another company that's got a clear vision and mission and values. So your employees, your customers, your suppliers, to get the best suppliers in the industry, they need to know the journey you're on, your financiers, your investors, stakeholders. Everyone needs to know the journey you're on. To get people to come on board and support the vision and the mission. It is so crazy critical. And then to create the mission and the vision and the values, you've got to have the business plan. And this is what so many people don't do, is take time to sit down and actually think about and I take a lot of our my growth CEOs at the moment, I take them through a process where they envision envisioning their company being 10 times the size it is now, which blows people's minds. But if you've got a $3 million business, what's it going to look like at $30 million if you've got a $20 million business, what's it going to look like at $200 million and when I say that, it is okay, not not only what is the revenue going to be? You know what that is at 10 times, what is the profit you're going to make? But what products and services are you going to be selling to? What markets? Most importantly, how are you going to be doing that? What infrastructure will you need? So in infrastructure is people, what technology, what equipment and hardware and assets, like buildings, desks, computers, warehouses, etc, and how are you going to finance it? So they're the elements of a business plan. So we do this example. This, you know, what do you look like in 10 years times? Which people really blow their mind? Sorry, not 10 times the size in five years time. And then I get them to step it back to now. And it's amazing how many people can then go, oh, wow, I can see how we can get there, you know? And, and I say, well, that's extreme, you know, that's not what you know, that sort of growth is extreme growth. Organic companies, just running a good business should be growing at about 15% per year. So I try and push companies you should be looking, when you're doing your growth plan, to look at probably 30% plus per year on strong growth and but there is no reason you can't grow a lot faster than that, and that's why I take them through that process, but you should always be doing a three year business plan of those fundamental things, again, revenue, profit, what products and services to? Who am I selling it to? How am I selling it? What infrastructure do I need, and how am I going to finance it? Those elements need to be in your three year plan, and it doesn't have to be detailed. It could be on one sheet of paper or two sides of an a four, just as long as you've got something written down and you know, and you can share that with your team and other people on how you're going to get there, but then you should always do a one year operational plan, which is the same thing, but with more clarity, because next year is what's right in front of you, is what you've got the most clarity over. And what milestones do we have to hit next year to enable us to be set up for year two and year three? But no, no business plans ever set in stone. It's it's, you know, if things don't go quite to plan or go exceed the plan, you can always change year two and three and go throughout but has to be done, because without that, you can't have a clear vision or a clear mission, and you can't tell the story to all the key stakeholders in your industry and beyond. Michael McGrath  1:03:50 I think that that ability to sit down and plan and think through in some detail and simulate on paper at least what might happen. It's so much cheaper to do that than to to launch headlong in the direction that your instincts telling you to go and then figure out when you get there that perhaps that wasn't great. So yeah, a little bit of that, bringing it down, you know, into three years and then one year, that sounds like great advice. Look, thanks for that input. Richard, that was phenomenal. You've had a fascinating career and journey and story. I know you're helping other entrepreneurs now. You're on the board, one of the boards there for coraggio in Melbourne. Just tell people what coraggio does and what you do there. Richard Turner  1:04:36 Yeah. So look, I've been doing peer to peer learning. There's two types of learning for entrepreneurs. So I think they need to be quite clear on that there's peer to peer learning, which is where you get onto a board with other CEOs that are all growing their businesses in different industries. You don't want competitive industries, because then you can't share your financials, but, but you basically sit around the board with other CEOs and or. Founders and you just you're sharing the experience of what you're going through, because the challenges of what you're going through probably the same challenges that other CEOs and founders are going through, and you share with each other how you got through those challenges, both in business and personally, because just being in business creates a lot of personal challenges. And you know, thing to be aware of is the divorce rate in entrepreneurs is about double the community divorce rate, just simply because they are so focused and often lose touch with the people that surround them, that often support them to do what they do. So need to be really careful of that. But there's peer to peer learning, which is essential. And I founded the Entrepreneurs Organization 30 years ago now in Australia, or one of the founders, and that I couldn't have achieved what I've achieved without that now, I've done a lot of talks for corasio. And then Corrado are a peer to peer organization, a big organization up and down the east coast, from Brisbane, Sydney, to Melbourne, and they've asked me, Would I chair one of their boards? And I started doing that last year. That's been very successful. They now want me to chair a second board. So we're setting up a second board of entrepreneurs. But separate to that, I also teach how to companies, how to grow through the Australian Center for Business Growth, which is actually teaching the theory of growth. A lot of the things we talked about today on how to grow, you know. So in in the peer to peer stuff, we sort of talk about current challenges that are in front of us, whereas with the Australian Center for Business Growth, we teach companies how to grow, you know, and all the stuff that talked about today. Michael McGrath  1:06:41 So look, I'll make sure that the Australian Center for Business Growth and coraggio and the details of your book are in the show notes. Richard Turner, thank you very much for joining us on The troubleshooters podcast. Until next time, I'd love to get you back on at some point. Thanks, Richard. All the best. Richard Turner  1:06:57 Thanks, Mark. Michael McGrath  1:07:02 You. So there you have it, how to start and scale and successfully exit a business, if you like, what Richard had to say. You can buy his book, The essential entrepreneur. Or you can look him up at coraggio, the peer to peer learning organization. Or you can find him at the Australian Center for Business Growth. All those details are in the show notes now, as ever, a shout out to our sponsors, Oasis Partners. If you see an exit on your horizon, speak to the team at Oasis. 500 plus deals and counting. And finally, if you like this sort of content, please share it with your friends and colleagues. Even one idea can make a huge difference, until next time. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 29 3 The Essential Entrepreneur: What it Takes to Start, Scale and Sell a Successful Business, Australia's leading guide for entrepreneurs. Richard’s LinkedIn: https://www.linkedin.com/in/rhturner/ Australian Centre for Business Growth website: https://centreforbusinessgrowth.com/people/richard-turner/ Coraggio: https://coraggio.com.au/coraggio-team/richard-turner/ Points of interest:

1. [0:01:19 - 0:02:08] Entrepreneurship Definition
2. [0:12:21 - 0:17:01] Early Business Experience
3. [0:22:22 - 0:28:19] Food Distribution Innovation
4. [0:40:10 - 0:44:39] Zen Energy Origin Story
5. [0:47:49 - 0:54:28] Solar Industry Challenges
6. [0:55:14 - 0:56:33] Entrepreneurial Growth Advice
7. [0:58:51 - 1:03:50] Business

Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:00 Welcome to the troubleshooters podcast with me, your host. Mike McGrath, so here we are, episode one of season three. We are back after a short break, and back by popular demand. That's both my mom and my niece that asked when the next one was coming out. So today's guest is Richard Turner. He's an experienced entrepreneur with a wonderful track record of starting and scaling businesses. Sit back as I get Richard to unpack his 40 year journey in business. So Richard Turner, welcome to the troubleshooters podcast. Yep. Thanks, Mike. Looking forward to it now. You are the entrepreneurs. Entrepreneur, if you don't mind me saying, in fact, not only are you an entrepreneur, but you're an award winning entrepreneur. And my understanding is you're Entrepreneur of the Year, not just once, but twice. Is that the case? Richard Turner  00:57 Well, South Australian entrepreneur of the year, twice, 14 years apart, for two different companies. But Australian entrepreneur of the year in 2010 Richard. Michael McGrath  01:05 That's very impressive. Now, the French came up with the word entrepreneur, right? Like to complicate things, I think the French, but, but what do you how do you describe an entrepreneur? Richard Turner  01:19 I think someone who's missing that risk gene, someone who's just willing to give something a crack and make a better life for themselves? Yes, yeah, that's something I've done all my life. You know, I've probably never had a real job. It's Michael McGrath  01:34 Interesting that, isn't it? That sort of risk profile, there's a higher, higher risk tolerance, I think in an entrepreneur Absolutely, Richard Turner  01:43 Absolutely, it's all about taking a risk, and it's about trying to get a better return for yourself than what you would get elsewhere if you're working for someone or investing or doing something. It's about backing yourself in with an idea that you validate against a potential market. You know, there's some demand. The timing is right, and you rally the courage to give it a go. Michael McGrath  02:08 Yes. So, I mean, on that point right, are entrepreneurs born, or can we make them? Richard Turner  02:17 Look I think there's a bit of both. You know, we see tremendous entrepreneurs that come from the most unlikely backgrounds, immigrants coming into the country, that are very poor, that are just so determined to make a better life for themselves and their families. They find mentors. It's about largely, it's about having mentors. You know, whether it's inside the family, if you've come from a business family, quite often, you have mentors inside the family. You sort of seen businesses start and grow, or you haven't. And then if you haven't had that experience, you've got to find those mentors and and it's amazing how giving people are. When you go and approach people, you find someone in an industry that you're interested in, and you somehow contact their Office or Office, or get through to them and ask if you can have a coffee or a talk with them. And it's amazing how giving a lot of people are. I mean, you'll always find those who aren't, but it's just a matter of persistence, and you get a chance to go and have a coffee with someone, ask them. You might find someone who's willing to be a bit of a mentor for you and guide you through. Or maybe it's a it's a group of people with different skills that help guide you through, but people find ways and means of doing it. As I said, there's entrepreneurs that come from the most unlikely backgrounds that are now millionaires or billionaires that just yeah, just determine people Yeah. I mean in terms of the being born, yes, a lot of entrepreneurs are probably on the spectrum. They're very focused people who who can apply themselves. So there's certainly genes. I mean, you look at the most well known entrepreneurs around the world, the Mark Zuckerbergs, the Elon Musk, the Bill Gates. I mean, they're obviously very well, they're on the spectrum, and and most are. And I would, I'm sure I am too, but it's just that ability to focus and be determined and probably not be so scared of the risk involved. But that all comes down to planning as well, making sure you're taking educated risks, not just doing something that there's no plan or no research done. I mean, I see so many companies develop products out there that they think is a good idea themselves, and they take it to market only to five there's no customer for that product. And I've seen people spend hundreds of 1000s of dollars developing things that there's no market for. So you've got to do the practical things. You've got to have the fundamentals in place, which we can talk about today. Michael McGrath  04:40 Look, I mean, I think you're right. There's something about our backgrounds. Perhaps there's something about what happened when we grew up, who was around, maybe who inspired us, maybe what we read. But certainly, there are some fundamentals that we can apply to that. So you're not born an entrepreneur insofar as. Know, you know everything about business. There's, there's some fundamentals you've got to come in touch with. You're either going to come in touch with them the hard way or the easy way, but you are going to come in touch with them, that's for sure. I mean, we came of age at a similar time. I left school in 1980 and I think you graduated with a BA in business in 84is that right? Richard Turner  05:20 Yeah, yeah. I did my year 12 and 81 so I'm just okay. Michael McGrath  05:23 So it was a very different world back then. And maybe we can, we can give the listeners today a little bit of the perspective around the fact we've had four decades between us Richard Turner  05:33 It's interesting looking back on that experience, because Yes, times are different, but the fundamentals don't change. I mean, I chair two boards of CEOs. I've mentored hundreds of people. I've been the entrepreneur in residence at UniSA recently. So I've mentored and seen hundreds of recent companies coming through, and the things that caused them to succeed and the things that caused them to fail are the same fundamentals. They don't change. In business, no matter how much technology progresses and things progress, the fundamentals don't change Michael McGrath  06:08 No, no, you're right. I mean, essentially, businesses is an attempt to solve a problem, whether it's a product or a service or both. Fundamentally, what's the problem with addressing and you know, is the, is there an economic, viable solution to bring that to the market, and will people pay for that, that problem being solved? And I think that, I mean, it's rarely couched in those terms, but effectively, we're, we're solving problems really, yeah, so look, on that subject, I want to mention your book. So you've written a book called The essential entrepreneur, which I'm, as I mentioned earlier, I'm a third of the way through, and it's terrific. I really think it's, it's great. And I'm a bit of a reader. And effectively, I mean, you went to university. I went to University of life, I'm afraid. And the only thing that set me apart and enabled me to get the education I didn't really get at school in a secondary modern comprehensive system in the 70s was reading. So somehow, for some inexplicable reason, at age 18, why I didn't read at school is still a mystery to me. I mean, I got a Grade B in English Literature having left Huckleberry Finn halfway down the Mississippi not not knowing what, how that story ended, because I hated reading. But for some reason, 18, I started to read mostly non fiction, lots of autobiographies. Because what became clear to me is that in the space of a week, I could get distilled 20 or 30 years of experience, and that just seemed like a really good use of time to me. So your book, which I'm enjoying a lot, talks about how you start a business, how you scale a business, and ultimately, how you sell a business. And what I really like about it is, right off the bat, you started talking about other entrepreneurs outside. I mean, you've got great experience yourself. You've started and scaled and exited four pretty large enterprises, which is pretty unusual in itself, but you also tapped into some of the entrepreneurs, some other very successful entrepreneurs that you knew. So tell us about the book and the genesis of that, and what you know who it's aimed at, because I really do. I really do many when I say I'm enjoying it. Richard Turner  08:31 So yeah, well, I've written, written it in very basic language, because I really wanted to be to be read by anyone in anyone who's had no education, who's just got an idea or a good idea, we all stand around the barbecue on weekends and talk about how we're going to solve the world's problems, but very few people wake up the next morning and do anything about it. So this is really for everyone to read and understand. I've got rid of all the jargon out of the book. And the other reason I wrote it is there's very little entrepreneurial books that come out of Australia. Most of the stuff we get comes from the US or other cultures where the legal frameworks different, the accounting principles are different, the whole culture of doing business is different. I see a lot of young companies coming through, and young people coming through that have read literature or read books on entrepreneurship out of different countries. And I have to sit them down and say, Look, unfortunately, you cannot do that in Australia. It's actually illegal. So yeah, or the market won't accept it. It won't Yeah, these things don't work here. You need to, you need to understand how the Australian market works, and that's really a big reason as to why I wrote this book. Michael McGrath  09:50 Yeah. I mean that that cultural variance is important, isn't it? I've done business in a few places around the world. For the more discerning listener, you'll realize I wasn't from Australia originally. Yeah, but I did business in China. I had a wholly owned foreign enterprise there with another couple of guys, and I literally spent two years getting my ass kicked in China because I just thought that, you know, we could write contracts, write agreements, shake hands and get on with it. And I realized that there's a completely different legal system there, and there probably isn't really much of a commercial legal system, as we would recognize. So I was signing these wonderful agreements, sticking in a drawer, thinking that that I'd done a good job, but actually with largely unenforceable. And I mean, that's one of a number of cultural own goals that you know I was I was engaged, and eventually I realized that I was going to have to do things differently, and I was going to have to slow down. It was much more personal relationship stuff. What would have taken me three hours in London was was going to take three days, and it was a dance that I had to do. Is just one example of the cultural variance. And it is a big mistake to think that the US is, again, I've done business in the US, and they're extremely entrepreneurial as a as a country. It's not an accident. They're the number one. But what's interesting to me about the Americans is they're so bloody optimistic. So you come away from a conversation American businessman, you think that that you know you're going to do business together, everything is going to be great. They're going to buy, what, you've got to sell, and then you never hear from them again. Richard Turner  11:24 No, yeah. I mean, still, and you can liken it to humor. You know, we're an English colony. We understand the English humor probably a lot better than we do the American humor. So you can, and there's very slapstick over there. We're just a different culture in that way. So you can liken that to business. We're just different and and where you say they're very bullish and very optimistic in the US, and you get very excited coming away from conversations in the US. And I've spoken to many companies that have done that, and same experience that really you walk away thinking, I've got this I've got this contract, and you know this is going to work, and you never hear from them again. It's just, they're very positive, optimistic people. But it's, it's the culture is different, the Connect is different. Michael McGrath  12:07 So coming back to that, your journey for a minute. So you came from a pretty entrepreneurial family. Your father was in business in in a in the kind of meat processing world. Tell us a little bit about what that was like growing up with that, yeah. Richard Turner  12:21 So I was the youngest of three boys. And look, growing up in a business family, so dad had this company called Holbrook Meats back in the, probably the late 60s, early 70s. That was, was very successful, started pretty much from the dining room table. So I remember that from the very early days. And during primary school, I'd, you know, we would all be sent in there, and, you know, washing the walls and cleaning the drains and packing the offal, doing all the great jobs. But as much as you look back on that, and you think, Geez, that was like child slave labor, like most family businesses, but you think, wow, I learned the value of hard work. I learned the value of money. And as you could imagine, in a workplace like that, the melting pot of cultures that that would be there. I learned at a very young age how to have a conversation with pretty much everyone, and playing table tennis at lunchtime. And it was, it was such a tremendous opportunity to grow up in a business like that. And then so I was, as I said, the youngest of three boys, but I was also the first luckily enough to have the chance to go to university. So my two older brothers got, you know, sucked into the business at a younger age, and they went straight into into work, but I had the chance to go and do a bachelor of business back in the early 80s at University of South Australia, or even before it was the University of South Australia was the Institute of Technology. But technology back then, and I was one of the first to go through, one of the first, first cohorts to go through to actually learn computer coding, which was quite remarkable. And yeah, after, after doing that on punch cards at school, to start coding on a on a screen and keyboard, and at work at that time, this company was sort of in the early 80s, growing rapidly. And back in those days, for those listeners who were old enough to remember, we had an Old Wang computer with a five inch floppy drive that just did our accounts payable and accounts receivable, and we'd just purchased this big Hewlett Packard 3000 that was in a full room, air conditioned room, and people will just be awestruck with this now, but the CPU was the size of a washing machine. We had two, 256 megabyte disk drives that were the size of suitcases. You know, the tape big reel to reel tape drives, the long printers and my job we it was to come in and take control of this machine and start automating all the big processes within the business. And at a young age, just, you know, in university, learning, coding, completing that course and coming into the business, I thought, Okay, I've got to make this machine work for the business. Business. So I need to find what are the biggest, most complex processes we do in this business that I can automate. And our livestock buying process or system was, you know, that drove our cost of goods for the business. And the way that worked at that point was completely manual. We had lots of cattle buyers all around the country buying 1000s of head of cattle a week, writing all the cost information and where they were from, the breeds and who bought them all on scrappy bits of paper that ended up in the office that had to be manually tallied up, that took sometimes weeks, and yet, that was our cost of goods. So our sales people often were working in the dark. So I thought, Okay, I need to try and develop a system here where our cattle buyers could key in that information directly, and we could have it available almost immediately. But you could imagine the cultural change that had to happen to get our cattle buyers around the country to start using computers and keying this information in was a huge challenge, but I persisted with it, developed the system, got it happening, and what I remember is just the impact it had, not only on the company, but on the industry. It completely disrupted the industry. It catapulted the business to the top of the tree. And as a young lad, still thinking this, this is quite remarkable. You know, it really lit a fire inside of me that what I had done, I had actually disrupted an industry. And I thought, wow, you know, that's what I want to do for the rest of my life, is go into industries and change the way those industries work. And anyway, that company became a public company in 1986 and and then two of our cattle buyers bought the export division out of the public company. Continued it on, and that company is now known as Thomas foods International. It's a multi billion dollar business here in Australia and but to see that come from, again, pretty much the dining room table, through to a public company through to what now? Michael McGrath  17:01 Yeah, it's interesting. I mean that. I mean you just articulated, really, the start of the digital revolution. I mean that, yes, yeah, that early 80s period. I mean, I got into business in 86 that period was PC started turning up on desks. Well, Richard Turner  17:18 We had the very first Macintoshes doing word processing. Yeah, back then in the early 80s, Michael McGrath  17:24 I remember when we got our first computer, we got it from all football club because they'd bought it and that no one knew how to work it. So my uncle at the time, stuck it in his car and drove it to us. And then we got Tony, one of the lads in accounts, and said, Can you see what you can do with that, and away you went. Richard Turner  17:43 I remember going into the Powerhouse Museum in Sydney a few years ago, and some of the early computers we used to use are in the museum. And I'd say to my wife, I can't believe that I'm going to the museum to see stuff that I grew up with Speaker 1  17:54 I mean, but that 40 year journey has been incredible, and in terms of the transformation that digital revolution, which is, I mean, for those Gen Z is among us, who we probably put to sleep by now, let's, let's just chat about AI for a second. I mean, that we've now got a new frontier opening up, effectively, Richard Turner  18:15 Unbelievable. Yeah, the opportunity for AI in terms of assisting the productivity of our people. You know, it shouldn't be a threat to jobs, but what it should enable our businesses to do is be five to 10 times more productive. You know, every individual within that business can do their research in an instant, get jobs done in an instant. You know whether it's presentations or any form of information gathering. You've got it at your fingertips, and you can use it immediately, and you can even go to the point of preparing those presentations or or whatever you need to do. So the the application of AI coming up is extraordinary, something we certainly didn't have the benefit of, yeah, any more than a few years ago, Michael McGrath  19:04 There's certainly a lot of fear. And, you know, I mean, the media love a bad news story. I mean, you know, if they can make it catastrophic, they will, but effectively, I'm definitely on the half glass, half full side of the equation around AI, we're beginning to see some great utility units. And, you know, we don't see it taking over the world, frankly, and but we do see it being able to do lots of things that we just couldn't do. I mean, the whole language model, the ability to interrogate information in a in a much more meaningful way than than we were bound effectively by, you know, objects and and, you know, the way information was stored. Now, all of a sudden, we can start through the language models just interrogating our own data and getting more intelligence from it. Richard Turner  19:58 Yeah, well, in terms of fund. Fundamentals we were talking about before. You know the big fundamental, once you get past starting a business and validating a business and validating your products, and you've got demand, and your business starts to grow, and if you've got something that is hot in the market, like with my last company, Zen energy, we basically pioneered the solar industry in Australia back in the early 2000s and we knew we had a hot product, we had to create a platform for rapid growth, which I learned how to do in my previous company, Regency food, which we're sort of getting a bit out of order, but developing that platform for growth. Because if someone asked me, What's the key to success in business, it's consistency. You've got to be consistent in everything you do, so the customer experience is the same, no matter who they engage with or what channel they engage with, with your company. And to be able to create a platform for growth that is consistent, you need to create processes and procedures and utilizing a quality management system, training your staff. But the application of AI to assist in that process is tremendous, you know. But in terms of training, like all our customer facing staff is in energy, one of the biggest recruits I made for that company was nothing to do with energy. He was the franchise manager for Baker's delight, you know, but I he came into the business, and for hours after work each day, we would role play with all our customer facing staff, the conversations we'd have, the terminology they'd use, the language they would use. So the customer conversation was the same with every customer that connected with the company, so that that consistency in terms of what you expect from a company is is absolutely critical. Michael McGrath  21:47 You know, I look at your sort of background and I go, wow, you know, you skip past that. But to get into that energy disruptive area so early, I mean, if I look what's happened since then with the carbon credit schemes and goodness knows what, and, yeah, I mean that that was, that was very early in that area, and, and, you know, to make a success of that. And did you get your timing right? Were you too early? What? What? What enabled you to see that when you saw it. Richard Turner  22:22 Yeah, well, the timing is everything in business, and I'll just lead into the Zen energy story. I'll just quickly give a quick overview of the second business, because after the meat processing business, Holbrook Meats, which became Thomas foods, my brother and I went and set up a food distribution company called Regency food services, which was a journey of if you had a restaurant or a caterer or a hotel or a hospitality outlet, in those days, you had probably 20 or 30 suppliers coming in the back door from all over the place, largely based on temperature zones of the products required. So you had frozen food suppliers, you had grocery suppliers, you had packaging suppliers, you had confectionery, chilled goods, small goods, you know, you had supplies for everything. The big trend that we saw coming in from overseas was from the US in particular, was around being able to provide all of that from one supplier. So a bit like Coles or Woolworths are now, but in food service, wholesale size quantities, and being able to set up a complex multi temperature warehouse and have vehicles that were multi temperature zone that we could deliver this product. So we started this company. We grew this company very rapidly, we did about five big innovations and disruptions in the industry, which I'll get to later in the conversation, but completely disrupted that industry to the point where by 1998 and 1999 we'd won Australian food service distributor of the year twice in a row. And when? When Bidvest, and you'll see the bid food trucks driving around all capital cities. Now, when Bidvest, the parent company, which is a South African company, went to the UK in the 90s, they basically rationalized the food service distribution business in the UK, bought the biggest food distributors, and then created the first national company, and then brought that model to Australia. So when they came to Australia, they were looking for a company that was who they deem to be like the model business they wanted to base their Australian business on. And saw our company, and we even had the same phone number as what they had in the UK. It was like one three food or one 300 food or something. And they said, You're the company that made no secret about it. You're the company we want to buy in Australia. And then they approached us five times in 1999 to buy our company. And my brother, Greg and I said, Well, look, we're both pretty young. Still. We're not really ready to sell. And they just kept coming back. And you know, it got to a got to a silly. Account, and we said, okay, maybe it's time to go surfing or do something else. So, so we sold that business, but, but the young, and I will say, the young girl I employed as my receptionist when she was 20, is now the CEO of that multi billion dollar business. And a very good lesson there in employing people, that when you employ people. You should always envisage them. Could they be part of my leadership team? Can they go two or three levels up? Michael McGrath  25:27 She's a CEO of Australia, isn't she? For bidves. That's a 2.7 Richard Turner  25:31 It has been for 10 or 15 years now, and is a real gun. But yeah, it started as a receptionist. Michael McGrath  25:38 I mean, I mean, just to put that in context, bidves are $2.7 billion organization in Australia now. I mean, it's, that's pretty impressive, isn't it? Yeah, Richard Turner  25:46 Yep. Well, that's that started, you know. And, I mean, I can take you through some of the innovations we did there that might be good for your listeners to hear. Because, you know, a lot of people think of innovation or disruption as being technology based. It it doesn't always come from technology. And, in fact, none of our innovations in that industry came through technology. So the second thing we did there was, I said to my brother one day, you know, we're a hospitality business. We're supplying hospitality outlets, you know, restaurants and caterers and hotels, and we were working almost opposite hours of the clock. So we started off that business running traditional warehouse hours from sort of early morning, four or five in the morning through till sort of early afternoon, mid afternoon, and we'd shut down, but our but our customers were working from lunchtime through till 10 or 11 o'clock at night. And and the chefs who would order the food would just pick up the phone and they get an answering machine. Chefs are grumpy people at the best of times, and they they would say, You know what I freaking want, and let's slam the phone down. And of course, we'd get the order wrong, and and we have to send out couriers the next day, and that would cost us money, and that would blow the profit on the orders. And we thought, well, this we need to think of how we can do things differently here to match the operating times of our customers. So we embarked on setting up the first 24 hour distribution center in Australia, and also we commenced that with running three tele sales teams from early morning right through to about 10 or 11 o'clock at night so we could talk to our customers in the takeaways, in the restaurants, in the in the hotels, talk to our chefs who order the food. We've developed a relationship with them. We confirmed, confirmed the orders with them. Through our quality management system, we got the orders right. Warehouse staff came in at midnight, our computer systems, we were all always on the leading edge of technology, or probably bleeding edge of technology, but we printed the picking sheets per vehicle, where they could do one lap of the warehouse pick the stock. They went into a staging area. Big telescopic loaders went into the truck. We had the trucks loaded and out the door by four o'clock. So we were last to take orders. We spoke to our customers, we built a relationship. We got the orders right. We were first on the road in the morning and first to deliver. So who do you think got the business and the company like that? And I remember that year getting the Qantas business, getting the Olympic Dam business. You know, all the big accounts in Australia were starting to come to us. Michael McGrath  28:19 I mean, it sounds like common sense, doesn't it? But I suppose that's the trouble with common sense. It's not that common often. Richard Turner  28:25 It's just intensely listening to your customer. What are we not doing? What are the latent needs that you need? How we can how can we make your business better? And you know, so by having one key delivery coming in the back door rather than 20 made a huge difference to their business and the convenience, so the business took off. The next thing you have to do is always ask yourself, What business Am I in? And again, these are the fundamentals. Like, when you get a business to that sort of size, often you're running multiple businesses within a business. So when I say that we were running we're very good at sales. We were very good at purchasing. We were very good at managing this complex warehouse. But one of the big problems, and was always a distraction for us, was managing this big fleet of by that time, we had about 14 trucks on the road. Drivers would be sick. Trucks would break down. Air conditioning units had broke down. The trucks had to be cleaned and maintained and and as employees, these drivers only seem to be able to do about 20 or 25 deliveries a day. Yep. But there was always a problem, something going on that would take my brother and I away from where we added the most value to the business, to do stuff that didn't add value to the business. We were just fixing up problems that should, you know, you shouldn't need to keep doing. But these things kept happening. So we asked ourselves, okay, how can we fix this? Is there a way maybe the owner, the drivers, could take ownership of their rounds? You know? How would that work? So we, we looked at the value of product on average. Which they'd take out. We calculated that as a percentage of what the drivers would cost us in salary, plus their own costs and insurance cost to the trucks, etc. And I remember this figure because it was burned into my head. It was 4.75% was what we had to pay them to give them a good salary, and all the the extra cost they needed to run their trucks. And of course, if you're going to have that conversation with your staff, you know you're going to get a very wary response from them. And of course we did, but you've only got to get one or two to say, yeah, we'll give that a go, as long as we can go back to the old way. And we did that. We got a couple to say, yep, we'll give it a go. And these guys turned into Supermen overnight. They were doing 50 deliveries a day. They were rotating the stock in the customers freezers. They were upselling the customers on new stock lines. Our customers basically became their customers. Their trucks were always the best looking trucks on the road. We'd have customers ring us up saying what the hell's got into your drivers. They are incredible. And of course, the company just took off. So, you know, always ask yourself, What business Am I in? Where am I adding the most value to this business? What am I doing that I shouldn't be doing? And make those clear cut decisions coming back to fundamentals. Michael McGrath  31:14 I mean, it's interesting. Is it that, that empowerment, Richard, that sort of idea, that we can find some kind of win win, just that idea of, how can we both do better, right? That's, that's a very innovative thought, isn't it? Really? Yeah, we're all Richard Turner  31:32 In business because there's something we know that we can bring to the market personally that creates value, and if we start doing all these other things that take us away from that. We start devaluing our own business. And so that was a key one. Then another thing, another thing towards the end of the business that was very innovative was, as I said, the people who order the food are the chefs and the people in the kitchen. But back in the late 90s, there was a cafe explosion, and, you know, street dining and cafe started going everywhere and and there was a real shortage of hospitality staff, much like there is now. And food sales staff who were going into these places and selling were being approached by the managers of these venues saying, Oh, can you go and talk to the chef down the road? I want him to work for me. Or can you go and talk to that food and beer? Food and beverage manager? I want him to work for me. And so us food sales staff were being used like recruitment people by play art customers. And this came up at a sales meeting, and I remember thinking, Oh, maybe the timing's right to provide a flexible workforce for our customers and set up a hospitality staffing agency. And we had a young woman at the time, Christy. Her name was that was helping us recruit our own staff, and I knew she had a background in hospitality, and I said to Christy one day, you know, I think there's an opportunity for a hospitality staffing agency. What do you think? If you think it's the timing's right as a good idea, let's set up Regency staffing, and you run it for us. And she came back in a couple of days and said, Yep, I think you're right. We did it, and she ran it, and I think we did two or $3 million in staff placements that year, but also had 300 chefs working for us, including 10 shifts in a Qantas and but the thing that we didn't actually plan on, you know, the idea was to create a flexible workforce for our customers. But who orders the food? The chefs. Now, if we owned the chefs, who were they going to order the food from? So we created this circular economy within our own industry, which was incredible. So, yeah, all these innovations just completely set us apart. And the companies, when we started the business that we aspired to be as good as we thought, Oh, we could ever be as good as them? That would be amazing. We surpassed those companies in two or three years, and we were just in clear air, doing things that no one had ever dreamt of changing the industry, making it really hard for people to catch us. And of course, we ended up being the target as Yeah, and being very public about the journey, being very public about the journey, is something I always tell young entrepreneurs, because I get people saying to me, Oh, we want to fly under the radar. We don't want to be seen or noticed. And I said, Well, that's great, until you fall off the radar. You try and find investors and try and find staff when no one knows who you are and what you're doing, and that's why most people can't find staff. They're not they're not good about telling their story to the media, being public about their successes, their rewards, their recognition, and giving people and being very clear on the vision again. I come back to your Elon Musks and your Mark Zuckerbergs and your Bill Gates is, I mean, they're half crazy people, but it's half crazy people that change the world. And it's, you never not know what those guys are doing. You know, they're very they're talking to the media all the time. They're envisioned. What the world's going to look like this is, this is where we're going. People get a chance to fall in love with these businesses, and they're just an example, yeah? I mean, no, no, I think, yeah, as a local example. You mean I, I interviewed Flavia Tata Nadi for the book, who founded fleet space, which is Australia's leading space company. I mean, her mission is to put a fleet of satellites around the Earth, Moon and Mars for mineral exploration. So what young kid's not going to want to be a part of that company? It's just an attraction. And what investors are not going to want to be a part of that business going forward? And for my own companies, we've never had to look for staff. They've been knocking on our door because people want to work for us. We've never had to find investors because people were knocking on our doors wanting to buy the company and but you've got to be very public. Someone's got to be, as I talk about these days, someone's got to be the Mick Jagger in your business, and get out there and dance and talk to the media and talk to the public and be very clear on what, where this company is going, what we're going what we're going to look like in a few years time, where the market's going, and what we're doing. Michael McGrath  36:04 So it's interesting. One of the examples you use in your book was The Haigh Chocolatier company. I think they're fifth generation, yes, yeah. So in your research there, what, what is it about a business that goes four or five generations? What? What? What was the essence and the fundamentals there that allowed that longevity. Richard Turner  36:22 Yeah, look, with multi generational businesses, the fundamentals still don't change. Like in talking to Simon Hague, who's current fourth generation owner, and Simon and his brother Alistair are joint managing directors, and they're in the process of retiring now and and and then the fifth generation. You know, there's no one standing up looking like the next, next owner at this stage, because some of them are still quite young. But you know, their board is managing that that transition. However, going back over the previous four generations, every generation of that family has done something unique and entrepreneurial to give that company new life and grow the business. So the company, in the first couple of generations was were doing very basic, low quality chocolate for the armed forces, you know, in the early wars. And it wasn't till the third generation, John Haig that went over to Austria, and I think did work with the Lindt family over there, and taught the children how to speak English, in exchange for learning how to make chocolate and brought and also in that process and working in the factory, learned where all the good cocoa beans were coming from, learnt the supply chain and sources, and brought that experience back to Australia and really reinvented The Hague's chocolate making process. He also went to the US and learned from the US retailers how to retail confectionery properly and between the making of quality chocolate and developing a retail concept, that was a huge change for the business, so you know, and that was in the third generation. And then Alistair and Simon have taken it a step further, expanding that business, taking it across Australia, continuing to develop the retail storefronts, continuing to develop and scale the manufacturing and distribution process and but even Simon said himself, he read my book and he said, Oh, that distribution thing, we need to consider that, because our Special, our speciality is making chocolate and running retail distribution is something we need to think about as well, you know. So it's what what are you good at? And what are you potentially is a distraction Michael McGrath  38:50 That brings out an important point around took me a while, but I eventually got the hang of talking to competitors, not in an adversarial way, but just in a kind of humble what can we learn? What can we share? And I find small businesses are reluctant to do that, but it's been such a rich source of information for me to just speak to others and tell them who I am and what we're doing, and ask them how things they're finding things. And there's been an incredible explosion of insight that's come to me, particularly when every five years I'm moving to a new area, it's just kind of the way I'm wired. And the fastest way to get across it is to speak to others who've been doing it for ages. And you know, you look at what they're doing well, and you look at perhaps, what they're not doing so well. And you know, you mentioned that. I mean, it's quite humbling, you know, for for the Hague family to go and spend time talking to a competitor in Switzerland, for them to go to the US and figure out what they were doing well, in retail there, that's and then bring that back and harness it, you know, leverage it. It's good and so. So coming out of food, then that's a big jump in. In terms of sector to move into Zen energy. And that's what was my question earlier, was, you know what was going on there? Because that was extremely ahead of its time. Richard Turner  40:10 I get asked all the time, how did you go from food to distribution to energy and and it was a simple story. I was just one night playing with the kids in the backyard, in the cubby house, and the sun was going down, and they wanted to put a little light and a little radio in the cubby house, and we had no power at the back of the yard. And this was early 2000s like about 2003 and I said, Okay, jump in the jump of the car. We'll go down the hobby shop and we'll see what we can find. Thinking I was going to come back with a car battery, 12 volt battery or something. Can? I was just going to power it from that. And anyway, I so this is before there was any solar industry or any commercial solar installers at all. So I found this little panel in the hobby shop, and I said to the guy, what's that do? And he said, Oh, that's a solar panel. And I said, oh, so what does that do? And I enjoyed maths and physics at school, so I was quite intrigued. And he said that converts sunlight to electricity. And I said, Ah, that's interesting. So I said, could that charge this battery over here, this 12 volt battery? And he said, yeah, if you matched it up. And then he wrote Ohms law on the whiteboard, or what's equals volts times amps. And so we we started matching the solar panel to the battery, and we got this little regulator and inverter, and this the cable and the switch gear and all that had to be matched as well, because it had to be proper DC cable. And other, you know, all the switch gear had to match. And brought all this home, and had a lot of fun putting it together with the kids, and we got this cubby house system working, and the battery never went flat, and it was fantastic. And my father in law was a senior electrician, and I said to Peter, I said, Can you see any technical barriers in this powering a house? And he said, No. He said, You might there'd be a lot of regulatory barriers, but the I can't see any actual technical barriers in scaling the components. So that was enough for me. And I thought, Okay, I'll start just researching around the world in who's who could potentially make these things. And there was a company in Germany called SMA that had just come out of the railway sector and made these big inverters for the railway yards. And they just started making these small inverters, though, that I could use in the home. And then I found a company in China called et solar that were an very early solar panel manufacturer had one production line started the same year. We started in 2004 and they were always lined up making these little solar panels, hand making them. So I went and met with the the chairman over there. And it was funny, we had a young, three month old baby at the time and and a Caucasian baby in the middle of China back then. Was a real novelty. You know, everyone would have their picture taken the baby. So it was like an open door to get to the get to the chairman straight away, and had this conversation with them. And I said, Look, I want to create a matching solar panel to these inverters in Germany, so and I want to brand the whole thing as a integrated system. Because the challenge we had if I was going to take this to market. And at that time, no one knew what a solar panel did, and no one knew what an inverter did. We all know that now, but back then was a different time, so I thought the only way I can take this to market where people needed to trust the brand. So the brand was really important, and they needed to trust what the system was going to do. So we took it to market on a very simple proposition, that this would power from a quarter of the average home to all of the average home. We came up with this brand called Zen. So Zen was an acronym back then for zero energy. Was about balancing generation and demand and the mission statement in those early days was to show our customers how to live free in a zero energy environment. So what we were selling weren't bits and pieces, weren't solar panels and converters and cables and switch gear. It was the whole concept of having energy independence at a time when no one could ever conceive you could ever be energy independent. So we introduced this whole thing of energy independence that people just fell in love with. And it was just at a time when John Howard, who was prime minister, was starting to talk about climate change. We were reading about climate change in the newspapers. Michael McGrath  44:39 So this is 2004 Richard Richard Turner  44:42 Yeah just Yeah. Starting to there was talk of the first subsidies for conserving energy in the home. And timing was perfect. So, but I thought, I can't sell these solar panels and inverters and bits and pieces. So I put it all together in a. System package called a Zen home energy system. So we knew we were going to be be very disruptive in the market. And if you're going to do something different and disrupt any market, whatever you're doing given a new name, you know it's the quickest and easiest way to cut through. So we coined this term home energy back then. You know, it's quite ubiquitous. Now, you hear Home Energy mentioned a lot, but we started that terminology back in 2004 and so we released this system as the Zen home energy system. Didn't want to call it a solar system or a business, a solar company, because we wanted to keep the door open for other forms of energy that we could, we could tap into, but we launched it as the Zen home energy system. People fell in love with it. The business went from 1 million to 5 million to 20 million to 70 million. Yeah, in the first four years, and then just kept going. And it was just a remarkable journey, and everything we learned in those previous businesses about developing a platform to enable rapid growth we put into the last business from day one. So we created all those systems, procedures, everything from day one, so we knew we could scale consistently. We developed a positive cash flow model. Cash flow is critical when you're starting a business, so you want to be cash positive or cash neutral, at least not cash negative. So which most businesses are, by the way, so cash negative is when you incur the costs before you get the money come in. So most people have 14 days credit or 30 days credit before they get paid, but you've already paid your staff and paid your wages, so you have to find money to make those payments. So but because this was such a hot, hot industry, and people were prepared to pay upfront or pay a deposit for the system that could fund our supply chain, the more we sold, the more cash we had in the bank. So we were a cash positive company, and we won the fastest growing company in South Australia two years in a row, which they said was technically impossible. I don't think anyone's ever done it since, but we're growing at a rate of 437% for on average over four years. We maintain that growth for four years was supposed to be impossible. Michael McGrath  47:22 So, Richard, what were you charging? You know, back in the day early on, for those systems, what was a household paying for you for the system? Richard Turner  7:30 I think some of the most popular systems were around the sort of $15,000 mark. You know, they were there. They cost a lot more, and they were a lot smaller systems, but they did the job we had. We had much bigger feed in tariffs then. So any surplus energy you got paid a lot more money for. So the economic still stacked up. You know, we'll Michael McGrath  47:49 So still get so these would have been early adopters. They would have these would have been people who were nuanced around environment. And, yeah, that's interesting, Richard Turner  47:58 Largely retirees, who are retiring who didn't have future income and wanted to invest their superannuation in something that could make them self sufficient. So it just, it just was the perfect timing for that market to produce that product. However, that journey wasn't without its problems, you know, and we should talk about the problems that we had, because it was, you know, we were always up against the fossil fuel companies, you know, the the old energy producers that really didn't want to see this technology take off, who were continually lobbying the government to change subsidies and change the framework and, you know, The renewable, renewable energy certificates as part of the subsidies were a big part of it back then. So that whole framework changed completely between 2012 and 2015 because the renewable energy certificates for every system that we installed, and we had 1000s of these that we would get all the time that would offset the cost of the systems for our customers. These were valued at $60 as a set price, and then the government removed that framework and took it to an open market through a clearinghouse, and almost overnight, these things became worthless for a period of time, until the market adjusted and the normal supply and demand processes kicked in, but these were sitting on all the solar companies balance sheets, and their balance sheets just crashed, and nearly every solar company in the country went broke between 2012 and 2015 some people may remember that, yeah, yeah. And the subsidies were designed to come off, but not come off in a very clunky way. They did, because as the industry scaled, costs were coming down, so we didn't need the same level of subsidy. But the way they took the subsidies off was just done in a terrible way, and it just destroyed the industry virtually overnight. But. But yeah, so our board did a lot of soul searching. I had some remarkable people on my board, and we decided the economic still made sense that we would pursue it. Professor Ross garno came onto our board in 2015 and I had another chap, Raymond Spencer came onto our board in 2010 Raymond had already done extremely well with his own business globally. Was he was headquartered in Chicago with a big financial services company that had gone public. He was already technically a billionaire, but he had invested in the company that was developing the first lithium ion battery management system to enable these big grid batteries that we see these days. So we were very early into the battery technology. And then Professor Ross Garneau, who is our preeminent economics professor in Australia, based out of the Melbourne University, who advised our federal government back in 2008 and 2011 what the impact of climate change was going to be on our economy. He also initiated the Clean Energy Finance Corporation. He initiated arena, the Renewable Energy Agency. He developed our first carbon pricing mechanism. He was looking to not just be the architect of change, he wanted to be part of the change. And he was looking for a company to join. And saw our company and said, Well, you've got the people, you've got the technology. Can I go on that journey with you? Just as Raymond said, he saw the company, saw what we were doing, can I go on the journey with you? That's where I said, all these people got to see our company, heard the story, saw what we were doing, fell in love with the business. And when We said to Ross, we need you to come on board, because we to put these big batteries and solar farms and wind farms into the grid. You can't just plug them into a grid that was designed for coal and gas, because coal and gas is a constant thermal source of energy, whereas renewables are intermittent, you know. So we needed batteries to smooth that energy supply and make make it look like big solar and gas plants in the grid, but the rules had to change on how the grid operated. So it was a very complex time. But what Ross wanted to do when he joined the company, straight away, he said, We need to own both sides of the energy meter, not just the household side. So when you put solar on your house, you reduce your house's energy consumption on the household side, but you still have to buy in power from the street, from AGL or origin or one of the big retailers. Ross said, straight away, we need to be a retailer like AGL and origin and a generator, and own these big solar farms and wind farms and big batteries in the grid. So we transitioned to become a generator and retailer in 2015 and that's what we've been doing for the last 10 years. So Zen is now about the third or fourth biggest generator and retailer in the country, after AGL and origin. You don't hear so much about Zen because we don't do residential energy. We only do commercial and industrial but we supply the states with their power. The lot of the councils, like half the councils in Sydney, with their power. Lot of the big all the big mining companies, the big retailers, like your Bunnings, your office works. We supply all their energy. CSIRO, even with their Deep Space Center, we supply all their energy so and also buc gasses recently, so we're actually trying to reduce the emissions from the gas industry by all their pumping and stuff. So Zen is a very large generator and retailer, and I'm very proud of the journey that business has gone on and the challenges we've had to deal with and in 2015 when we transitioned from a generator, from a solar and battery company to being a generator and retailer was very confronting for me personally, because I had to say to the board, look, you know, they were talking about the journey going forward. And I said, Look, that's understanding the complex energy markets is not my skill set. You know, I love the maths and the science behind the solar and the batteries, but where we're going, I'm not the right person for your CEO. You know, I needed to step down. We brought in an interim CEO from AGL guy called Jeff Titus, who was fantastic. He took us through that interim period, and we now have Anthony Garneau. Ross Garneau, son is our CEO, and just doing a remarkable job and really leading the transition to clean energy in Australia. So very proud of that business. Yeah. Michael McGrath  54:28 So do you step down? Did you? Are you not exactly? Richard Turner  54:32 Yeah. I stepped down in 2015 as I was CEO for the first 12 years, and then stepped down to being innovation director and and did some other roles I've now, basically, I'm not in the business day to day at all. Haven't been since more the last five years. So just a very happy shareholder watching what they're doing at the moment. But, but again, very different business, right product, right time. Fundamental, fundamentals. In place, Michael McGrath  55:00 very different. And there's a highly regulative environment in terms of the framework and the governments involved, and that becomes very choppy. And there's a need for lobbying. God knows what? There's a very, you know, brings its own volatility, that doesn't it. Richard Turner  55:14 Yeah, so you just got to bring the right people into the company, and you've got to be, you know, an entrepreneurs biggest mistake, often is holding onto 100% of nothing, rather than having a small percentage of something huge. It's about the vision, which is entrepreneurs are great at seeing an opportunity in the market, getting it going, growing, but a company and I teach CEOs how to grow companies these days, and companies are often like children growing up. You know when, when the company is young, and it's in startup mode and initial growth mode, you're doing everything, you're validating the market, you're doing all these things. But then the company gets into rapid growth mode where you've got to have a leadership team, and you've got to be able to delegate responsibility, and you've got to have systems and procedures, and you've got to start letting go of those things, because if you don't let go, you become the bottleneck for growth in the company. And I see so many companies, particularly family businesses, get to five or 10 million in revenue and can't grow beyond that, because they just can't let go of the company. And that is the biggest barrier to growth. So yeah, you've got to create value in the company, not value in yourself. And so many people struggle with that. You know, not all entrepreneurs make it. Michael McGrath  56:33 Yeah it's interesting that we call them glass ceilings. So you look at any particular sector or vertical that we're operating in, and we we see various glass ceilings that emerge. 5 million might be one, 8 million or 10 million, and a whole bunch of businesses get stuck around those levels because of some of the reasons that you're talking about, which is the current thinking has got them to that point, and that's often the most difficult bit of the journey, often, not always, but often. And yet, that inability to put it under management systematically and get some some bigger thinking and skills, and that's a very it's got to be right size that Richard, because if you bring a corporate guy in, he wants to smother it. But if you bring anyone into entrepreneur, you end up with the same problem that got you to the glass ceiling. So it's, it's matching those skills, isn't it? And it sounds like you did a great job of that at Zen, by the way, was identifying those, those people that could, you know, move it, move it to the next level, yeah Richard Turner  57:43 For that to get to where it is. Now, I just had, we just had to bring in the right people, you know, the specialists in that area. And, yeah, I mean, I played my role, got it to where it was. And we've built an amazing leadership team, an amazing board, and, yeah, we've had people from all over the world now you know coming into our board that have run massive power companies. Michael McGrath  58:09 Yeah, look fascinating story, Richard, I'm so grateful just to let's just wrap up talking a little bit about the role of vision and values and planning in that business mode that starts, particularly that startup early stage mode. Often, I think this is under done. The need for a clear vision, the need for values, because the values won't change, the business will change. The people might check, but the values invariably, you know, a reflection of the management, this the ownership. And I think they can be really important, particularly if they're embraced, I think, and and then planning, obviously, yeah, well, Richard Turner  58:51 Let' talk about both of those things, because the vision, as I said before, just telling the story, articulating the story, talking to the media, using public relations, which is often the dark hearts of marketing. I would spend half my marketing budget on public relations, because otherwise advertising is you talking about you. Public Relations is other credible people talking about your business and the success of your business, so much value comes in other people talking about it, but to tell the story of your company, you've got to have this aspirational mission statement. You've got to be able to tell the world how you're going to change the world within your sector through your mission statement. That needs to be front and center of your business. Your vision statement is what your company is going to look like in three years time. So by 2028 we're going to be doing this, and we're going to be this company by doing these things. And yeah, so it's the whole how and what the business is going to look like in three or four years time. And the values is the culture that you set within your company. It's how the communications work internally. Externally. You. With all your stakeholders in and out of the company. You know that culture and that vision and that mission is not only important for your customers, it's critical for your employees to know the journey they're on. That's how you get them to stay with your company. Otherwise, they'll go and join another company that's got a clear vision and mission and values. So your employees, your customers, your suppliers, to get the best suppliers in the industry, they need to know the journey you're on, your financiers, your investors, stakeholders. Everyone needs to know the journey you're on. To get people to come on board and support the vision and the mission. It is so crazy critical. And then to create the mission and the vision and the values, you've got to have the business plan. And this is what so many people don't do, is take time to sit down and actually think about and I take a lot of our my growth CEOs at the moment, I take them through a process where they envision envisioning their company being 10 times the size it is now, which blows people's minds. But if you've got a $3 million business, what's it going to look like at $30 million if you've got a $20 million business, what's it going to look like at $200 million and when I say that, it is okay, not not only what is the revenue going to be? You know what that is at 10 times, what is the profit you're going to make? But what products and services are you going to be selling to? What markets? Most importantly, how are you going to be doing that? What infrastructure will you need? So in infrastructure is people, what technology, what equipment and hardware and assets, like buildings, desks, computers, warehouses, etc, and how are you going to finance it? So they're the elements of a business plan. So we do this example. This, you know, what do you look like in 10 years times? Which people really blow their mind? Sorry, not 10 times the size in five years time. And then I get them to step it back to now. And it's amazing how many people can then go, oh, wow, I can see how we can get there, you know? And, and I say, well, that's extreme, you know, that's not what you know, that sort of growth is extreme growth. Organic companies, just running a good business should be growing at about 15% per year. So I try and push companies you should be looking, when you're doing your growth plan, to look at probably 30% plus per year on strong growth and but there is no reason you can't grow a lot faster than that, and that's why I take them through that process, but you should always be doing a three year business plan of those fundamental things, again, revenue, profit, what products and services to? Who am I selling it to? How am I selling it? What infrastructure do I need, and how am I going to finance it? Those elements need to be in your three year plan, and it doesn't have to be detailed. It could be on one sheet of paper or two sides of an a four, just as long as you've got something written down and you know, and you can share that with your team and other people on how you're going to get there, but then you should always do a one year operational plan, which is the same thing, but with more clarity, because next year is what's right in front of you, is what you've got the most clarity over. And what milestones do we have to hit next year to enable us to be set up for year two and year three? But no, no business plans ever set in stone. It's it's, you know, if things don't go quite to plan or go exceed the plan, you can always change year two and three and go throughout but has to be done, because without that, you can't have a clear vision or a clear mission, and you can't tell the story to all the key stakeholders in your industry and beyond. Michael McGrath  1:03:50 I think that that ability to sit down and plan and think through in some detail and simulate on paper at least what might happen. It's so much cheaper to do that than to to launch headlong in the direction that your instincts telling you to go and then figure out when you get there that perhaps that wasn't great. So yeah, a little bit of that, bringing it down, you know, into three years and then one year, that sounds like great advice. Look, thanks for that input. Richard, that was phenomenal. You've had a fascinating career and journey and story. I know you're helping other entrepreneurs now. You're on the board, one of the boards there for coraggio in Melbourne. Just tell people what coraggio does and what you do there. Richard Turner  1:04:36 Yeah. So look, I've been doing peer to peer learning. There's two types of learning for entrepreneurs. So I think they need to be quite clear on that there's peer to peer learning, which is where you get onto a board with other CEOs that are all growing their businesses in different industries. You don't want competitive industries, because then you can't share your financials, but, but you basically sit around the board with other CEOs and or. Founders and you just you're sharing the experience of what you're going through, because the challenges of what you're going through probably the same challenges that other CEOs and founders are going through, and you share with each other how you got through those challenges, both in business and personally, because just being in business creates a lot of personal challenges. And you know, thing to be aware of is the divorce rate in entrepreneurs is about double the community divorce rate, just simply because they are so focused and often lose touch with the people that surround them, that often support them to do what they do. So need to be really careful of that. But there's peer to peer learning, which is essential. And I founded the Entrepreneurs Organization 30 years ago now in Australia, or one of the founders, and that I couldn't have achieved what I've achieved without that now, I've done a lot of talks for corasio. And then Corrado are a peer to peer organization, a big organization up and down the east coast, from Brisbane, Sydney, to Melbourne, and they've asked me, Would I chair one of their boards? And I started doing that last year. That's been very successful. They now want me to chair a second board. So we're setting up a second board of entrepreneurs. But separate to that, I also teach how to companies, how to grow through the Australian Center for Business Growth, which is actually teaching the theory of growth. A lot of the things we talked about today on how to grow, you know. So in in the peer to peer stuff, we sort of talk about current challenges that are in front of us, whereas with the Australian Center for Business Growth, we teach companies how to grow, you know, and all the stuff that talked about today. Michael McGrath  1:06:41 So look, I'll make sure that the Australian Center for Business Growth and coraggio and the details of your book are in the show notes. Richard Turner, thank you very much for joining us on The troubleshooters podcast. Until next time, I'd love to get you back on at some point. Thanks, Richard. All the best. Richard Turner  1:06:57 Thanks, Mark. Michael McGrath  1:07:02 You. So there you have it, how to start and scale and successfully exit a business, if you like, what Richard had to say. You can buy his book, The essential entrepreneur. Or you can look him up at coraggio, the peer to peer learning organization. Or you can find him at the Australian Center for Business Growth. All those details are in the show notes now, as ever, a shout out to our sponsors, Oasis Partners. If you see an exit on your horizon, speak to the team at Oasis. 500 plus deals and counting. And finally, if you like this sort of content, please share it with your friends and colleagues. Even one idea can make a huge difference, until next time. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> https://www.oasispartners.com.au/wp-content/uploads/2025/07/Picture2.png clean no 1:07:50 No no https://www.oasispartners.com.au/podcast/the-troubleshooters-podcast-season-2-wrap-up/?utm_source=rss&utm_medium=rss&utm_campaign=the-troubleshooters-podcast-season-2-wrap-up Tue, 11 Feb 2025 04:31:06 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17623 https://www.linkedin.com/in/kelly-jamieson-871aa73/ Mat Stillone LinkedIn: https://www.linkedin.com/in/mathew-stillone-b4797a41/ Tom Waterhouse LinkedIn: https://www.linkedin.com/in/tom-waterhouse-a2630132/ Tom Hardwick LinkedIn: https://www.linkedin.com/in/tom-hardwick-2aa81943/ Tim Hutchinson LinkedIn: https://www.oasispartners.com.au/podcast/tim-hutchinson/ Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:06 Welcome to the troubleshooters podcast with me, your host, Mike McGrath. Well, season two of the troubleshooters podcast is done and dusted, and what a pleasure it's been for me to interview all our guests. A big thank you to all of them. I also enjoyed getting to hear their stories, and I hope you have too. Sit back and relax as we wrap up Season Two by pulling together some of the best bits and highlights. If something resonates, then the full episodes are on our website or wherever you like to listen to your podcasts. Enjoy In our third episode of season two, we spoke to Kelly Jamison, the co founder and MD of Edible Blooms, an online gifting business that delivers delicious bouquets of chocolate, among other things, to homes and offices. I love listening to Kelly's journey, including her outlook on mistakes and how she learnt from them. Enjoy this snippet of my conversation with Kelly, where we talk about some of our business decisions, as well as how she fosters a real culture of entrepreneurship throughout the business. Kelly Jamieson  01:10 Oh, gosh, you know, I look now at what's available to startups, you know, the, you know, different channels for capital, and you know, there's a lot, lot of options for people starting up now that just didn't exist back in those early days. I remember I had one of the banks, Oh, we love your idea. We'd love to chat about your business, but they said, Oh, but you need two or three years of trading. You know, we can't, you know, bank you until, you know. So in those very early days, when you really, you're pretty scrappy and, you know, you're really trying to make every dollar count. You know that funding would be really helpful, but in some ways, I think, you know, sometimes when things are a little, when you've got a really tight budget, you make it go a long way. We didn't pay ourselves a lot in the early days either. That's the other thing. You compromise your own salaries and all of those sorts of things. But you know, hopefully in the long term, it becomes worthwhile, Michael McGrath  02:00 yes, I was, I mean, and that's a very good point, is that whole, you know, they say necessity is a mother of invention. So, yeah, totally. Having adequate capital is great. Having too much capital is not a great idea at all, because we generally will end up spending on the wrong things. Because we're, we're kind of, we don't know what we don't know, do we in the beginning? And you've mentioned that in some of the stuff I've read that you've you're very much were learning by mistakes, and you were using a feedback loop, and then you were making adjustments. And it's difficult to get those lessons if you've got plenty of capital to go and express yourself with Kelly Jamieson  02:40 Yeah, absolutely, yeah, it is. It is an interesting challenge. But I yeah, I do agree. I think you can have too much capital, and I think that's, you know, it can be detrimental, because you can burn through cash very quickly. Michael McGrath  02:51 And I love this quote where you say, making mistakes is gold. What do you mean by that? Kelly Jamieson  02:58 Well, we have it. We've had it in our company policy from the beginning, because I really wanted to try and foster a real culture of entrepreneurship through the business, because we were very scrappy when we were starting up, and I certainly learned that I wasn't perfect, and Abby learned the same as well. And so I think the key thing with mistakes is learning from them. So one of the things we like to do here is when we do make a mistake, is we actually talk about it, and we talk about what we can learn. And sometimes making mistakes can actually be a good thing, because it means you're trying new things and you're not afraid to do something a little bit different. And look, one of the great examples is going back about eight or nine years ago, we're sending out our Christmas campaign to our corporate database. We do a lot of corporate gifting, and we're supposed to, I think it was supposed to go out to a database of, you know, a few 1000 people, one of our smaller databases, and we accidentally sent out the corporate email to our entire customer base. So this is like 10s of 1000s. So we had the most amazing sales period afterwards, because our customers, who are consumer customers, work in offices or work in businesses, and they saw our Christmas range. And so we got a lot of early corporate inquiries. So now, every year since then, we send our corporate range to everybody. We say this is, this is what's available this year, because we do recognize that you might be a consumer customer of ours, but it doesn't mean that you can't be a business customer as well. So so some that's why I say mistakes are gold, because sometimes when you make a mistake, really good things can happen, and you can learn some great things too. So it's not all about making a mistake in it being a bad thing? Michael McGrath  04:42 Yeah, no. Well, certainly we hear this a lot, that that feedback loop that you get, you try something, you get some feedback, you adjust, you get some more feedback, you adjust again. And then, isn't that the definition of continuous improvement, really, isn't it? Kelly Jamieson  04:57 Yeah, it totally is. And I. Yeah, also we have to move very fast in today's business environment. Now we don't have the time to perfect every single thing before it goes to market. So one of the things we've recently just innovated is we have and check out option on our website called instant gifted. And it's a really great process, because sometimes when you're sending a gift, we really analyze what are our friction points in the customer journey? And one of the friction points is people want to send something beautiful, or congratulate somebody, or say thank you for that referral. But you don't always know, especially now post COVID, are they at home? Are they working in the office? What's the best address to send it to them? What's the best day of the week to send it to them. So we created a new checkout option, which we've got a trademark on the instant gifted. And it basically allows you to personalize the gift process by choosing so I might say, Oh, look, I know Mike loves chocolate dipped strawberries. I'm going to choose that box, and then I can write the gift card to you. And instead of having to then work out where you are and where it needs to go. I can send it to you by email, and then you can choose when you receive it and when it gets delivered. When we came up with that idea, the whole idea of perfecting everything, we had the process working perfectly, but we knew there were some extra bells and whistles we could add to it as we went, we said, let's get the basic service out. Get some feedback. Get the feedback loop. What? What are we missing? What do we need to add? And so actually, one of the feedback loops that's come back is, gee, we love that, but we'd love to do that for our employees. We don't know everybody's home address now, so we want to send their Christmas gifts out by email, and then they can choose when they want to have it delivered and where. So, you know. So that's what we're working on at the moment for Christmas this year, so that we can actually do these bulk uploads and make it really easy for people to bulk send gifts. So there's some, you know, I think there's some real benefits in, you know, moving quickly, getting the prototypes up and then, yeah, keeping that customer loop going, to keep improving. Michael McGrath  07:00 In Episode Five, I spoke to Matt stilone, founder and MD of protein supplies Australia, as well as a number of other successful companies. Matt founded protein supplies Australia in his home garage in 2011 with an initial investment of just $5,000 I chatted with Matt about how he overcame adversity, built strong resilience, and found what really matters in life. Have a listen to this snippet of our conversation where we chat about finding your purpose in life and the roller coaster ride of running a business. Mat Stillone  07:32 Yeah. Look, I am an unfiltered version of myself says, I think people are waking up in the sense of, there's been a real, I guess, a trend which has been pushed by media that plant based diets are the savior of these epidemics in our health sector. You know, the city being one of them. And, you know, documentaries like game changers, I know, if you're aware of that, that really set off the trend, you know, and painting that whole thing, you can be really, really healthy and strong and fit and be plant based, which you know necessarily can be true, but there's limitations, or you need to be really careful about your diet. And I think that with like, anything in this industry, trends, it's just trends. You know, keto, I've seen it all. You've seen it all too low. Fat, sugars, cool. Now, next minute, fats, good again. You can eat as much fat as you want. Get on the keto diet, and then you've got, you know, this whole carnivore movement. Now, everyone just live on meat, eat meat. Day, left, right and center. So it gets like global trends, and, you know, people realizing that it's not as sustainable as once was. Also, you know, sort of that propaganda around it, Michael McGrath  08:43 Yeah, yeah, no, it's true.  And I think you're right about trends. I think the other thing that we're seeing, particularly post COVID, as we moved into those supply chain issues and a period of inflation with interest rates rising again, is that, is that there's a premium to pay for genuinely, if you're talking about genuinely better for you with genuine integrity in the supply chain, there's normally a premium map, and that premium is less attractive when you've got a, you know, when there's a fiscal tightening on which we've got at the moment, because mom, you know people, you know that They will trade down. And if you look at all the organic food sector over the last 30 years, each time it gets momentum, Matt, we get hit with a recession or some kind of issue, some kind of fiscal tightening once or twice a decade, and it goes back two or three years, and I think it's happening again now I think that the research suggests that people will perhaps pay a 15% premium, but they won't pay a 25, or 30% premium, and that's kind of what we're facing. I mean, there's a certain genre of consumer that will matter, but they're not big enough to be mainstream. Mat Stillone  09:59 Yeah, I would agree. Michael McGrath  09:59 Definitely, yeah. So as you said, You've got to be smart. Well, look, most people have enough with one business, maybe two, if they're nuts, you've got four here, and you're still going right. So where, let me ask you this, what happened to that guy in his late teens and early 20s who was struggling with mental health issues and and depression. Talk to me about about how you manage that stress now and and all the drama that goes with running four businesses. What's been the key? Matt, Mat Stillone  10:32 Yeah, that's a difficult one to answer without speaking too much on about I think for me, I found my purpose in life like one. There's two things that really drive three things, actually, that really drive me to get out of bed in the morning. That sense of like this is cliche, but sense of purpose, like feeling like I'm contributing something, and I'm important in some way. And while I'm still here, people around me are benefiting from my existence, and that's a big driver for me of like getting out of bed in the morning. Yes, the next one is my son. So my son's now 19 in what next week, week after so you know, that's obviously your parent yourself. You'd know what I've got five kids, yeah? So I know that I know the story. Well, yeah, you know? And then lastly, like, I used to be very driven by money, okay, you know, the more I got it, the more I wanted it, because I never really had it. A lot growing up like that. So, but then in the last few years, I've kind of come to terms with a lot of things about myself, like I know myself so well. Now really realize that I actually, genuinely love helping people and being a part of their journey to whatever six success means for them, those things while I'm doing all those things work doesn't, although it is extremely stressful, don't get me wrong. And you know, in particular right now, like, obviously, all these things going on with inflation and downturn, with the economy and stuff that's that's very difficult stuff to kind of go to bed at night and not worry about, especially when everything's on the line, but those sort of things for me, I think that while I feel that way, the stress, it feels like a game to me, okay, this is like an enjoyable game. Think, like with anything in life, there's literally nothing that is worth having that isn't challenging and like the journey. This the whole process and all the stress and all the roller coaster running, businesses and things, I actually really enjoy it. And the journey is the fun part about it. It's not the the outcome, which some people measure by how many millions you have in your bank or what car you drive and stuff. That's the process of journey. But I also do a lot of things, mate, like to manage this. So when I say that, you know, for any business owner out there, build a management team, get some actually, get people in your business that actually smarter than you and know what they're talking about, and teach you things and make yourself redundant. That was one thing I try to be an octopus for so long. And yeah, I definitely had massive burnout situations where I really felt like I wanted to give up multiple times. Yes, finding balance is another cliche thing, but doing things that I enjoy, making sure that they're important, like I respect them enough that I actually do them regardless of the workload that's on. Michael McGrath  13:41 Yeah, that's great. No, no, you've come a long way, Matt, haven't you? No doubt. So just while we finish up, did just talk to us about the three Rs that you like? Mat Stillone  13:50 Well, this has been a while since I did this, but resilience now stand out to me, and that's still the one, yeah, out of all of all of the, well, there's only three of them, but the three hours that I brought up, you know, a few years back, resilience, it's something that you really can't teach, but it's something that you can learn by exposure. So when people, when you're afraid, to avoid certain situations that cause stress or their challenges, you know, a lot of people don't like waking up and not knowing what the day is going to bring. So that's why some people really enjoy working for someone else and being part of their vision. And other business, business owners, entrepreneurs really get off on that idea as well. But I think building, having, exposing yourself to the most difficult and the most rewarding situations does give you thick skin, and you know that determination and having that determination to keep going when a lot of people are willing to walk away and give up, and to me, what resilience is resourcefulness as well, like that's the other one of the other hours that you know I mentioned, you know, we talked about, said bootstrapping before. Or for me, I act like I in a business, I always say to people, let's act like we have nothing. Like, what can we do with nothing? And how reason you become quite resourceful when you're really driven to make something happen. You know that can mean leveraging off connections that you have, that can be working on your negotiation skills, to be able to again wording, but convince someone to maybe invest in your vision as well. Yeah, being resourceful, and, you know, investing in yourself as well. That's Michael McGrath  15:32 in some ways, it's that creativity, that problem solving, you you alluded to it. It's that, you know, there's an old saying that says necessity is a mother of invention. And in a way, if you have to, then you will, and you know, so, I mean, I totally agree. I think that resilience, which we also think of here as persistence, resourcefulness, is about solving problems by being creative and and not getting lost in the negativity of a problem, right? You know, because we're going to get wallet by them regularly, so just pausing and having a listen to yourself and then framing up often, we find that the seed of the solution is embedded in the problem somewhere. And if you, if you can be objective enough about looking at the problem, maybe from a different angle, often, you can find some great lessons in there. And then the last one you mentioned was relationships. Mat Stillone  16:35 Everyone in my business, they're like family to me, and truly, because you spend more time with them than you do your own family at times in your life, which is kind of sad in itself, but it's true. So, you know, building relationships last, lasting relationships is really, for me, such a rewarding It's like planting a seed and then seeing the fruit come 10 years later, because those relationships that you had at the bottom, or when you're trying to build something great and you have a whole bunch of people trying to help you, they might move on to bigger and better things, maybe some point, and even down to, like, suppliers and all these sort of things, some point in your business career, that relationship might be the one that saves you. Yeah, and when I say that, you never know who you're talking to, you really never know. And some the perfect stranger can come along and drop this one little dime of something that will just change your whole trajectory in life. So for me, relationships and building relationships is where I am successful because that skill set I have as well. Michael McGrath  17:45 I love my chat with Tom Waterhouse, the founder of Waterhouse VC, Tom, hailing from the illustrious Waterhouse family, started his career in bookmaking at the young age of just 18, and quickly rose to become Australia's top on course bookmaker. His journey is a testament to the power of mentorship, adaptability and sheer innovation. Have a listen to how Tom reflects on the mentors in his life and his journey from handling millions on Derby Day to pioneering online bookmaking. We finished up with Tom walking us through his latest venture at Waterhouse VC and how he's bringing his 15 years of niche expertise to the investment space. I know originally you were thinking about finance, but you The story goes that you got to the track, and within 20 minutes, you'd realize you wanted to do it. Tom Waterhouse  18:34 Yeah, look, I still finished it. I did commerce degree at Sydney union and majoring in finance. And I, yeah, I loved doing that, but the racing industry and book Making, there was just so much money there back then, 2020, something years ago, and it was just full of energy and excitement. And also, I had a big advantage in that my grandfather was biggest book in the world in the 60s and 70s, and my dad, he ran a professional betting syndicate since 1980 and was leading bookmaker. So I had a blueprint of what to do. And you're very lucky when you're young and you have a mentor, or a couple of mentors that can say, Look, this is how you do it, because then it's easy. You just follow what they say. It's a great point there. Michael McGrath  19:15 And actually, I was going to ask you, what was it like to have famous parents and a famous grandparent like that? Well, you know, was it all advantage, or was there some disadvantages to that? Tom Waterhouse  19:25 You You don't even think about it, because that's what all you know. But now, looking back on it, I think what an advantage, you know, like, what an amazing thing to be able to go into an industry that they have such a good understanding of such an exciting industry. Yeah, it's a huge like, I've, yeah, I've been very, I've been blessed, you know, in terms of,and there's always, like, slight disadvantages to your advantages, but there's not for one second, but I don't think how lucky I was, you know, excellent. Michael McGrath  19:58 And look, just on that point there. And, I mean, we're not talking just about you becoming a licensed bookmaker at age 20. We're talking about you then became by age 28 the largest and most profitable on course, bookie in Australia. I mean, that's phenomenal rise, really. Tom Waterhouse  20:14 Yeah. Look, the there were, sorry, there were a lot of things, but there were probably three main things. Obviously, my grandfather was I had him as a mentor, and we went in in a partnership, partnership when I was, like 22 or something like that. So I great learning from him. And then my dad was a form genius, so he was had this amazing like form database, so I had his form and all the learnings, I never stopped asking my dad. I still don't stop asking him questions, asking him questions. How do I do this? What should I do here? And then also, the internet took off, and I moved to Melbourne, where you could offer different products than what you could in New South Wales. And I had the advantage of being able to access Betfair and see what the market was doing. It's like having access to the ticket on the stock market, and a lot of the bookies hadn't picked up, having a computer and stuff. So I had big advantages, and also the name, the brand, the family, yeah. But yeah, I thought I was going to be doing that the rest of my life, and and it was a highly profitable large business, but everything changed into 2008 2009 with a change of regulation, yeah. And then you had to pivot master pivot, yeah, because we were turning over, I think I sell $6 million on Derby Day in 2008 and like the favorite in the derby would have got half a million dollars in cash out of it as standing it. And the next year was lucky to get 5000 out of it. And I thought, well, the game's up. I have to move online. And so, yeah, we launched on waterhouse.com in 2009 proper launch in 2000 launch in 2010 within 18 months, we had a quarter of a million customers, which was just Yeah, phenomenal growth and but to put it in perspective, we turned over more. I turned over more as an on course booking in 2008 than Tom waterhouse.com turned over as an online bookie before we sold. Yeah. Okay, so on course book Making was a big business, yeah, which is easy to forget, because when you go to the races now, there's no one there, but it's only 1520, years ago that it was all there. Michael McGrath  22:09 And founding Tom waterhouse.com, right? That movement online, you were having to figure a lot of that out yourself. I presume I was effectively a digital revolution. Tom Waterhouse  22:18 Yeah, it was, it was, it was, it was an amazing learning experience, because I barely used email back in 2008 I know that, and that sounds foreign now, but I barely used email. IPhone only came out in 2008 That's right, but you know, so I think I had a nopier before then, or something like that. And so we shifted to online, and it was a big change, but you really look at what mentors and what's going well, and a few of the other bookies had moved online, and their businesses were booming. So the likes of sporting bets, sports bet, Cole, tidy, Alan Iskander in Melbourne, that they were all moving online. And so you could go, what are they doing? That looks like it's pretty good. How do I sort of use that as a blueprint to copy and and to basically go in that, in that space, and then find your own little path within it. And but yeah, that was a huge learning experience, and we there was so much we didn't know, so many mistakes we made, but those mistakes and learning, it ultimately led to us selling to William Hill and then running William Hill's business in Australia. Michael McGrath  23:23 In episode 10, I sat down with Tom Hardwick. Tom is an experienced CEO and entrepreneur. He has demonstrated a history of scaling businesses both organically and through acquisitions. His journey from CO founding a leading Australian child care group to launching a European inspired wine bar is nothing short of impressive, with experience spanning sectors from char clear to private equity and now into hospitality. Tom's entrepreneurial spirit knows no bounds. Tom Hardwick  23:53 So yeah, we did two years at BBY, and we just, we just weren't sort of loving the environment there. So the team moved across to Patterson ordinette, and that had its own challenges, working for a Perth based group in Sydney, but yeah, what I did is I built the foundations of BBY, and then when I went to Paterson, I just had this sweet spot of and I'd sort of focused on income style products, primarily listed property trusts, the smaller property trusts that the big banks didn't really pay a lot of attention to. And so probably raised four or $500 million over three years at Patterson's, whether from IPOs or placements, etc. And so I built a bit of a franchise in the small property trust space, and then a couple of the big banks noticed it, and said, Hey, why don't you come and join us? And it was sort of tempting to go into the big investment bank space, but I just, I'm not someone for, like, corporate politics and, you know, the big and I had it at cause, and so I went and, you know, spoke to one of my mentors at the time, Frank. Who was running abacus, or you founded abacus, and said, Frank, look, I'm at this crossroads. Here's where I am. He says, Tom, why don't you come and work for us? You'd be great, sort of, looking after our funds management, business and investor relations. And, you know, it's one of those things that, you know, the great jobs you get in your life, you don't normally apply to, to an ad or a recruiter. You sort of, it's through your networks and, you know, discussions and and so out of that, you know, I went and joined abacus. And, you know, it was a great two years pre GFC, you know, building their funds platform and buying some assets and syndicating. Michael McGrath  25:33 It is again that there was a movement. Was a bubble. Yeah, we didn't know it was a bubble. But there was, you know, I remember the guys in London Oasis were saying, selling a bit, it's like shooting fish in a barrel. Yeah, yeah. Boy, did it change, and it's never gone back, actually. Tom Hardwick  25:49 No, it was interesting. We were so we went to Macquarie had this Global Road Show. So he went to London for a few days, and then New York, and they got all these investors to hear the stories of these Australian Property Trust. And when we're there, a few people in London were saying, Oh, are you in the US? They're saying, Are you having trouble accessing debt? Yes, you know, what are you talking about? It's all fine in Australia. And they were just seeing the start of, you know, the crash. And then, you know, a couple of months later, Centro couldn't get its debt refinanced in the US, and bang. It just well changed pretty cool, yeah, and that didn't happen quickly. That was, that was probably one of the scarier times being in a business that big with, you know, we had 2 billion of assets and going, geez, where's the cash gone? And, you know, the banks want us to deliver and, you know, it was, that was pretty Michael McGrath  26:37 Who were the guys in investment banking that were helping you? Like, was it sink or swim you or in fact, you know, were you taken under anybody's wing? Tom Hardwick  26:46 It was so tough the investment banks were, you know, they were really focusing on the big guys. Frank, basically got an introduction to a very wealthy man in South Africa, left Australia on Christmas Eve, went and spent Christmas day with him in South Africa, and within 24 hours, basically negotiated an underwritten rights issue to, you know, restore abacus his balance sheet. And, you know, basically Frank and Nate. He did it themselves, and then they bought him one of the investment banks to wrap it up a little bit, right? But no, it was Frank. Frank had to go and save his his company. And, you know, it was a public company with a board, and yeah, so the little guys were the least, the last to get any love. But, you know, he got off his backside and he solved the problem. Michael McGrath  27:33 Yes, yeah, no, look, that was a, that was a unique time in finance. I mean, what was emerging of private equity, which wasn't a lot in Australia at that point, it was very small that just disappeared overnight. They kind of ran for the hill, yeah, banks started get out of the investments had made. And funnily enough, we just started in Australia at that point, yeah. Okay, so, you know, we had two years in nothing, and so we had to get fairly creative, trust me, so that's interesting. You you enjoyed that that time in investment banking, you were with abacus, and so you'd been in there for best part of a decade, yeah, sort of five or six years investment banking, four years at abacus, yeah. And then you'd had maybe the best part of eight or nine years in law, yep. So, so at that stage, we've got, we've got to, you know, some skills emerging, haven't we? Tom Hardwick  28:27 Yeah, and it was, I think, when I look back at the success of guardian, it was this sort of breadth of experiences over 20 years that I felt gave me a very good platform to be a CEO, and but it did take a bit of courage, because every three or four years, I'd get a bit bored, and I tended to jump into things that were quite new. And, you know, so there's I had a I remember talking to Greg Paramore, who was one of the great property, right, you know, CEOs. And he said, Listen, son, just back yourself. Yeah, if you think it's a good thing, jump off the deep end and have a crack at it. And what's the worst thing can happen? It doesn't work. And like with the logistics business, right? I jumped out of a partnership in a law firm. It failed, but, yeah, it was a good experience, and without that, I wouldn't have got the next opportunity. So Michael McGrath  29:22 on that point then, so you, you kind of, when did you decide that you'd had enough at abacus? Tom Hardwick  29:28 What had happened was we had started building Guardian as a bit of a side project. Yeah, my wife was in childcare her whole life. Right when we came back from America, we bought our first center in noir Warren in Melbourne. Michael McGrath  29:41 So for those who don't know, and we've got a few international listeners, yeah, they might not know who Guardian is. So for those two listeners, tell us what Guardian is, sure. So Guardian early learning group was a childcare business that we built. I basically started from scratch in about 2004 that, you know, I eventually joined full time in 2010 from abacus into that and there's, you know, tell that story. And then over those years, from 2010 we essentially up until 2010 we managed other people's assets for a fee. In 2010 we raised private equity to buy some assets that abacus had put together. In episode 13, I sat down with Tim Hutchinson, co founder and CEO of skills GPT AI is currently being talked about extensively. Many of us are bemused by what it all means. I spoke to Tim about his journey from zoology to the world of AI. Quite a jump. Tim now helps companies tap into the power of AI to better manage their workforce, highlighting real world applications in sectors such as energy, he emphasizes the need for continuous learning and collaboration between developers and business owners. Here's a preview of our conversation where we explore some of the disruptions Tim is seeing with the emergence of AI. Tim Hutchinson  31:08 Let me give you an example then, which is probably not probably would be a combination of those two broad sources of data you touch on, a lot of our work as skills. GPT is really trying to find opportunity and disruption for organizations, particularly around their workforce. Now, what I mean by that is we've got some fairly massive disruptions happening. They macro disruptions. So AI, emergence of AI, of course, people are concerned about what that means to jobs. Michael McGrath  31:44 So give an example of kind of some of the disruptions that you're seeing. So that's binary, really, you you're not talking, Tim Hutchinson  31:47 I'll give you an example from a conversation yesterday where,yeah, a client in the energy sector, because a lot of our work is is, is moving to sectors such as under transition. So the transition to clean energy from Legacy sources, okay, is a brilliant example of workforce disruption, okay? Because you've got, fundamentally, you've got legacy jobs rolling off in simple terms, from, you know, the coal gas industries, yeah, and you've got an increasing demand for people with knowledge and skills around renewables, okay, you know, making connections to solar, to wind, etc. Michael McGrath  31:49 I mean, the disruption there is. You're not switching a workforce. It's an it's a new workforce and a new well, Tim Hutchinson  32:00 so that that's, that's a big external disruption that's happening from, I mean, from a tech perspective. So sorry, I was going to explain even in that instance. So there's, there's that sort of macro disruption, yeah, and then they sothere are challenges there in terms of finding the right staff. They don't actually exist at scale with those renewables experience. Okay, so they're starting to look at efficiencies in the existing workforce as a starting point, yeah, even if you can find one or 2% efficiencies, it all helps. Okay, so you know, at one point in time, recently, they're looking for more people with scheduling, rostering, planning experience, yeah, but two or three months down the track, recognize that some of the AI tools are able to perform that task, right? So as opposed to needing people with rostering experience, right, you pivot, and what you actually need is people with the ability to right size those AI rostering models, right? So that and this, this, these are they different kinds of people. So they're used talking about technical people versus, you know, project management type people, in simple terms and this. And this is where you start to think, Well, what actually is, where does knowledge fit for people? Is it is it functional knowledge? Is it technical knowledge? Yeah. And this is, there is no answer to it, because this is a rapidly moving piece. We're not building product at this stage. No, we're not building out of the box SaaS product, because in most cases, we're trying to find a highly effective point solution for a priority problem around workforce, and then to develop from there. Michael McGrath  34:21 Look, I mean, I suppose the real challenge is that, I mean, you know, most of probably listen to this podcast are small business owners, right? About 40% of them are, apparently. So there's, you know, hundreds of small businesses that are going, you know, they hear AI, they get the fin review. You know, they really articles like, will I be a bust and and, surely not the binary, the binary press, yeah. And so we're looking at, okay, how do I harness this? How what's in it for me? Because, you know, you think about walls or coals and all their data, and you go, Okay, well, you. You can think, you can play the long game. You can, you can invest in this. There's such a business case there. I mean, you can already see from the amount of data they must have, if you could start to do something with that dynamically and get insights. And the the the proven ROI, is already massive, yeah. So it's off the charts, yes. But was it? You know, your small business, they employ 50 people, and they're trying to think through, okay, well, how do we harness this thing, other than we've got chat GBT on the desk and or Microsoft co pilot, and we're just plugging in questions, yeah? Tim Hutchinson  35:34 Well, yeah, but, but even that, actually, I mean even, even that part. So, you know, if you think about chat GPT, and I'm sure listeners are using it for various tasks at home and, dare I say, at work. But with the security concerns, very quickly, small organizations start to get their own sort of secure instance through 365 so they therefore can have that conversation with chat GPT securely, and it's a good point, because actually organizations, you start to the people whoefficiently are finding good use for it are the workers. If you actually ask people what they're using it for, and have an open, honest conversation, that's where you learn the insights and people will be using it for report writing. They'll be using it for structuring reports. They'll be using it for planning their week. Every possible sort of entry level use, if you like. But I think what's happened is, I think you mentioned the newspaper there. You know, we have this strange binary press whereyou have to go through a hype cycle, don't you where, first of all, it's, it's incredible. It's, it's, it's going to solve all the problems in the world, and then a week later, it's going to, going to be the end of all work. Yeah, Autopsy gun at least. I mean, to let that pass, and then, you know, now we're at a stage where companies are trying to, or beginning to understand what's possible, yeah, trying to find these practical solutions. However, you know, there is, I mentioned cost earlier, and actually, for SMEs, there is a cost factor. And in many cases, to, you know, to have a we get a lot of requests from people who are, I think I'll think of one very close to home. The other week, a recruitment company who said to us, Hey, we've of course, got a CRM with 100,000 candidates on it. Could we,you know, put that in their terminology, put that into AI and find interesting things right now, the answer is, yes, absolutely, okay. Does it come at a cost? Yes, absolutely, yeah. And because of this pace of change in the world, you can't, in good conscience, stitch somebody a solution together and leave it with them. You actually need to then sort of offer a managed service, yeah, to continually help that model develop. Because it's a continuous improvement thing, you know, there's, there is a difference between um, so I'd say two things broadly, and they're not, they're not, they're objective, hopefully not in any selfish interest. One is with, with AI, the best thing to do is to get started. Now, I buy that. Let me clarify. I don't mean get started. Start throwing money at the problem. I mean, start learning about it. Start reading about it, start trying to at least understand what it is. If anyone wanted to reach out on LinkedIn afterwards, I've, we've got various resources that point to, you know, a nice, a nice checklist of 20 resources they can go to for free to start that learning journey. Yeah, because I think you need to understand it first of all, yeah, you know. And then, and then the other piece is probably to to talk, to talk to existing staff, because people will be using chat GPT and rather than pretending they're not, from a security perspective. Michael McGrath  38:58 So tell me about the security risk, right? So you know someone in a small business, so there's 20 staff, and half a dozen of them start, you know they, you know that they're using, uh, chat, GBT, and they haven't told anyone. So where are the risks for the business there? Tim Hutchinson  39:14 Well, I think, I mean, the the risk is that you are essentially sharing information publicly. So very I remember quite early on we had, and it feels like a lifetime ago, but it but it was a year ago, a CFO was stood up in a meeting we were in and sort of, um, laughing about it, said, Ah, I've uploaded the annual accounts, and I've started to get some insights. Okay, really, really, not a good idea. Now,generative AI chat. GPT is not a search engine, so as such, that packet of information that set of accounts isn't sitting there to be accessed in its entirety. However, it's something of an unknown as to what aspects are. So absolutely you shouldn't be sharing sensitive information. But as we all. Know, straight censorship is not an answer to anything. So I think you need a discussion with staff and really understand, yeah, okay, because that's again, going to that point about it originates in the boardroom, not the server room. Take the workforce as a proxy for the boardroom. Find out what people are using it for. Find out where the efficiencies are. And the other thing I'd say, I quite like this is I've got a colleague, Ray Fleming, who tries to explain generative AI in simple terms, and says, treat it as an intern. Okay, I quite like it because if you think about an intern, you get the best out of them by giving them the best direction, simple, structured direction. You find value in the work, typically quickly, but you typically, or should check the work, and that's very much the same with generative AI. You know, there are phenomenal insights, but I think you do have to also take it with a pinch of salt, because of hallucinations people will have heard of and make certain that you're either applying your own critical thinking, or the guys who've built the models for you have hought about what how the information that surfaced is verified and against what Michael McGrath  41:28 Well, there you have it. I hope you've enjoyed season two, and this little wrap up. Thanks to you, our listeners, who've been with us since day one, and if it's your first time here, you're very welcome. Hit subscribe and look out for season three, as we bring you another round of genuine business troubleshooters to inspire and motivate you to keep going even when the going gets tough. Don't forget to subscribe, and if you enjoyed any episode, leave us a review. Thanks for being here until next time Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 29 2 https://www.linkedin.com/in/kelly-jamieson-871aa73/ Mat Stillone LinkedIn: https://www.linkedin.com/in/mathew-stillone-b4797a41/ Tom Waterhouse LinkedIn: https://www.linkedin.com/in/tom-waterhouse-a2630132/ Tom Hardwick LinkedIn: https://www.linkedin.com/in/tom-hardwick-2aa81943/ Tim Hutchinson LinkedIn: https://www.oasispartners.com.au/podcast/tim-hutchinson/ Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:06 Welcome to the troubleshooters podcast with me, your host, Mike McGrath. Well, season two of the troubleshooters podcast is done and dusted, and what a pleasure it's been for me to interview all our guests. A big thank you to all of them. I also enjoyed getting to hear their stories, and I hope you have too. Sit back and relax as we wrap up Season Two by pulling together some of the best bits and highlights. If something resonates, then the full episodes are on our website or wherever you like to listen to your podcasts. Enjoy In our third episode of season two, we spoke to Kelly Jamison, the co founder and MD of Edible Blooms, an online gifting business that delivers delicious bouquets of chocolate, among other things, to homes and offices. I love listening to Kelly's journey, including her outlook on mistakes and how she learnt from them. Enjoy this snippet of my conversation with Kelly, where we talk about some of our business decisions, as well as how she fosters a real culture of entrepreneurship throughout the business. Kelly Jamieson  01:10 Oh, gosh, you know, I look now at what's available to startups, you know, the, you know, different channels for capital, and you know, there's a lot, lot of options for people starting up now that just didn't exist back in those early days. I remember I had one of the banks, Oh, we love your idea. We'd love to chat about your business, but they said, Oh, but you need two or three years of trading. You know, we can't, you know, bank you until, you know. So in those very early days, when you really, you're pretty scrappy and, you know, you're really trying to make every dollar count. You know that funding would be really helpful, but in some ways, I think, you know, sometimes when things are a little, when you've got a really tight budget, you make it go a long way. We didn't pay ourselves a lot in the early days either. That's the other thing. You compromise your own salaries and all of those sorts of things. But you know, hopefully in the long term, it becomes worthwhile, Michael McGrath  02:00 yes, I was, I mean, and that's a very good point, is that whole, you know, they say necessity is a mother of invention. So, yeah, totally. Having adequate capital is great. Having too much capital is not a great idea at all, because we generally will end up spending on the wrong things. Because we're, we're kind of, we don't know what we don't know, do we in the beginning? And you've mentioned that in some of the stuff I've read that you've you're very much were learning by mistakes, and you were using a feedback loop, and then you were making adjustments. And it's difficult to get those lessons if you've got plenty of capital to go and express yourself with Kelly Jamieson  02:40 Yeah, absolutely, yeah, it is. It is an interesting challenge. But I yeah, I do agree. I think you can have too much capital, and I think that's, you know, it can be detrimental, because you can burn through cash very quickly. Michael McGrath  02:51 And I love this quote where you say, making mistakes is gold. What do you mean by that? Kelly Jamieson  02:58 Well, we have it. We've had it in our company policy from the beginning, because I really wanted to try and foster a real culture of entrepreneurship through the business, because we were very scrappy when we were starting up, and I certainly learned that I wasn't perfect, and Abby learned the same as well. And so I think the key thing with mistakes is learning from them. So one of the things we like to do here is when we do make a mistake, is we actually talk about it, and we talk about what we can learn. And sometimes making mistakes can actually be a good thing, because it means you're trying new things and you're not afraid to do something a little bit different. And look, one of the great examples is going back about eight or nine years ago, we're sending out our Christmas campaign to our corporate database. We do a lot of corporate gifting, and we're supposed to, I think it was supposed to go out to a database of, you know, a few 1000 people, one of our smaller databases, and we accidentally sent out the corporate email to our entire customer base. So this is like 10s of 1000s. So we had the most amazing sales period afterwards, because our customers, who are consumer customers, work in offices or work in businesses, and they saw our Christmas range. And so we got a lot of early corporate inquiries. So now, every year since then, we send our corporate range to everybody. We say this is, this is what's available this year, because we do recognize that you might be a consumer customer of ours, but it doesn't mean that you can't be a business customer as well. So so some that's why I say mistakes are gold, because sometimes when you make a mistake, really good things can happen, and you can learn some great things too. So it's not all about making a mistake in it being a bad thing? Michael McGrath  04:42 Yeah, no. Well, certainly we hear this a lot, that that feedback loop that you get, you try something, you get some feedback, you adjust, you get some more feedback, you adjust again. And then, isn't that the definition of continuous improvement, really, isn't it? Kelly Jamieson  04:57 Yeah, it totally is. And I. Yeah, also we have to move very fast in today's business environment. Now we don't have the time to perfect every single thing before it goes to market. So one of the things we've recently just innovated is we have and check out option on our website called instant gifted. And it's a really great process, because sometimes when you're sending a gift, we really analyze what are our friction points in the customer journey? And one of the friction points is people want to send something beautiful, or congratulate somebody, or say thank you for that referral. But you don't always know, especially now post COVID, are they at home? Are they working in the office? What's the best address to send it to them? What's the best day of the week to send it to them. So we created a new checkout option, which we've got a trademark on the instant gifted. And it basically allows you to personalize the gift process by choosing so I might say, Oh, look, I know Mike loves chocolate dipped strawberries. I'm going to choose that box, and then I can write the gift card to you. And instead of having to then work out where you are and where it needs to go. I can send it to you by email, and then you can choose when you receive it and when it gets delivered. When we came up with that idea, the whole idea of perfecting everything, we had the process working perfectly, but we knew there were some extra bells and whistles we could add to it as we went, we said, let's get the basic service out. Get some feedback. Get the feedback loop. What? What are we missing? What do we need to add? And so actually, one of the feedback loops that's come back is, gee, we love that, but we'd love to do that for our employees. We don't know everybody's home address now, so we want to send their Christmas gifts out by email, and then they can choose when they want to have it delivered and where. So, you know. So that's what we're working on at the moment for Christmas this year, so that we can actually do these bulk uploads and make it really easy for people to bulk send gifts. So there's some, you know, I think there's some real benefits in, you know, moving quickly, getting the prototypes up and then, yeah, keeping that customer loop going, to keep improving. Michael McGrath  07:00 In Episode Five, I spoke to Matt stilone, founder and MD of protein supplies Australia, as well as a number of other successful companies. Matt founded protein supplies Australia in his home garage in 2011 with an initial investment of just $5,000 I chatted with Matt about how he overcame adversity, built strong resilience, and found what really matters in life. Have a listen to this snippet of our conversation where we chat about finding your purpose in life and the roller coaster ride of running a business. Mat Stillone  07:32 Yeah. Look, I am an unfiltered version of myself says, I think people are waking up in the sense of, there's been a real, I guess, a trend which has been pushed by media that plant based diets are the savior of these epidemics in our health sector. You know, the city being one of them. And, you know, documentaries like game changers, I know, if you're aware of that, that really set off the trend, you know, and painting that whole thing, you can be really, really healthy and strong and fit and be plant based, which you know necessarily can be true, but there's limitations, or you need to be really careful about your diet. And I think that with like, anything in this industry, trends, it's just trends. You know, keto, I've seen it all. You've seen it all too low. Fat, sugars, cool. Now, next minute, fats, good again. You can eat as much fat as you want. Get on the keto diet, and then you've got, you know, this whole carnivore movement. Now, everyone just live on meat, eat meat. Day, left, right and center. So it gets like global trends, and, you know, people realizing that it's not as sustainable as once was. Also, you know, sort of that propaganda around it, Michael McGrath  08:43 Yeah, yeah, no, it's true.  And I think you're right about trends. I think the other thing that we're seeing, particularly post COVID, as we moved into those supply chain issues and a period of inflation with interest rates rising again, is that, is that there's a premium to pay for genuinely, if you're talking about genuinely better for you with genuine integrity in the supply chain, there's normally a premium map, and that premium is less attractive when you've got a, you know, when there's a fiscal tightening on which we've got at the moment, because mom, you know people, you know that They will trade down. And if you look at all the organic food sector over the last 30 years, each time it gets momentum, Matt, we get hit with a recession or some kind of issue, some kind of fiscal tightening once or twice a decade, and it goes back two or three years, and I think it's happening again now I think that the research suggests that people will perhaps pay a 15% premium, but they won't pay a 25, or 30% premium, and that's kind of what we're facing. I mean, there's a certain genre of consumer that will matter, but they're not big enough to be mainstream. Mat Stillone  09:59 Yeah, I would agree. Michael McGrath  09:59 Definitely, yeah. So as you said, You've got to be smart. Well, look, most people have enough with one business, maybe two, if they're nuts, you've got four here, and you're still going right. So where, let me ask you this, what happened to that guy in his late teens and early 20s who was struggling with mental health issues and and depression. Talk to me about about how you manage that stress now and and all the drama that goes with running four businesses. What's been the key? Matt, Mat Stillone  10:32 Yeah, that's a difficult one to answer without speaking too much on about I think for me, I found my purpose in life like one. There's two things that really drive three things, actually, that really drive me to get out of bed in the morning. That sense of like this is cliche, but sense of purpose, like feeling like I'm contributing something, and I'm important in some way. And while I'm still here, people around me are benefiting from my existence, and that's a big driver for me of like getting out of bed in the morning. Yes, the next one is my son. So my son's now 19 in what next week, week after so you know, that's obviously your parent yourself. You'd know what I've got five kids, yeah? So I know that I know the story. Well, yeah, you know? And then lastly, like, I used to be very driven by money, okay, you know, the more I got it, the more I wanted it, because I never really had it. A lot growing up like that. So, but then in the last few years, I've kind of come to terms with a lot of things about myself, like I know myself so well. Now really realize that I actually, genuinely love helping people and being a part of their journey to whatever six success means for them, those things while I'm doing all those things work doesn't, although it is extremely stressful, don't get me wrong. And you know, in particular right now, like, obviously, all these things going on with inflation and downturn, with the economy and stuff that's that's very difficult stuff to kind of go to bed at night and not worry about, especially when everything's on the line, but those sort of things for me, I think that while I feel that way, the stress, it feels like a game to me, okay, this is like an enjoyable game. Think, like with anything in life, there's literally nothing that is worth having that isn't challenging and like the journey. This the whole process and all the stress and all the roller coaster running, businesses and things, I actually really enjoy it. And the journey is the fun part about it. It's not the the outcome, which some people measure by how many millions you have in your bank or what car you drive and stuff. That's the process of journey. But I also do a lot of things, mate, like to manage this. So when I say that, you know, for any business owner out there, build a management team, get some actually, get people in your business that actually smarter than you and know what they're talking about, and teach you things and make yourself redundant. That was one thing I try to be an octopus for so long. And yeah, I definitely had massive burnout situations where I really felt like I wanted to give up multiple times. Yes, finding balance is another cliche thing, but doing things that I enjoy, making sure that they're important, like I respect them enough that I actually do them regardless of the workload that's on. Michael McGrath  13:41 Yeah, that's great. No, no, you've come a long way, Matt, haven't you? No doubt. So just while we finish up, did just talk to us about the three Rs that you like? Mat Stillone  13:50 Well, this has been a while since I did this, but resilience now stand out to me, and that's still the one, yeah, out of all of all of the, well, there's only three of them, but the three hours that I brought up, you know, a few years back, resilience, it's something that you really can't teach, but it's something that you can learn by exposure. So when people, when you're afraid, to avoid certain situations that cause stress or their challenges, you know, a lot of people don't like waking up and not knowing what the day is going to bring. So that's why some people really enjoy working for someone else and being part of their vision. And other business, business owners, entrepreneurs really get off on that idea as well. But I think building, having, exposing yourself to the most difficult and the most rewarding situations does give you thick skin, and you know that determination and having that determination to keep going when a lot of people are willing to walk away and give up, and to me, what resilience is resourcefulness as well, like that's the other one of the other hours that you know I mentioned, you know, we talked about, said bootstrapping before. Or for me, I act like I in a business, I always say to people, let's act like we have nothing. Like, what can we do with nothing? And how reason you become quite resourceful when you're really driven to make something happen. You know that can mean leveraging off connections that you have, that can be working on your negotiation skills, to be able to again wording, but convince someone to maybe invest in your vision as well. Yeah, being resourceful, and, you know, investing in yourself as well. That's Michael McGrath  15:32 in some ways, it's that creativity, that problem solving, you you alluded to it. It's that, you know, there's an old saying that says necessity is a mother of invention. And in a way, if you have to, then you will, and you know, so, I mean, I totally agree. I think that resilience, which we also think of here as persistence, resourcefulness, is about solving problems by being creative and and not getting lost in the negativity of a problem, right? You know, because we're going to get wallet by them regularly, so just pausing and having a listen to yourself and then framing up often, we find that the seed of the solution is embedded in the problem somewhere. And if you, if you can be objective enough about looking at the problem, maybe from a different angle, often, you can find some great lessons in there. And then the last one you mentioned was relationships. Mat Stillone  16:35 Everyone in my business, they're like family to me, and truly, because you spend more time with them than you do your own family at times in your life, which is kind of sad in itself, but it's true. So, you know, building relationships last, lasting relationships is really, for me, such a rewarding It's like planting a seed and then seeing the fruit come 10 years later, because those relationships that you had at the bottom, or when you're trying to build something great and you have a whole bunch of people trying to help you, they might move on to bigger and better things, maybe some point, and even down to, like, suppliers and all these sort of things, some point in your business career, that relationship might be the one that saves you. Yeah, and when I say that, you never know who you're talking to, you really never know. And some the perfect stranger can come along and drop this one little dime of something that will just change your whole trajectory in life. So for me, relationships and building relationships is where I am successful because that skill set I have as well. Michael McGrath  17:45 I love my chat with Tom Waterhouse, the founder of Waterhouse VC, Tom, hailing from the illustrious Waterhouse family, started his career in bookmaking at the young age of just 18, and quickly rose to become Australia's top on course bookmaker. His journey is a testament to the power of mentorship, adaptability and sheer innovation. Have a listen to how Tom reflects on the mentors in his life and his journey from handling millions on Derby Day to pioneering online bookmaking. We finished up with Tom walking us through his latest venture at Waterhouse VC and how he's bringing his 15 years of niche expertise to the investment space. I know originally you were thinking about finance, but you The story goes that you got to the track, and within 20 minutes, you'd realize you wanted to do it. Tom Waterhouse  18:34 Yeah, look, I still finished it. I did commerce degree at Sydney union and majoring in finance. And I, yeah, I loved doing that, but the racing industry and book Making, there was just so much money there back then, 2020, something years ago, and it was just full of energy and excitement. And also, I had a big advantage in that my grandfather was biggest book in the world in the 60s and 70s, and my dad, he ran a professional betting syndicate since 1980 and was leading bookmaker. So I had a blueprint of what to do. And you're very lucky when you're young and you have a mentor, or a couple of mentors that can say, Look, this is how you do it, because then it's easy. You just follow what they say. It's a great point there. Michael McGrath  19:15 And actually, I was going to ask you, what was it like to have famous parents and a famous grandparent like that? Well, you know, was it all advantage, or was there some disadvantages to that? Tom Waterhouse  19:25 You You don't even think about it, because that's what all you know. But now, looking back on it, I think what an advantage, you know, like, what an amazing thing to be able to go into an industry that they have such a good understanding of such an exciting industry. Yeah, it's a huge like, I've, yeah, I've been very, I've been blessed, you know, in terms of,and there's always, like, slight disadvantages to your advantages, but there's not for one second, but I don't think how lucky I was, you know, excellent. Michael McGrath  19:58 And look, just on that point there. And, I mean, we're not talking just about you becoming a licensed bookmaker at age 20. We're talking about you then became by age 28 the largest and most profitable on course, bookie in Australia. I mean, that's phenomenal rise, really. Tom Waterhouse  20:14 Yeah. Look, the there were, sorry, there were a lot of things, but there were probably three main things. Obviously, my grandfather was I had him as a mentor, and we went in in a partnership, partnership when I was, like 22 or something like that. So I great learning from him. And then my dad was a form genius, so he was had this amazing like form database, so I had his form and all the learnings, I never stopped asking my dad. I still don't stop asking him questions, asking him questions. How do I do this? What should I do here? And then also, the internet took off, and I moved to Melbourne, where you could offer different products than what you could in New South Wales. And I had the advantage of being able to access Betfair and see what the market was doing. It's like having access to the ticket on the stock market, and a lot of the bookies hadn't picked up, having a computer and stuff. So I had big advantages, and also the name, the brand, the family, yeah. But yeah, I thought I was going to be doing that the rest of my life, and and it was a highly profitable large business, but everything changed into 2008 2009 with a change of regulation, yeah. And then you had to pivot master pivot, yeah, because we were turning over, I think I sell $6 million on Derby Day in 2008 and like the favorite in the derby would have got half a million dollars in cash out of it as standing it. And the next year was lucky to get 5000 out of it. And I thought, well, the game's up. I have to move online. And so, yeah, we launched on waterhouse.com in 2009 proper launch in 2000 launch in 2010 within 18 months, we had a quarter of a million customers, which was just Yeah, phenomenal growth and but to put it in perspective, we turned over more. I turned over more as an on course booking in 2008 than Tom waterhouse.com turned over as an online bookie before we sold. Yeah. Okay, so on course book Making was a big business, yeah, which is easy to forget, because when you go to the races now, there's no one there, but it's only 1520, years ago that it was all there. Michael McGrath  22:09 And founding Tom waterhouse.com, right? That movement online, you were having to figure a lot of that out yourself. I presume I was effectively a digital revolution. Tom Waterhouse  22:18 Yeah, it was, it was, it was, it was an amazing learning experience, because I barely used email back in 2008 I know that, and that sounds foreign now, but I barely used email. IPhone only came out in 2008 That's right, but you know, so I think I had a nopier before then, or something like that. And so we shifted to online, and it was a big change, but you really look at what mentors and what's going well, and a few of the other bookies had moved online, and their businesses were booming. So the likes of sporting bets, sports bet, Cole, tidy, Alan Iskander in Melbourne, that they were all moving online. And so you could go, what are they doing? That looks like it's pretty good. How do I sort of use that as a blueprint to copy and and to basically go in that, in that space, and then find your own little path within it. And but yeah, that was a huge learning experience, and we there was so much we didn't know, so many mistakes we made, but those mistakes and learning, it ultimately led to us selling to William Hill and then running William Hill's business in Australia. Michael McGrath  23:23 In episode 10, I sat down with Tom Hardwick. Tom is an experienced CEO and entrepreneur. He has demonstrated a history of scaling businesses both organically and through acquisitions. His journey from CO founding a leading Australian child care group to launching a European inspired wine bar is nothing short of impressive, with experience spanning sectors from char clear to private equity and now into hospitality. Tom's entrepreneurial spirit knows no bounds. Tom Hardwick  23:53 So yeah, we did two years at BBY, and we just, we just weren't sort of loving the environment there. So the team moved across to Patterson ordinette, and that had its own challenges, working for a Perth based group in Sydney, but yeah, what I did is I built the foundations of BBY, and then when I went to Paterson, I just had this sweet spot of and I'd sort of focused on income style products, primarily listed property trusts, the smaller property trusts that the big banks didn't really pay a lot of attention to. And so probably raised four or $500 million over three years at Patterson's, whether from IPOs or placements, etc. And so I built a bit of a franchise in the small property trust space, and then a couple of the big banks noticed it, and said, Hey, why don't you come and join us? And it was sort of tempting to go into the big investment bank space, but I just, I'm not someone for, like, corporate politics and, you know, the big and I had it at cause, and so I went and, you know, spoke to one of my mentors at the time, Frank. Who was running abacus, or you founded abacus, and said, Frank, look, I'm at this crossroads. Here's where I am. He says, Tom, why don't you come and work for us? You'd be great, sort of, looking after our funds management, business and investor relations. And, you know, it's one of those things that, you know, the great jobs you get in your life, you don't normally apply to, to an ad or a recruiter. You sort of, it's through your networks and, you know, discussions and and so out of that, you know, I went and joined abacus. And, you know, it was a great two years pre GFC, you know, building their funds platform and buying some assets and syndicating. Michael McGrath  25:33 It is again that there was a movement. Was a bubble. Yeah, we didn't know it was a bubble. But there was, you know, I remember the guys in London Oasis were saying, selling a bit, it's like shooting fish in a barrel. Yeah, yeah. Boy, did it change, and it's never gone back, actually. Tom Hardwick  25:49 No, it was interesting. We were so we went to Macquarie had this Global Road Show. So he went to London for a few days, and then New York, and they got all these investors to hear the stories of these Australian Property Trust. And when we're there, a few people in London were saying, Oh, are you in the US? They're saying, Are you having trouble accessing debt? Yes, you know, what are you talking about? It's all fine in Australia. And they were just seeing the start of, you know, the crash. And then, you know, a couple of months later, Centro couldn't get its debt refinanced in the US, and bang. It just well changed pretty cool, yeah, and that didn't happen quickly. That was, that was probably one of the scarier times being in a business that big with, you know, we had 2 billion of assets and going, geez, where's the cash gone? And, you know, the banks want us to deliver and, you know, it was, that was pretty Michael McGrath  26:37 Who were the guys in investment banking that were helping you? Like, was it sink or swim you or in fact, you know, were you taken under anybody's wing? Tom Hardwick  26:46 It was so tough the investment banks were, you know, they were really focusing on the big guys. Frank, basically got an introduction to a very wealthy man in South Africa, left Australia on Christmas Eve, went and spent Christmas day with him in South Africa, and within 24 hours, basically negotiated an underwritten rights issue to, you know, restore abacus his balance sheet. And, you know, basically Frank and Nate. He did it themselves, and then they bought him one of the investment banks to wrap it up a little bit, right? But no, it was Frank. Frank had to go and save his his company. And, you know, it was a public company with a board, and yeah, so the little guys were the least, the last to get any love. But, you know, he got off his backside and he solved the problem. Michael McGrath  27:33 Yes, yeah, no, look, that was a, that was a unique time in finance. I mean, what was emerging of private equity, which wasn't a lot in Australia at that point, it was very small that just disappeared overnight. They kind of ran for the hill, yeah, banks started get out of the investments had made. And funnily enough, we just started in Australia at that point, yeah. Okay, so, you know, we had two years in nothing, and so we had to get fairly creative, trust me, so that's interesting. You you enjoyed that that time in investment banking, you were with abacus, and so you'd been in there for best part of a decade, yeah, sort of five or six years investment banking, four years at abacus, yeah. And then you'd had maybe the best part of eight or nine years in law, yep. So, so at that stage, we've got, we've got to, you know, some skills emerging, haven't we? Tom Hardwick  28:27 Yeah, and it was, I think, when I look back at the success of guardian, it was this sort of breadth of experiences over 20 years that I felt gave me a very good platform to be a CEO, and but it did take a bit of courage, because every three or four years, I'd get a bit bored, and I tended to jump into things that were quite new. And, you know, so there's I had a I remember talking to Greg Paramore, who was one of the great property, right, you know, CEOs. And he said, Listen, son, just back yourself. Yeah, if you think it's a good thing, jump off the deep end and have a crack at it. And what's the worst thing can happen? It doesn't work. And like with the logistics business, right? I jumped out of a partnership in a law firm. It failed, but, yeah, it was a good experience, and without that, I wouldn't have got the next opportunity. So Michael McGrath  29:22 on that point then, so you, you kind of, when did you decide that you'd had enough at abacus? Tom Hardwick  29:28 What had happened was we had started building Guardian as a bit of a side project. Yeah, my wife was in childcare her whole life. Right when we came back from America, we bought our first center in noir Warren in Melbourne. Michael McGrath  29:41 So for those who don't know, and we've got a few international listeners, yeah, they might not know who Guardian is. So for those two listeners, tell us what Guardian is, sure. So Guardian early learning group was a childcare business that we built. I basically started from scratch in about 2004 that, you know, I eventually joined full time in 2010 from abacus into that and there's, you know, tell that story. And then over those years, from 2010 we essentially up until 2010 we managed other people's assets for a fee. In 2010 we raised private equity to buy some assets that abacus had put together. In episode 13, I sat down with Tim Hutchinson, co founder and CEO of skills GPT AI is currently being talked about extensively. Many of us are bemused by what it all means. I spoke to Tim about his journey from zoology to the world of AI. Quite a jump. Tim now helps companies tap into the power of AI to better manage their workforce, highlighting real world applications in sectors such as energy, he emphasizes the need for continuous learning and collaboration between developers and business owners. Here's a preview of our conversation where we explore some of the disruptions Tim is seeing with the emergence of AI. Tim Hutchinson  31:08 Let me give you an example then, which is probably not probably would be a combination of those two broad sources of data you touch on, a lot of our work as skills. GPT is really trying to find opportunity and disruption for organizations, particularly around their workforce. Now, what I mean by that is we've got some fairly massive disruptions happening. They macro disruptions. So AI, emergence of AI, of course, people are concerned about what that means to jobs. Michael McGrath  31:44 So give an example of kind of some of the disruptions that you're seeing. So that's binary, really, you you're not talking, Tim Hutchinson  31:47 I'll give you an example from a conversation yesterday where,yeah, a client in the energy sector, because a lot of our work is is, is moving to sectors such as under transition. So the transition to clean energy from Legacy sources, okay, is a brilliant example of workforce disruption, okay? Because you've got, fundamentally, you've got legacy jobs rolling off in simple terms, from, you know, the coal gas industries, yeah, and you've got an increasing demand for people with knowledge and skills around renewables, okay, you know, making connections to solar, to wind, etc. Michael McGrath  31:49 I mean, the disruption there is. You're not switching a workforce. It's an it's a new workforce and a new well, Tim Hutchinson  32:00 so that that's, that's a big external disruption that's happening from, I mean, from a tech perspective. So sorry, I was going to explain even in that instance. So there's, there's that sort of macro disruption, yeah, and then they sothere are challenges there in terms of finding the right staff. They don't actually exist at scale with those renewables experience. Okay, so they're starting to look at efficiencies in the existing workforce as a starting point, yeah, even if you can find one or 2% efficiencies, it all helps. Okay, so you know, at one point in time, recently, they're looking for more people with scheduling, rostering, planning experience, yeah, but two or three months down the track, recognize that some of the AI tools are able to perform that task, right? So as opposed to needing people with rostering experience, right, you pivot, and what you actually need is people with the ability to right size those AI rostering models, right? So that and this, this, these are they different kinds of people. So they're used talking about technical people versus, you know, project management type people, in simple terms and this. And this is where you start to think, Well, what actually is, where does knowledge fit for people? Is it is it functional knowledge? Is it technical knowledge? Yeah. And this is, there is no answer to it, because this is a rapidly moving piece. We're not building product at this stage. No, we're not building out of the box SaaS product, because in most cases, we're trying to find a highly effective point solution for a priority problem around workforce, and then to develop from there. Michael McGrath  34:21 Look, I mean, I suppose the real challenge is that, I mean, you know, most of probably listen to this podcast are small business owners, right? About 40% of them are, apparently. So there's, you know, hundreds of small businesses that are going, you know, they hear AI, they get the fin review. You know, they really articles like, will I be a bust and and, surely not the binary, the binary press, yeah. And so we're looking at, okay, how do I harness this? How what's in it for me? Because, you know, you think about walls or coals and all their data, and you go, Okay, well, you. You can think, you can play the long game. You can, you can invest in this. There's such a business case there. I mean, you can already see from the amount of data they must have, if you could start to do something with that dynamically and get insights. And the the the proven ROI, is already massive, yeah. So it's off the charts, yes. But was it? You know, your small business, they employ 50 people, and they're trying to think through, okay, well, how do we harness this thing, other than we've got chat GBT on the desk and or Microsoft co pilot, and we're just plugging in questions, yeah? Tim Hutchinson  35:34 Well, yeah, but, but even that, actually, I mean even, even that part. So, you know, if you think about chat GPT, and I'm sure listeners are using it for various tasks at home and, dare I say, at work. But with the security concerns, very quickly, small organizations start to get their own sort of secure instance through 365 so they therefore can have that conversation with chat GPT securely, and it's a good point, because actually organizations, you start to the people whoefficiently are finding good use for it are the workers. If you actually ask people what they're using it for, and have an open, honest conversation, that's where you learn the insights and people will be using it for report writing. They'll be using it for structuring reports. They'll be using it for planning their week. Every possible sort of entry level use, if you like. But I think what's happened is, I think you mentioned the newspaper there. You know, we have this strange binary press whereyou have to go through a hype cycle, don't you where, first of all, it's, it's incredible. It's, it's, it's going to solve all the problems in the world, and then a week later, it's going to, going to be the end of all work. Yeah, Autopsy gun at least. I mean, to let that pass, and then, you know, now we're at a stage where companies are trying to, or beginning to understand what's possible, yeah, trying to find these practical solutions. However, you know, there is, I mentioned cost earlier, and actually, for SMEs, there is a cost factor. And in many cases, to, you know, to have a we get a lot of requests from people who are, I think I'll think of one very close to home. The other week, a recruitment company who said to us, Hey, we've of course, got a CRM with 100,000 candidates on it. Could we,you know, put that in their terminology, put that into AI and find interesting things right now, the answer is, yes, absolutely, okay. Does it come at a cost? Yes, absolutely, yeah. And because of this pace of change in the world, you can't, in good conscience, stitch somebody a solution together and leave it with them. You actually need to then sort of offer a managed service, yeah, to continually help that model develop. Because it's a continuous improvement thing, you know, there's, there is a difference between um, so I'd say two things broadly, and they're not, they're not, they're objective, hopefully not in any selfish interest. One is with, with AI, the best thing to do is to get started. Now, I buy that. Let me clarify. I don't mean get started. Start throwing money at the problem. I mean, start learning about it. Start reading about it, start trying to at least understand what it is. If anyone wanted to reach out on LinkedIn afterwards, I've, we've got various resources that point to, you know, a nice, a nice checklist of 20 resources they can go to for free to start that learning journey. Yeah, because I think you need to understand it first of all, yeah, you know. And then, and then the other piece is probably to to talk, to talk to existing staff, because people will be using chat GPT and rather than pretending they're not, from a security perspective. Michael McGrath  38:58 So tell me about the security risk, right? So you know someone in a small business, so there's 20 staff, and half a dozen of them start, you know they, you know that they're using, uh, chat, GBT, and they haven't told anyone. So where are the risks for the business there? Tim Hutchinson  39:14 Well, I think, I mean, the the risk is that you are essentially sharing information publicly. So very I remember quite early on we had, and it feels like a lifetime ago, but it but it was a year ago, a CFO was stood up in a meeting we were in and sort of, um, laughing about it, said, Ah, I've uploaded the annual accounts, and I've started to get some insights. Okay, really, really, not a good idea. Now,generative AI chat. GPT is not a search engine, so as such, that packet of information that set of accounts isn't sitting there to be accessed in its entirety. However, it's something of an unknown as to what aspects are. So absolutely you shouldn't be sharing sensitive information. But as we all. Know, straight censorship is not an answer to anything. So I think you need a discussion with staff and really understand, yeah, okay, because that's again, going to that point about it originates in the boardroom, not the server room. Take the workforce as a proxy for the boardroom. Find out what people are using it for. Find out where the efficiencies are. And the other thing I'd say, I quite like this is I've got a colleague, Ray Fleming, who tries to explain generative AI in simple terms, and says, treat it as an intern. Okay, I quite like it because if you think about an intern, you get the best out of them by giving them the best direction, simple, structured direction. You find value in the work, typically quickly, but you typically, or should check the work, and that's very much the same with generative AI. You know, there are phenomenal insights, but I think you do have to also take it with a pinch of salt, because of hallucinations people will have heard of and make certain that you're either applying your own critical thinking, or the guys who've built the models for you have hought about what how the information that surfaced is verified and against what Michael McGrath  41:28 Well, there you have it. I hope you've enjoyed season two, and this little wrap up. Thanks to you, our listeners, who've been with us since day one, and if it's your first time here, you're very welcome. Hit subscribe and look out for season three, as we bring you another round of genuine business troubleshooters to inspire and motivate you to keep going even when the going gets tough. Don't forget to subscribe, and if you enjoyed any episode, leave us a review. Thanks for being here until next time Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> https://www.oasispartners.com.au/wp-content/uploads/2025/02/Picture3_1.png clean no 42:05 No no https://www.oasispartners.com.au/podcast/frank-li-from-migrant-to-dux-to-deal-maker/?utm_source=rss&utm_medium=rss&utm_campaign=frank-li-from-migrant-to-dux-to-deal-maker Tue, 10 Dec 2024 22:11:28 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17588 https://www.linkedin.com/in/frank-li-6954396/ TBC Enterprises Limited website: https://www.tbclimited.com/ Points of Interest Frank’s early life: 0:56 The start of Frank’s China journey: 6:32 Understanding two cultures: 16:27 The Bundaberg journey: 19:23 Selling the business 34:28 Getting back to Australia: 43:45 The Geopolitical state of China: 46:48 Finding business partners and the Chinese culture: 1:05:24 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike  00:10 Welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now today's guest is a genuine China market specialist and Troubleshooter. Frank Li started bill and successfully sold his large Chinese distribution business to a big European buyer in 2023. This is a great rags to riches story and another testament to the power of hard work. So sit back as I chat with Frank about his journey. So welcome to the troubleshooters podcast. Frank Li,  Thank you. Mike:  00:48 Now you're a China market specialist, Frank, you're a great, long track record of being with China. You weren't born in China, right? Were you? Were you born in Shanghai? Frank Li  00:56 I was born in Shanghai? Okay. And parents Chinese. Parents are Chinese. Okay, yeah. So I grew up in China, then came out here in the early 80s, okay, and, you know, since then, you can probably hear through the accent, yes, that I've been in Australia for a long time, so pretty much, you know, primary school. Mike:  01:16 So how were you in the early 80s? Then when you came here, Frank Li  01:18 I was 10 as a tenor, yeah, so the, you know, so you had, you got a good, got a background at that point in China, you knew where home was, yes, okay, and, but then you obviously got very westernized, uh, effectively, yeah, education, a, uh, what was that like in the In the 80s, treated? Well, yeah, look, it's schooling. Primary School was okay, okay, high school was okay. But, you know, I think you're English, like, terrible. I didn't know the ABC, so, okay, so that would have been difficult. That was, that was, but you know, it was happy times on reflection, the I still recall the school I went to, which is actually not far from where we are sitting now, okay, St Mary's cathedral, actually the same school that our Prime Minister's from, yeah, although we're we're probably too far apart. Is it? Mike:  02:14 Is that a Catholic school, right? Frank Li  02:15 It's a Catholic school, yeah. Okay. St Mary's cathedral, um, I sacraments and stuff? Did you, I mean, it was a Catholic school, right? Did they? Mike:  02:24 Did you do your sacraments? Or China is a kind of Buddhist country, right? Frank Li  02:30 Well, China's largely Buddhist, okay, but I was not religious, okay, okay, but we, we went through that school more so, because it was probably the most affordable private school option available, Okay, interesting, rather than the publicschool, I think that's still the decision for many parents, actually, yeah. And, you know, I recall we had something like 150or 100 and something different nationalities in the school. So there was a, you know, that there was a click of Greek boys, Portuguese boys, Italian boys. So it's quite a melting pot, yeah. And so, you know, school was, you sort of find your little pockets, if you like. And of course, there was a little pocket of the skips as we caught them back then, okay, but you know, that was very interesting. So you obviously did well at school, because you became a graduate you, I think you're a chemical engineer. Yeah, I had the honor of actually, in year 12 being the Ducks of the school, did you? Mike:  03:29 So you went from, that's very interesting. You went from age 10, not knowing any English, to the Ducks of the school by 12. That's either a very good school or you're a very bright guy. Frank Li  03:41 I think it is a combination of year 12 came along at the right time for me, right in terms of my educational maturity, if anything, you know, year eight, year nine, I was a bit of a bit of a rough kid. Okay, I still recall the the warning from the teacher. You just wait until parent teacher night. I will tell your mom what sort of what sort of a child you are. And I was actually quite scared, yeah, but, but come year 11, year 12 was like, you know, knuckle down. Okay, to to do the academics. And great for some and I think with most things in life, if you actually do the work, yeah, you don't have to be the smartest person. No, you don't have to be the most intelligent person. But if you are the most diligent and persists, yeah, then you will actually havepretty good outcomes. And for me, it was a case of, you know, I, as you mentioned, you know, I didn't speak any English. When I arrived in Australia, didn't know what the alphabet was. Wow,in year 12, I came first in two unit maths, two unit English. Okay, so, so that was a bit of a surprise, even for me as well. Mike:  04:57 So, so phenomenal. And so I presume you got support and encouragement has probably been polite from your parents, because only Chinese parents are pretty keen on their education with their children. Frank Li  05:06 My mom was pretty relaxed. She, you know, she, she really worked her ass off. Yeah. My parents were divorced, so I, you know, my dad was back in China. I was here with my mum, okay? And I still recall, you know, working three jobs, okay, to support me, and then so I was pretty much left to my own devices as to whether I was going to study or play around or do whatever. Mike:  05:35 You computed that by sort of year 12, you thought, okay, mom's working hard. I work hard as well. Frank Li  05:41 Yeah. I think potentially it was, was that, yeah, and, you know,it, it was a case of, I sort of set a goal for myself for two years. I mean, year 11, year 12. It's really only two years when you think about it, yeah, and you have a good go at it, and you see what happens at the end of it, yeah, so, so, so that was a probably internal sort of a clock setting for myself. Mike:  06:05 Yeah. I mean, that's a common story for the people that we, we get on the podcast, immigrant parents working extremely hard, trying to establish themselves, and that kind of rubs off. I mean, you know, we're, I think without strong work ethic, you're in trouble in business, really, that's for sure. So where did the entrepreneurial bent come from? What was in your background that got you thinking about business and so? Frank Li  06:32 So I think if we, you know, jump over to my China journey. For me, going to China was about a couple of things. One was in my work. At the time, I was working for a very large Australian company. I got to a level where, you know, theypay for my MBA. Okay, so this is Carlton United Breweries, yeah. So fosters, they pay for my MBA. And so that, obviously they recognize something in me in terms of future potential in the business, but when it came to having discussion around, okay, I'm about to finish my MBA, what can we do in terms of my my development within the company, within the business? Okay? It was a pretty much standard off ish sort of response, which didn't really encourage me to say, let's stay here for the next couple of years. Okay, so you left there in 2002 so how will you then roughly 31/32 so you kind of figured by that stage at perhaps the corporate scene was a bit limited. Well, there was a there was a ceiling that I couldn't actually get through, yeah. And so it was a case of, I need to go somewhere else to find a, you know, have a career change, or, yeah, or do something different. And then, if we then fast forward to 2004 when I actually went to China and and that was, if you recall, trying to join the WTO in 2002 okay? And that was in the news, or I heard it in the news. It's like, okay, well, if I'm actually going to do anything in terms of entrepreneurial sort of venture, yeah, now's a good time. I was single, had a bit of savings, yeah, had a bit of business experience. Mike:  08:16 And were you going up and down to China by then to see Frank Li  08:20 I've been a couple of times for holidays, okay, not so much for business. Okay, so mom had taken you back a couple of times. Yeah, yeah. My mom took me a couple of times, and I went up there with a school friend. Mike:  08:31 Okay, so sort of three times in 20 years. Frank Li  08:37 You wouldn't say that I knew China. Yeah, okay. If anything, the year actually went to China, didn't actually speak much Chinese at all, okay, which is quite amazing when you think about my background, right? So I think speaking it really and, well, you speak it at home, but it's a dialect of it wasn't Mandarin, it was a Shanghai dialect, okay? And so when I got to China, everyone's speaking Mandarin. It's like, okay, I need to learn this. Okay, from from scratch, to relearn it. Yeah. But I had a good you know, you had a good base. You had a good base, a good start, starting point. And so going to China was a case of, it's joined the WTO. Everyone's going to be looking at pouring into the country. I had a bit of a invisible armor on myself, if you like, because I just graduated from Australia's number one business school, agsm, it gives you a fair bit of confidence when you walk out of there. Yeah. And I thought I should be able to start a business in China with my background, with my experience, and also had family contacts, which always helps. So I thought now, now would be good time to go to China, because if I don't do it now, yeah, it becomes a lot harder to do when you're married. And this is 2004 right? 2004 so, so, and you were 30 in your early 30, early, early 30s, yeah. And the idea was to go there, set up a business, run for two years, come back. And, you know, rip the rule. Of the China Business. That was the starting point. Okay, little did I know it would take 20 years too many. Mike:  10:06 Isn't that the way? Yeah. So people don't realize how long it takes to build a real it's, Frank Li  10:12 I mean, a lot of people talk about overnight successes, and you look at all the different so called overnight successes out there that they never are. I mean, I heard about, I heard, I heard a podcast the other day about BYD, the car that we now see all of the roads in Australia. That guy started business in 1990s Okay, as a battery maker, yeah. So you know now he's only just now, he's become a global Yeah, if you like, well known brand or global threat to the incumbent, yeah, car makers and economies. Mike:  10:39 Yeah. I suppose the catalyst was your background. China's just joined the World Trade Organization 2002 you thought, okay, there's an opportunity for me to leverage my background. I understand the culture, and maybe I can make some money and build a business in two years. That's what you thought. Okay, so what happened? Frank Li  10:58 So two years became more than two years very quickly. Yeah, when I first arrived in China, all the friends and connections and family people, pretty much were of the one opinion, I arrived too late. Okay? And I sort of questioned, well, what am I too late for? I mean, we can, we can have a good gig about it today. But back then, everything in China was about property. Everyone was invested in property. Everyone was into property. And, you know, I had actually sold my property in Australia to go to China. And I thought, if I actually wanted to get into property, I should just say, back in Australia, I'm not here to jump into property, although, having said that, you know, if you look at the property prices between 2002 versus what it is today, maybe I should have, because the increase is astronomical, more more than 10 times. Mike:  11:50 Yeah, I've never really understood property in China. I must admit, I've got a slight declare an interest, because I I earned a whole foreign enterprise in Dongguan and lived up in Hong Kong and spent quite a bit of time in China. This is 20 years ago now, but I could never compute the property prices and land values versus wages correct. Frank Li  12:10 So it doesn't compute right? And the thing is, and I think it's a case of, we're using the Western mentality of trying to work out my income and property price, and how can I actually afford the mortgage? Yeah, whereas in China, it's not just you, it's the whole family. It's potentially three generations pouring the money into that one property, okay, to help you fund that and also help you pay for that so, and I think that's where that's effectively driven the pricing. Well, I don't know about that. I'm Look, I don't understand property in China, no, which is why I didn't get into it. No, okay. And you know, if you look at my history being Australia, it was in beverages. And when I sold the business in China, it was in beverages, okay, so background in Carlton, United brewers, right? Mike:  12:57 So you understood beverages. You understood, you know, distribution, you understood branding. So, so what? How did that business of yours? It's called just beer, right? I know it was called just Frank Li  13:10 No, no that that was okay. That was the first business that I ventured into with a couple of partners that didn't go so well, okay, but that was, that's interesting. Mike:  13:20 So that was beer and other alcoholic beverages, really in China, correct? Okay, so always interested in in the failure before the success. So what actually happened, and what did you pull out of it? So, obviously, not a lot of money, but what did you pull out of it from a learning point of view Frank Li  13:36 From a learning point of view, pick your partners wisely. Okay, do a lot of due diligence before you jump in. Okay, ask the hard questions, embarrassing questions that you need to ask beforehand. Okay, because it's gonna cost you a lot down the track. Yeah. Okay. So what happened with that business was, it was, I wouldn't say we were very successful, but we were pretty solid. We got to get good distribution across China. But ultimately, what failed was when you have partners who are embezzling money from the business, okay, and other partners find out about it, and then not fessing up to the fact that they were doing that, and then really fighting it, that does not end. Well, no, no. And so that's what ultimately drove that business to the grave, if you like, okay? And the other part with that business was we ended up having four partners. In the end, all three other partners left China, right, and I was expected to stay there and run the business whilst everyone else was getting the same so I think the equity around that didn't actually quite work out too well for me. Mike:  14:42 No, okay, so you, you left that big lesson, pick your partners wisely, do your DD and you know, make sure the arrangements are thought through. And then you got into your own business center. So you had a major, major success with 31Jiu, right? Frank Li  14:59 Correct. So tell us about this. So that was a business we started at the at the end of the previous business. And I was very fortunate that I had a very good friend who backed me, because, you know, coming out of the previous business, I didn't have a lot of money, right? And as you know, with any business, you need to have a startup capital to actually get it going. So he was very good. He provided the finance behind the business, yeah, because he knew me as a person. And this is, I think, a classic case of, you know, you hear about investors talking about, when they invest early stage in businesses, they don't really invest in the business, they invest in the people, yeah. So this is where he didn't even see the business plan. He didn't even see any numbers, but he said, How much do you need? Here? It is interesting. And so that really helped, yeah, to get rid of the pressure as to where the money's going to come from, in terms of running, in essence, a startup business. Mike:  15:55 And then, so that's interesting. I mean, there's an old saying that says money follows management, really. So when you know the money's backing the people, fundamentally, because the ideas, some of them are great, some of them are not so good. But one thing you do know about planning is everything's going to change when you hit reality. But good management find a way. I think that's the difference. So it's interesting that you got back there, but what was the problem that you were solving? What was the opportunity that you'd identified? What is it that got you to start 31Jiu Frank Li  16:27 So that the thesis remained the same? You know, I understand Australia. I understand Western business mindset, I understand Chinese culture, and I want the new generation of Chinese people who can afford it to enjoy what I enjoy growing up in Australia. Now, it just so happened I understand beer and beverages, yeah. And so that's where we started. The name 31Jiu. I mean, the 31 is the latitude of Shanghai, yeah. Joe the Jiu, the character is actually the Chinese character for alcohol. So within the name itself, he you hadcombination of where we operate, who we are, and also what we do. So there was no confusion in that. Yeah, and Joel is actually your English, of course. I mean, we were in China targeting Chinese, so, so the name was so people would have just immediately got older. Well, no, they didn't. But once you explain to them, oh, then I know. Okay, okay. And the funny thing is, everyone in Shanghai who has an ID card the first two numbers is 31 okay. And, and all Chinese businesses in or Shanghai businesses, their tax file number is 31 okay. And so anyone who's in business should know, yeah, where 31 comes from? Very good, if they thought about it, yeah. And so, you know, it was a case of bring a little bit of what I know to be good quality products to China so that Chinese people can enjoy it. And that was, if anything, the underlying starting point for, you know, the business that we did then over the years that grew too we had Italian beers, we had American beers, we had Welsh beers, we had so beers from different parts of the world that we're actually building. And also, Mike:  18:13 There was an emerging market in Shanghai and China for, you know, Western alcoholic beverages, right? And you were tapping into those sort of specialist niche brands, bringing them to China. Frank Li  18:25 Yeah, there was that. Then also, you know,coincidentally, in 2004 and 2005 both line, Nathan and fosters both decided to leave China, okay, and, and that was a bit of a and I saw that as a bit of an opportunity, okay, as you know, you know, large corporates, when they make a decision like that, they're probably not going to turn around within five years and say, we're going to go back. And so I saw at least a five year window in which I can do their products in China, yep, and and have a go without the brands coming back in a big way, right? So, so that that was the aspect of of doing Australian beers, okay? Mike:  19:09 And then Simon, who introduced us, was telling me that things really took off for you around ginger beer and Bundaberg, so you got the license for that, effectively, for China, right? Frank Li  19:23 So we, we got the distribution rights for Bundaberg in China, yeah, in 2016 okay? And that massively resonated with that, with the China market, right, correct? So, so we were in the So, so the Bundaberg range of products, so this, just to be very clear, it's not Bundaberg rum, it's Bundaberg brew drinks. Brew drinks. So in Australia, we know the Bundaberg ginger beer, but in China, they know the passion fruit, the pink grapefruit, okay, the fruit flavors a lot more than they know ginger beer. Okay? Ginger Beer, if anything, is more of a Western flavor, more of a Western Palette, more English, if you like, yes, then the fruit flavors, whereas ginger in an indulgence product is not, does not go down well in China, Ginger is known more for health and medical benefits. So, so that that really so when we came into the market, a couple of things were happening globally. There was a Moscow Mule movement in the West, and Moscow Mule is made with ginger beer. And Bundaberg tapped into that in the in USA, yeah, and a couple of other markets around the world that was using ginger ale or ginger beer, that there was a bit of a movement around that. And at the same time, the likes of Coca Cola was playing around with Coca Cola ginger ale or Coca Cola ginger flavor drinks. So there was a quite a few brands out there that was in the ginger space, which helped us to get ginger beer into China. Then, when we first started with Bundaberg products, we didn't know what the market was going to be like. We just saw it as an opportunity to bring another Australian product into the country. So there wasn't a, you know, like a corporate world, we have a five year plan of what your brand's going to do, what your marketing plan you got the rights you out of the rights. This was just another set of rights. And you see how it goes. It's an opportunity. It's another it was also a very much plannedstrategy on our part to move away or or to add to our beer portfolio. Okay, you know, if you look at the McKinsey's horizons, if your core horizons beer, if you want to de risk a little bit, if you want to move away from that little bit, if you want to add revenue streams, you don't add more beers. You add something that's adjacent to it. So for us, that was soft drinks. We could have done wine, but wine is actually a lot more capital intensive. Yeah, as many companies in the world have shown that it doesn't work. It's not a fast turnover cash products. Mike:  22:12 So Frank, you sign it up, right? How quickly did you know it was okay, it was going to be a winner and transform everything, Frank Li  22:19 When you were on to win a even before the first shipment arrived. Is that right? Because we actually sold it, okay, pre sold it. So good sign. So that was a good sign. It was also, it also goes to show that we had a good customer base, okay? And we actually sold the first container, first shipment of 1400 cases, before you actually arrived right, which was great for cash flow, in that sense, because you know you're getting cash in before you even pay for taxes. Mike:  22:49 So you started this in 2013 So when was this on that? And then you sold out in 23 So where were you on the journey when you got hold of the, the the Bundaberg opportunity. Frank Li  23:03 I mean, we're still very early stage, you know, journey, still trying to, still trying to play around with our business model. Okay, so by that, I mean, you know, a lot of people who do distribution in China, there's couple of ways to cut the cut up the cake, if you like. You could actually do national distribution yourself, yeah, which is very resource intensive, very capital intensive. Mike:  23:31 So you, you tapped into a distributed network, did you Frank Li  23:35 Or you could actually do what we end up doing or choosing to go down the path of is using a network of distributors to grow the business, yeah. Now, obviously, when you go from the first model to second model, there's a whole question around margins, because when you add in a layer of distribution, I'm going to give away giveaway margins. But with China, what you get is a huge uplift in volume. Okay? As we get rights from the brands to distribute in China, we also then give rights away to our distributors to distribute within either a certain channel or within a certain geographic region, okay? And that gives them some certainty that if they grow their business, they're not going to get cut out by someone else. Yeah, and having that sort of certainty for our business partners in China actually was what I think really helped us get on the escalator to grow in our business. And you already had those relationships. We had some of those relationships. We didn't have a lot, because our business model in 2013 was very much with your distribution ourselves, okay? Because, you know, on paper, look great, yeah, margins are great, yeah, when you actually go through the other model, you got to give away not a few percentage points, quite, a quite a bit. Yeah. But what you do get is growth, growth and and without the capital to fund. Well, you know, you don't need to have your own staff to go to each venue, right? You your distributor, have do that one. Mike:  25:12 And were these venues different to the alcoholic venues? I mean, with it, was it a separate yes or no? Frank Li  25:18 I mean, retails, retail, onlines online, but pretty much for us on premise was, by and large, still the same venues that we went to. So we will go to a bar and sell our soft drinks and beer. And it just so happened, the soft drink, the Bundaberg soft drink, sat in that space where people either a didn't want to drink, yeah, which is a trend now globally, the young, younger generation, but they still want to go out. They don't want to drink, either because they don't want to drink or because they need to drive, okay? And China has a zero tolerance to drink driving. Okay? And so we sat in that fridge space by ourselves in a category that was came out of nothing, okay? And it was at a price point that was just a little bit below the beer price, or about the same. And so people you know were getting the same drink size, having a good night, enjoying themselves. And you have a product that look great, taste the Great, yeah, which is also very, very important. And so we were able to leverage that, and in that sense, the markets that we sold to for beer was the same markets or channels that we sold to for Bundaberg. Okay, so there were synergies in that, and with the growth of that, we then developed on trade off trade, so retailers and then E commerce took off as well, Mike:  26:43 And you'd been there since oh seven, so you'd had some of those relationships for a while, and you'd learned a lot aboutabout China, because you were new to China. So you'd learn a lot about the culture and the game by that stage. Frank Li  26:55 So because it is different, isn't it, it's very different. The relationships that we had in oh seven were very different to the relationships we had in 2013 okay, because our business model is different, it changed pretty much overnight. We didn't have distributors. I mean, we had to find new distributors in different parts of the country, which is new for us so and we then took on things like doing trade fairs to try and find distributors. We brought on wholesale managers whose only job was to go and find distributors around the country, and then we will qualify them, and we will, you know, look, bring them on board, and then we work with them. Yeah, for us, it was a case of having a little bit of success with that business model of using distributors and then doubling down on that Mike:  27:44 Okay, so were you considered local Frank at that point that people saw you as local Chinese boy, you know?  So the business crew became successful. When did you get your knock on the door? When who approached you? And how did that come about? Frank Li  27:52 So what I think the easiest answer to that question will be, it depends, okay, to to the Western person in China that considered me as local, okay, to the Chinese person in China that considered me as foreigner, okay, I had a good friend who said, did that help you or hinder you? It helps, because I can actually play both sides, okay? And I understood both sides, okay. You know, people talk about the whole Chinese banquet culture, where you got to drink lots of alcohol, my staff knew that I didn't drink a certain I don't drink the Chinese white white liquor, the rice spirit. And so whenever we have a meal with a client, they would say, I only drink beer or wine, okay? And that's, you know, stated up front, because they say in China, I might look Chinese, but because my growing up in Australia, I don't, I'm not used to that. So I'm actually used to be so setting those sort of things early on with our customers, our distributors, was good, yeah, yeah. So, so I was able to, you know, play both sides, if you like, yeah, in that sense, yeah. So I my daughter was born in 2012 Okay? And, you know, we were quite happy in Chinathroughout all the years. Yeah, I think couple of turning points. One was realizing that, you know, one of the holidays back here, that okay, maybe when you think about education for for my daughter when she's a bit older, and this is not, not to say that Chinese international education is not good, if anything, you know, China, or Shanghai at least, has some of the best education in the world in terms of academics and so forth. So it wasn't so much about that as more so around the more well rounded education that, you know, okay, you would get in Australia versus, say, China. Okay, so that was one, I think one, one thing that we that was probably important, and then the other aspect was probably around COVID, okay? Um.And for anyone who lived through the lockdown in China, that was probably,if you like, the last straw, yeah, but you know, we were well on the way towards an exit, or looking for an exit, just before that. Mike:  30:15 Okay. I mean, for those that don't know, it was fairly brutal. I mean, Simon Minetti, as you know, work works for us. And was up there during the lockdown, and, you know, I mean, he said it was pretty he couldn't wait to get back. Frank Li  30:29 So, so Simon, you know that they had a tough because they had two very young kids, and they were, they were getting, if you like, getting the full on Chinese treatment, yeah. Whereas for us, put us right. We were locked inside for 66 days. Okay? And I speak to people you know in Australia, talk about about LockDown. They say, Yeah, we have lockdown. We had 100 odd days in Melbourne, or whatever it was in Sydney. And you know when, when I explained to them the Shanghai style of lockdown versus what they had? Yeah, it's chalk and cheese. I mean, we were not allowed to leave our front door, right when you think about it, you live in an apartment block, yeah? And you can't leave your front door, wow. Let's put it this way, a person in jail has better rights than we had at the time if you're in jail, yeah, let's get let out for bit of time for sunlight during the day. Yeah, we were not even allowed to leave for that. Okay? The middle it got better towards about a month in. But, you know, in the first two weeks, Mike:  31:32 It was a remarkable time. Was it was emotional. It was a remarkable, I mean, it was almost biblical. I mean, I mean, it's understandable, Frank. I mean, I remember I was able to come to the office, but I remember looking up and down George Street, there's just nobody there. It was just, I mean, it's a big by Australian Standard. Sydney's a big city. There was literally nobody out. It was amazing. Frank Li  31:58 I mean, at the end of March, 2022 he had one of the vice mayors of Shanghai come out on international news saying, We will never do a lockdown. Now, typically, when someone from the government says something like that, that means they're not going to do it. Okay. But on the first of April, even before that, Shanghai started with a four day and four day quarantine between the east of the city and the west of the city. So pu Dong and pushy So the city is divided by the river.The Financial guys knew that it wasn't been more than four days they actually send their traders into the office and told them, You stay inside right because they needed to trade right now. Either they had foresight, they had more news. They were just well prepared, whatever it might be they did that they had traders who stayed in there for two and a half months. Is that right now they were well fed because they were getting food brought in by their company. But I was fortunate in that I live in one of the best parts of Shanghai, if you can think of a mix of a double bay lifestyle with Harbor Bridge sort of environment. That's what I lived in Shanghai, so I wasn't doing badly, but for the first two weeks, we had no food. I mean, you can imagine that in a city of 27 million people, we had no food. How does that happen? Yeah, right. So, so that was incomprehensible in that sense. I mean, when you live in China as a guests of the country, you're always gracious to the host. You're always respectful of the rules and the laws, etc. But for that to happen so suddenly in Shanghai, it was incomprehensible, not just for me, but and I think for a lot of locals as well as expats who live there. So so that if anything sort of made us say what you know, we probably need to think about in terms of just lifestyle. Mike:  34:17 So you sold your bus, you remember you sold your business just before COVID? Did you Frank Li  34:23 We sold our business at the end of COVID? So October, 2022 was when we closed the deal Mike:  34:28 And what happened to the business during COVID. So if anything, may 2022 was our best month ever. Wow, in terms of sales, wow. And this is this goes to, you know, and I have to say, both myself and my team were very good at what we do. So we're very, very good at getting products from A to B, right. You know, during, if you look at 2021 when Australia and China had its political bust up in. You like, Yeah, we actually cleared products through the port within two days, right? Whereas a lot of people who were bringing non one products, non green products, that were not on the banned list were having the product stack of port. Okay, so in channel 21 we actually, how was that? Frank Li  35:15 How are you able to do that? You had relationships. Well, what was going on? Combination of having good service providers, yeah, with strong relationships, yeah, yeah. And also, you know, leveraging our service providers in our time of need, okay, right? And then wording them up prior to that. So, so once people are ready for the fact that, you know, we need to, then, yeah, we need them. Then to, you know, pick up their game. Yeah. So who bought you and how did they approach you? We went to market with a financial advising company, okay, in the end, we decided on a company that was a small investment company. They called EJ Makai, okay, it's a small, boutique investment firm with China footprint and USA. Footprint, okay, the founder of that James, James Lee. He's based most of the time in Boston, but he also travels with China quite a few times a year, and also goes to the Scandinavian countries, okay, regularly, because that's where his connections are, okay. So we work with them. And then so, because they were actually very good, that they got our proposal out to many, many companies, and in early 2022 we got a inquiry from Jebsen. So Jebsen group is a Hong Kong based Danish company, okay, they've been in the region for about 130 years. Wow, so long history. I think they're now into the fifth generation, or sixth generation of Mr. Jebsens. They started off life as shipping merchants, I think so, shipping goods from Europe to China, and then they developed into product distribution. Today, the businesses running couple of geographies, so Hong Kong and mainland China, they operate couple of verticals. So automobiles is one of the major verticals. They're the dealer. They own a dealership for Porsche cars, consumer products. So electronics, like watches, vacuum cleaners, electronic goods that you see around the house, they have a vertical around that. And beverages is one of the other verticals that they have. So they're the owners of the blue girl beer brand in Hong Kong. So put it in Hong Kong, you will know that pre brand, yeah, that brand commands something like 30% market share. And the gypsum beverage beer business in Hong Kong has something like 50% market share of the Hong Kong Mike:  37:50 Okay, so they and so you're ostensibly the agreements that you had with various IP owners and manufacturers, the Bundaberg one was a big Did you have a fight, you know, some kind of long agreement with them, or, yeah. Frank Li  38:11 So we had a long term agreement with Bundaberg. So we had, that's what you were assigning, really, to them. That's one aspect of it. So we, we had a business that top line that was growing wrapper, right? Not small digit, no, not small number, double digits. It's quite, quite high. I won't go into that with numbers, sure. And our ebook percentage was actually quite high. Again, double digit, all right, so we, I operate very lean ship, if you like, yeah, because I'm across all aspects of the business. And I think that is probably because my both, both the Fosters and BOC gas experience that I had, and also the agsm training that I had that actually allowed me to see all facets of the business, Mike:  38:59 Just as a matter of interest. When did you, did you manage to pay your, your partner back? That how you found he was paid? Frank Li  39:06 He was paid handsomely within the first 12 months. It's outright, isn't that great? It was many years. He didn't have to wait too long. No, it was, it was early, which is great, because he risked his position, right? And even towards him whenever we needed, you know, as you know, with any business that's growing, you cannot be self sufficient in terms of funding for the business. And our business was always cyclical. It's a summer intensive business. And in terms of cash flow, you know, was always January through to August. Was very tough. September through to about Christmas time was always very good. And so, so it's always around about, you know, each year we would go back and say, Well, next year we need, okay, a bit of a bridging loan. Already. Season, more funding. Quite predictable. But seasonal. Yeah, seasonal, very seasonal. And, and, you know, when you get consistent growth and, and, you know, we, I believe in what you promise to people you actually do okay if you can't do it, don't promise. It's not just about setting low expectations, but it's also being who you are as a business person, you know, any any brand that we take on board, be it Bundaberg or it was cub back in the day, or whoever might be, we never actually talk trading terms. No, there was always a given that I would pay them cash up front, right? So we get that out of the way. Yeah, I have no history with you. Well, why should you give me terms? But if we show some, you know, trading history, and we show that we pay our bills on time, and we show that we are consistent with what we do and we deliver on what we say, then that is a start of a building of a trust. And we do that with not just the international brands we work with, but we do that with all of our local Chinese suppliers as well. Yeah. So, so you, you're able to exit successfully. The Danish backed Hong Kong guys bought you. And were you out straight away? Or did you have to do some kind of Yeah? So, so I worked till the end of last year, so, okay, for about 15 months in the business. Cool. And you know that Jebsen is very good. They again, they deliver on what they say they will do. And you know they, they went to find a replacement for me, going to market for that. we interviewed a lot of high profile, very talented, very experienced China operators, okay? So, so they, you know, definitely went to, went to do that work very well. Okay, that didn't sting on, you know, trying to get someone on the cheap. So, so, because, you know, one of the questions earlier, what are the bias? One is for the contractual rights that we have, because that then shows that they have some longevity as a distributor. But the first and foremost is we were a very profitable business that was growing very quickly. And then we also actually had real customer database. A lot of people, when they talk about China, they say, yeah, we'll get your products into China. But what they really means that they know someone who might know someone, and they'll land your product on a shelf somewhere, yeah? But they don't actually do any sell through, yeah? So not we were, not only were we good at selling into a retailer or selling into a bar, we actually actively help them to sell out, all right, which means you had that consumer pool, yes, so that then gave you longevity and sustainability in all the channels, in all the markets that you work. And we were very good at doing that. And you know, when we saw the business, we had 11 offices around the country, okay, where we have sales staff on the ground to help our distributors, yeah, do that? Do, do the distribution business and do or do the sales, if you like, yeah. So Jefferson saw that part of our business, and at the same time, I think strategically, they were looking for growth. As you know, you can either get organic growth or you can acquire it. And we came along, I think, you know, perfect timing as to where their business journey was for China at the time, and we had a basket of brands that they were interested in, fascinating. And, you know, they've now re they now have a whole new business division called Jebsen wellness, okay, purely because they now bit that they have our business unit that's sitting there, which, so it was very strategic for them. Yes, absolutely, yeah. Mike:  43:45 And so you, you worked on and then you, when did you get back to Australia, Frank Li  43:51 January of this year Mike:  43:52 Okay, great. So ostensibly, you are a definite, you've got a great pedigree there in China. So you, you've really set up as a China market specialist now in Australia to help brands and companies that want to break the Chinese local market, which is very difficult to do, yeah. Frank Li  44:10 So, you know, my original idea of coming back to Australia was, relax. Do not much. Play a bit of golf. Do a bit of sailing.And, you know, say, long into retirement, yes. But I think you know when you when you go from a market and environment like China to Australia,you know people talk about China speed and China speeds about and you know you lived in Hong Kong, so you understand what Hong Kong speeds. Like China speeds Hong Kong, but on steroids, yeah,to come back to Australia, where it's almost,I don't know, to put it nicely, maybe, maybe not the best term, but it's almost like a retirement village sleeping, right? You know, many people don't pick up phone calls. It goes to voicemail and Um, try and get off someone after five o'clock is almost impossible. If you want to trade it to come around you, you'd be expecting at least two weeks for them to turn up, or if you or if you want to turn up today or tomorrow, you're paying a lot of money that that was a bit of a, if you like, reverse culture shock. But not just that. It's, it's the lack of, I guess, intellectual stimulation as to where I've come from to where I'm at now. And I think I realized that, you know, a lot of what I have to give is still pretty much related to China. A lot of the connections I've got is still much related to China. Yeah, and there are still a lot of brands, even when we were, you know, in China, but even after came back, people were approaching me about how to get into China. Yeah. So I thought, Well, why not bit of mental stimulation, leveraging what I already know, yeah, why not? Why not get back into it, not in the same level of intensity that I was when I was operating my own business, but to the level where I can hold someone's hand on their entry into China, and then hopefully on their first couple of steps of growing in China. It's almost like, you know, if you think of a child, right, you can hold, you can hold their hands up to maybe primary school before they start to go. You know what? Thanks. I can look after myself now. So, so it's almost that sort of a pathway, interesting, yeah, and Mike:  46:30 So you, you spend some time up there. You, you back and forth to, Frank Li  46:35 I've been, I've been up to China. So, so I was just up there for a bit of holiday, for October holidays, but I'm actually up there in two weeks, okay, in about 10 days, actually. Yeah, cool. And so we left a brand that I that's engaged me to go up to China, yeah. Mike:  46:48 So let's talk we let's get your insight, Frank, so let's talk a little bit about China and the kind of geopolitical state of the place. So certainly you mentioned earlier, and I think it was very striking to Australians, how China fell out with Australia,around the comments that were made by our then prime prime minister about a lot of things, but yeah, yeah. Well, I mean, ostensibly we understood he was quite keen to know, yeah, how this thing came about that affected the world Tedra that was really taken badly, wasn't it by the Chinese? Frank Li  47:24 I think it wasn't just one thing. It was a combination of many things. And I think just got worse and worse and worse Mike:  47:30 And it really, it's really effective relationship. I mean, I mean, we've got, we've got clients that are in the wine industry that have been dramatically affected by some of the fallout rate from that which still isn't fixed. Frank Li  47:47 Well, the one, if you like, it's called a tariff. Call it a ban, whatever you want to call it. When someone loves 206% tax on you, call it whatever you like. That's the end of that. That's the end of that as a market, as a product category. So I think look, if there's any learnings from it, you look at Australia, you look at New Zealand, throughout all of recent history, New Zealand does business with China. Australia does business with China. Australia stated China is our largest trading partner. Yeah. I mean import and export, right? Yeah. But at the same time, if you're the largest trading partner, do you say bad things about your trading partner in a global environment, in the public news, if you have a gripe, maybe you've seen a say it in the background. It's, you know, we spoke a bit about soccer at the start. If a coach has a problem with their captain, as Chelsea's coach had a problem with his captain, you don't say that in the news. You say that in the dressing room, you know, one on one, you don't broadcast it to the world that this is our issue, right? So you can see from China's perspective whether if that was one thing or many things. Yeah. And you know, if you read in the news, you know, when the previous Chinese Premier came out to Australia, around about 2015 or 16, he was meant to sign the Belt and Road Initiative at Parliament. And I think it was the day before he was meant to sign Australia walked it back. Now, you've invited the premier to come here. He's meant to sign it, yeah. And at the 11th hour, you said we're not going to sign it, yeah? You don't give a real proper explanation, yeah, the guy walks back with his tail between his legs. That's loss of face, yeah, yeah. That, you know, you know, you sometime, some point down the track, there's going to be payback, yeah? All right, yeah. And so I think it's combination of many things, but I think China's also pretty smart. They didn't do it unilaterally across all categories. They only picked a few. Well, they didn't pick iron ore correct, and they didn't pick mining, even though mining was on a bit of a gray area. For No pun intended. It was in a bit of a gray area for a little bit. Yeah, they did pick iron ore because they know they needed it. Yeah, and if anything, during those years, iron ore prices went up. Yeah, right. So, so look, it's politically, I think was a slap on the wrists. But you know, a lot of lot of business people, a lot of Australian citizens, a lot of farmers, a lot of people were hurt by it. Mike:  50:27 Yeah, no, no, definitely. It's interesting where we are now, because we're a few years on from that. Now we've got a new government here. There's been, certainly overtures. Perhaps it's not mended entirely, but certainly there's, there's improved diplomacy. I think going on, what would you agree? Frank Li  50:45 I agree. I mean, I think if you, if you show some sort of respect, show a bit of show that you were maybe potentially not doing the right thing. And I think having a change of government allows that message to the hell didn't it, right? Because, you know, the Liberal government of even if there was a, let's say Prime Minister Albanese didn't get into government, it was another liberal Prime Minister, I think would be pretty much in the doghouse, still, not more difficult, but having a switch in government, which, in terms of, you know, the ethos and the way of thinking is very different. It allows the government to walk a lot of things back, which is why you see us in the situation that we are now. Mike:  51:26 But what about the future? Because, you know, if you look at China's our largest trading partner, both import and export. You know, the Chinese is largest trading partners the USA still. So we hear things about, you know, that President Xi is under pressure. We hear things about the crisis, the property crisis and the financial we hear things about the demographics, right? There's a huge demographic cliff. Go, what are your views on all that? Because we've still got 1.3 is it 1.3 billion people up there? Frank Li  51:59 No. 1.3 or 1.4 Yeah. So give or take, yeah. Mike:  52:02 And, I mean, at one time that was being talked about at 1.6 so there's definitely been a downward spiral there. But, but for Australia, I mean, Australia has to, you know, you know, has to develop this relationship further. I think, Frank Li  52:20 Absolutely, I think Australia is in a very unique situation where, you know, we, we are now in a very good spot with China in terms of relationship, okay, Mike:  52:30 You think that you would describe it as a good spot. What better than what it was back in 2000 Frank Li  52:35 I mean, it couldn't have been a lot worse there. I mean, right? I mean, some of the language coming out of China is fairly dramatic Mike:  52:39 Absolutely, right. You know, I think China, in a lot of lot of ways, are very pragmatic. At the end of the day, there's 1.4 billion people to feed, yeah, if you look at a lot of things that they're doing today, it's about security, yeah, be it national security, food security, whatever it might be, it's around security, okay? And so, and I said, Australia is in a very unique situation in that it's one of the bigger western world partners, and at the same times, it's one of the countries that's actually doing relatively well with China, yeah, so it's, if anything, it's a good conduit to have conversations with China about different global issues without upsetting, yeah, too many people.  I mean, it's interesting, you know, we look at the M and A market and, you know, obviously, I mean M and A is my day job, and, I mean, I got into this about 15 years ago, specifically. And there was a lot of talk at the time about, you know, Chinese companies wanted to perhaps buy Australian business assets. That's never happened. I mean, at the big end of town, we saw some food security. Horrible land. Interestingly, I looked earlier that Chinese owned about 2.2% of our property in Australia. So not that high. The Dutch and the US and the UK are more property China's. But we, all we talk about is the fact Chinese have bought all our apartments, right? So, but so that's fairly modest, but certainly on the business front, in the five, $200 million enterprise value range, there are no Chinese mainland business buyers in the market. And that surprises me, and I do think it'll come. I probably won't be around when it comes, but I particularly manufacturing. So we do a lot in manufacturing assets, and I've been surprised we haven't been able to tap into interest from mainland China, particularly where there's strong IP and that can be leveraged and brought back to China. But I just think culturally, we're not there yet. But I think one of the things that I'm seeing is that, as you know, we're a generation on from when I started now 15 years ago, A Lot of the Chinese business owners now who are emerging have been trained in the West. They've been educated in the West. And I do think we'll see more integration coming out of matter. What are your views on that? Frank Li  55:15 It's an industry that I'm not really into, but just very broad strokes. If you look at Chinese investment in terms of waves, a lot of it would be, I mean, the top end of town will be driven by the government. If government says, Go, Go this way, yeah, then the SOEs and the southern funds would go that way, okay? Mike:  55:43 So that, because we've got a, you know, the the the Chinese Communist Party got a tremendous struggle hold on the country. I mean, let's have it, right, and, and they're probably the most watched and recorded people in history, right? But so ostensibly, the government set the agenda, really, for what, where we're going to invest in Frank Li  56:02 so, so, you know, there's been a, I listened to a number of podcasts, and really, pretty much about China and global economies. If you look at where, you know, in 2015 china set up the Made in China 2025, roadmap, and that's coming up next year. If you look at the key areas where they wanted to succeed, and I think the report card is pretty much that in a lot of areas, they've succeeded. The only one they haven't is probably silicon chips, and that's driven by USA not allowing them to grow. But you know, something like EVs, they probably outperform, then against the expectations. So if you look at, you know, where China's headed, and as a result, where they might want to invest, you look at the high level documents, such as Made in China 2025 which actually does extend it into 2030 and then all you got to do is read their five year plan. Now, we are now in the FYP 14. You look at where a lot of Chinese investments go. It comes out of the high level central government documentation. If you listen to all of that, then you know, okay, directionally, where they're going to go as a result, that may then define an industry. It may then define a geography, and that may then define a particular industry, right? So, and I think a lot of people who become successful overnight. I mean, not so much overnight, as we said before. About BYD is because when they see something that actually the government wants you to invest in and head in, everyone jumps into it. Okay, it's interesting, yeah. And if you look at the EY industry as an example at the moment, because it's quite a hot topic globally, right in China, there's something like 200 200 plus EV service provider or EV manufacturers, yeah, and that's because everyone jumped into it, yeah? Not because, I mean, yes, there was government subsidies, but everyone jumped into it, and now there's over, over capacity. So, so that's, that's why they, you know, some companies are actually not profitable, but unless it's still trying to sell their cars, yes, Mike:  58:24 Because I know 20 years ago, when I was up there, we there was, you know, a lot of forget the name of it now, but they're a lot of government owned companies. So you had, what were they called? Again, the state, state owned enterprise, SOEs, yeah. So in Chinese, we call them gorge and young, yeah. So, so, fortunately, the less of those now is, Frank Li  58:42 There's still a lot is, I mean, you know, it's everyone, you know. I think one of the biggest gripes USA has with China in terms of market access is that the SOEs get better market access than private enterprise, right? So by that, I mean, you know, if we look at EV as an example, yeah, if the government decides that EVs will be an industry that we want, they want business to get into electric vehicles, yeah, they will then support certain companies in EV by giving them better, better loans, by having local government give them cheaper land to build factories, by Giving them better, better, uh, concessions and better opportunities, whereas small business or individual operators will get less of that. Yeah, okay, okay, yeah, because at the end of the day, you know that the government looks after itself. That's something that you know the Australia and maybe to an extent, America, don't actually have as a as a sector. Mike:  59:39 Yes, yeah. I mean, certainly. I mean, my experience of setting up a wo fee in China was, I mean, they've taken bureaucracy to a new level of China. So you said yours up about 20 years ago, right? So that would have been a nightmare. So I remember was a complete Yeah. I'm not even sure it's even set up. Yeah, right. Yeah. Frank Li  1:00:00 So it is a, I mean, it's not the intent of the central government to have that sort of bureaucratic nightmare. In my experience, the red tape is because the different departments don't know how to work with each other to actually get you all the paperwork that you need. They're like, you know, tax Bureau is doing its work, doing its job, and it's got its requirements. The Business Bureau is doing its job and it's got its requirements. The bureau that gives hands out liquor license, they do their job, so they all have their requirements, which are pretty much written in law for Chinese businesses. And so when it comes to wolf, is like, Well, what do we do? Mike:  1:00:42 I mean, corruption was pretty rife up there 20 years ago, I can tell you, right? But do you think, and I know that the xi government is trying to clean that up. I mean, do you think that's worked? Do you think there is do you think they've eliminated a lot of that kind of government type corruption? Frank Li  1:00:59 I don't know what the numbers are these days, but I do recall. It's always hard to know. I do recall some, some, something like 2015 was the third year of President Xi's reign, if you like, because he came to pass in 2012 I think was 2015 there was some data around over 1 million Chinese politicians. So this is from local government, although, after central government were either indicted or investigated for corruption, yeah, yeah. I mean, put that into perspective, there's not even 1 million Australian politicians, from councilors up to federal level, sure. And that was in 2015 Yeah. And I think, I think, from a Chinese perspective, is those individuals either because they can or because they have no choice, yeah, will take that risk. Yeah, right. I mean, you look at it from a someone holding office, if someone comes and sees you in hands of a bag of money and insists that you take it, what are you going to do? Yeah, there's a certain implication, if you don't take it, Mike:  1:02:04 Yeah, no, it's interesting. But, I mean, you're, you're now on the ground, seeing, you know, taking, you know, organizations into China, in terms of trying to secure them, distribution. Now, is it, is it a bit easier now, is it, is it less, problematic when you're trying to get set up Frank Li  1:02:24 In terms of finding business partners, it's easier, okay, there, you know, I started there in 2004 so that's a generation ago. Yeah, there are, there's the new generation, by and large or speak some level of English. Okay, so, so we know one of the barriers is less. So the language barrier is a bit less. The current generation, if they got wealthy parents who sent them overseas for education, would have had some Western cultural experiences where they've lived overseas for a year or two or three. So that's remove another barrier around cultural misunderstandings, okay? And so that, in that sense, has become a bit easier, okay? You know, in the FMB sector, which is still, I mean, FMB is not finance, it's not high finance, we know. So, so it's not as attractive and lucrative as that sort of business, so that the people who who end up working in FMB don't have the same skill sets as someone who goes to the Ivy League school and finishes, you know, an MBA school. So but by and large, that they will have some English, they'll have some overseas experience, yeah, it becomes easier to find the right partners and so and because of technology, you know, things like that smartphone, yeah, in terms of connectivity, it's easier to then connect with people. Mike:  1:03:56 Okay? I mean, that's a very good point about connectivity, because, you know, there's obviously no YouTube up there, no Facebook, no Twitter. You've got WeChat and others so, so all those platforms you mentioned, Frank Li  1:04:07 YouTube is equivalents i chi, yeah, yes, yeah. Mike:  1:04:11 And look, the Chinese have been very, you know, they've been very effective at that, haven't? They've got a kind of war around the place, and, and, but they're very wide because, you know, I was probably there 20 to 25 years ago, and as technology was kind of emerging, but they effectively missed the whole desktop computer thing. They went straight to a phone, right? And so apparently, the 50% of people buy all their clothes and shoes online, in charge. So this they really adopted. As soon as that iPhone came out, that smartphone came out, God, did they adopt that online game? Frank Li  1:04:54 I think you know that that is probably one of the things that you. So that's about China in, you know, adopt, adoption of new technology, yeah, which probably goes to the culture of, you know, China's, you know, the modern China's gone through the cultural revolution where they've, you know, you look at couple 100 years ago in terms a lot of technology, China was the leading country in the world to, at the end of the Cultural Revolution, they were falling way behind everyone else, so that there is that mentality now, Chinese people are very proud people. Chinese people are very intelligent, and they want what is the best for themselves and for their kids and for their family, so for their child and for their family. Yeah. So they will. They're willing to try new things, yes, rather than assess then and then say yes or no, that they're willing to try a lot of new things. Yeah? So I think that's what you're seeing in the modern day. Yeah? China, yeah. And also, you know, with the smartphone, your example, buying buying clothing online, I think things like having a good user experience. Now, the one thing you don't see is that, of the 50% who buy their clothes online, how much of that gets returned? Okay, right? Because China allows you to have a free return policy, okay? Now, I don't know what it's like with Amazon and eBay and all the different e commerce platforms in Australia. Mike:  1:06:19 I think some are better than others. But, you know, it does seem to be a phenomenon where clothes, they allow you to send them back, right? So, so I'm an expert at this, not because I buy but my wife, in fact, the first week of COVID, I thought she was dealing drugs. We had so much, so many parcels, so many parcels arriving. Frank Li  1:06:36 So, so I think the use experience allows the person to try without the hassle of dealing with someone in store, right? So there's no pressure. Mike:  1:06:48 Yeah, okay, so, and I think that's something that is that cultural thing. Do you think? Do you think they they prefer to be in control than we do? Frank Li  1:06:59 I don't know. No, I mean, Mike:  1:07:01 Or do you think that's just a kind of universal thing if, because that's it, I suppose it's the convenience of it. I mean, I can't stand doing other I mean, I'm, I'm going to London in December. I tried to book a hotel the other night. I gave up after 20 minutes, and thought, you can stick that and I'll figure it out another way. I'll probably get my wife to do, I guess I'll get someone here to do, because I was just in a loop. I got in the loop, and I just don't have the patience for it. Yeah. Frank Li  1:07:28 So I think there's a generational thing, definitely, the older generation do not do that, that they want to touch and feel. And you know, how can I buy clothes online? Because it might not be the right size, the fabric might feel different, the colors might not be what I want, etc, etc. So I think there's bit of that. And so definitely, the younger generation are willing to try and for them. There's no costs, because we don't like it. Send it back. There's no cost. Got it right? And if you lower the barrier of entry, really, that just said, yeah, it's a no brainer. Yeah. And you know, the large e commerce platforms in China allow them, facilitates that experience. Mike:  1:08:06 Yeah, okay, very interesting discussion, Frank, and I'm very grateful that you came in. I mean, certainly we, they're our largest trading partner, import and export. China's a reality. I'm glad that the waters a bit smoother between us. You wouldn't have wanted that to continue down the road it was going particularly So, yeah, great stuff. And look good luck with you. I know you're certainly a specialist. You're going to be a great help to companies that want to find their way up to China. It's a very exciting place, isn't it? You mentioned the speed there. I mean, I lived in Hong Kong, and I remember used to commute every couple of weeks, and I would come back to Australia, and just, I just couldn't get over what was going on. I mean, you couldn't get on a Monday night in Sydney, you couldn't get anything to eat after about six o'clock at night. But in Hong Kong, I could get anything I wanted, any time of the day seven, right? Yeah. So, I mean, Hong Kong was genuinely one of those 24 hour cities, so that was a bit of a shock for me. I think I've now slowed down to Australian speed, but, but yeah, it's certainly very, it's a very exciting place, isn't it? Frank Li  1:09:18 It is so so you know, on that, on that experience of yours with Hong Kong. So in China, in Shanghai, you probably take it to the next level. Wow. If you're hungry at two in the morning, you just get your phone out. You order something, it'll be there in half an hour. Yeah. Man, is that two in the morning? Amazing, right? So now, obviously, not every city is the same, but definitely, if you're living in Shanghai or Beijing, on either large cities, or even that, some of the tier two cities you will get that service, yeah. I mean, Mike:  1:09:45 Hong Kong was a sort of gateway to China for a long time, but now, I think people are just, it's not the same. Frank Li  1:09:51 Well, I think now Shanghai is a gateway. We were talking about that 20 years ago. Shanghai will be the new Hong Kong, effectively, yeah. Yeah, people go straight there. And in the interesting Hong Kong's change, because 95% of the visitors now are mainland Chinese. So that whole Hong Kong market is is got itself together around that those visitors, rather than before, it was the it was a stop offer all the Westerners come in. Mike:  1:10:17 Yes, correct. So it's changed a lot as well. Yes. Frankie, thanks for coming in. Good luck with everything. Thank you. Frank Li  1:10:24 Thank you very much. Thanks for having me. Mike:  1:10:29 Wow. Being in lockdown in Shanghai was clearly not much fun. So there you have it. Frank Li arrives in Sydney. Can't speak a word of English. Seven years later, he's Ducks of the school. I hope you enjoyed my discussion with Frank as much as I did. Now, a quick shout out to our sponsors, Oasis partners, the only m&a firm I know who passionately believe in truly leveling the playing field for their clients, who are selling, often to much larger buyers. So if you think it might be time for you to consider your strategic plans about the future. Give the guys a call at Oasis partners. Finally, if you like today's episode, do share it with your friends until next time, stay safe. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 28 2 https://www.linkedin.com/in/frank-li-6954396/ TBC Enterprises Limited website: https://www.tbclimited.com/ Points of Interest Frank’s early life: 0:56 The start of Frank’s China journey: 6:32 Understanding two cultures: 16:27 The Bundaberg journey: 19:23 Selling the business 34:28 Getting back to Australia: 43:45 The Geopolitical state of China: 46:48 Finding business partners and the Chinese culture: 1:05:24 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike  00:10 Welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now today's guest is a genuine China market specialist and Troubleshooter. Frank Li started bill and successfully sold his large Chinese distribution business to a big European buyer in 2023. This is a great rags to riches story and another testament to the power of hard work. So sit back as I chat with Frank about his journey. So welcome to the troubleshooters podcast. Frank Li,  Thank you. Mike:  00:48 Now you're a China market specialist, Frank, you're a great, long track record of being with China. You weren't born in China, right? Were you? Were you born in Shanghai? Frank Li  00:56 I was born in Shanghai? Okay. And parents Chinese. Parents are Chinese. Okay, yeah. So I grew up in China, then came out here in the early 80s, okay, and, you know, since then, you can probably hear through the accent, yes, that I've been in Australia for a long time, so pretty much, you know, primary school. Mike:  01:16 So how were you in the early 80s? Then when you came here, Frank Li  01:18 I was 10 as a tenor, yeah, so the, you know, so you had, you got a good, got a background at that point in China, you knew where home was, yes, okay, and, but then you obviously got very westernized, uh, effectively, yeah, education, a, uh, what was that like in the In the 80s, treated? Well, yeah, look, it's schooling. Primary School was okay, okay, high school was okay. But, you know, I think you're English, like, terrible. I didn't know the ABC, so, okay, so that would have been difficult. That was, that was, but you know, it was happy times on reflection, the I still recall the school I went to, which is actually not far from where we are sitting now, okay, St Mary's cathedral, actually the same school that our Prime Minister's from, yeah, although we're we're probably too far apart. Is it? Mike:  02:14 Is that a Catholic school, right? Frank Li  02:15 It's a Catholic school, yeah. Okay. St Mary's cathedral, um, I sacraments and stuff? Did you, I mean, it was a Catholic school, right? Did they? Mike:  02:24 Did you do your sacraments? Or China is a kind of Buddhist country, right? Frank Li  02:30 Well, China's largely Buddhist, okay, but I was not religious, okay, okay, but we, we went through that school more so, because it was probably the most affordable private school option available, Okay, interesting, rather than the publicschool, I think that's still the decision for many parents, actually, yeah. And, you know, I recall we had something like 150or 100 and something different nationalities in the school. So there was a, you know, that there was a click of Greek boys, Portuguese boys, Italian boys. So it's quite a melting pot, yeah. And so, you know, school was, you sort of find your little pockets, if you like. And of course, there was a little pocket of the skips as we caught them back then, okay, but you know, that was very interesting. So you obviously did well at school, because you became a graduate you, I think you're a chemical engineer. Yeah, I had the honor of actually, in year 12 being the Ducks of the school, did you? Mike:  03:29 So you went from, that's very interesting. You went from age 10, not knowing any English, to the Ducks of the school by 12. That's either a very good school or you're a very bright guy. Frank Li  03:41 I think it is a combination of year 12 came along at the right time for me, right in terms of my educational maturity, if anything, you know, year eight, year nine, I was a bit of a bit of a rough kid. Okay, I still recall the the warning from the teacher. You just wait until parent teacher night. I will tell your mom what sort of what sort of a child you are. And I was actually quite scared, yeah, but, but come year 11, year 12 was like, you know, knuckle down. Okay, to to do the academics. And great for some and I think with most things in life, if you actually do the work, yeah, you don't have to be the smartest person. No, you don't have to be the most intelligent person. But if you are the most diligent and persists, yeah, then you will actually havepretty good outcomes. And for me, it was a case of, you know, I, as you mentioned, you know, I didn't speak any English. When I arrived in Australia, didn't know what the alphabet was. Wow,in year 12, I came first in two unit maths, two unit English. Okay, so, so that was a bit of a surprise, even for me as well. Mike:  04:57 So, so phenomenal. And so I presume you got support and encouragement has probably been polite from your parents, because only Chinese parents are pretty keen on their education with their children. Frank Li  05:06 My mom was pretty relaxed. She, you know, she, she really worked her ass off. Yeah. My parents were divorced, so I, you know, my dad was back in China. I was here with my mum, okay? And I still recall, you know, working three jobs, okay, to support me, and then so I was pretty much left to my own devices as to whether I was going to study or play around or do whatever. Mike:  05:35 You computed that by sort of year 12, you thought, okay, mom's working hard. I work hard as well. Frank Li  05:41 Yeah. I think potentially it was, was that, yeah, and, you know,it, it was a case of, I sort of set a goal for myself for two years. I mean, year 11, year 12. It's really only two years when you think about it, yeah, and you have a good go at it, and you see what happens at the end of it, yeah, so, so, so that was a probably internal sort of a clock setting for myself. Mike:  06:05 Yeah. I mean, that's a common story for the people that we, we get on the podcast, immigrant parents working extremely hard, trying to establish themselves, and that kind of rubs off. I mean, you know, we're, I think without strong work ethic, you're in trouble in business, really, that's for sure. So where did the entrepreneurial bent come from? What was in your background that got you thinking about business and so? Frank Li  06:32 So I think if we, you know, jump over to my China journey. For me, going to China was about a couple of things. One was in my work. At the time, I was working for a very large Australian company. I got to a level where, you know, theypay for my MBA. Okay, so this is Carlton United Breweries, yeah. So fosters, they pay for my MBA. And so that, obviously they recognize something in me in terms of future potential in the business, but when it came to having discussion around, okay, I'm about to finish my MBA, what can we do in terms of my my development within the company, within the business? Okay? It was a pretty much standard off ish sort of response, which didn't really encourage me to say, let's stay here for the next couple of years. Okay, so you left there in 2002 so how will you then roughly 31/32 so you kind of figured by that stage at perhaps the corporate scene was a bit limited. Well, there was a there was a ceiling that I couldn't actually get through, yeah. And so it was a case of, I need to go somewhere else to find a, you know, have a career change, or, yeah, or do something different. And then, if we then fast forward to 2004 when I actually went to China and and that was, if you recall, trying to join the WTO in 2002 okay? And that was in the news, or I heard it in the news. It's like, okay, well, if I'm actually going to do anything in terms of entrepreneurial sort of venture, yeah, now's a good time. I was single, had a bit of savings, yeah, had a bit of business experience. Mike:  08:16 And were you going up and down to China by then to see Frank Li  08:20 I've been a couple of times for holidays, okay, not so much for business. Okay, so mom had taken you back a couple of times. Yeah, yeah. My mom took me a couple of times, and I went up there with a school friend. Mike:  08:31 Okay, so sort of three times in 20 years. Frank Li  08:37 You wouldn't say that I knew China. Yeah, okay. If anything, the year actually went to China, didn't actually speak much Chinese at all, okay, which is quite amazing when you think about my background, right? So I think speaking it really and, well, you speak it at home, but it's a dialect of it wasn't Mandarin, it was a Shanghai dialect, okay? And so when I got to China, everyone's speaking Mandarin. It's like, okay, I need to learn this. Okay, from from scratch, to relearn it. Yeah. But I had a good you know, you had a good base. You had a good base, a good start, starting point. And so going to China was a case of, it's joined the WTO. Everyone's going to be looking at pouring into the country. I had a bit of a invisible armor on myself, if you like, because I just graduated from Australia's number one business school, agsm, it gives you a fair bit of confidence when you walk out of there. Yeah. And I thought I should be able to start a business in China with my background, with my experience, and also had family contacts, which always helps. So I thought now, now would be good time to go to China, because if I don't do it now, yeah, it becomes a lot harder to do when you're married. And this is 2004 right? 2004 so, so, and you were 30 in your early 30, early, early 30s, yeah. And the idea was to go there, set up a business, run for two years, come back. And, you know, rip the rule. Of the China Business. That was the starting point. Okay, little did I know it would take 20 years too many. Mike:  10:06 Isn't that the way? Yeah. So people don't realize how long it takes to build a real it's, Frank Li  10:12 I mean, a lot of people talk about overnight successes, and you look at all the different so called overnight successes out there that they never are. I mean, I heard about, I heard, I heard a podcast the other day about BYD, the car that we now see all of the roads in Australia. That guy started business in 1990s Okay, as a battery maker, yeah. So you know now he's only just now, he's become a global Yeah, if you like, well known brand or global threat to the incumbent, yeah, car makers and economies. Mike:  10:39 Yeah. I suppose the catalyst was your background. China's just joined the World Trade Organization 2002 you thought, okay, there's an opportunity for me to leverage my background. I understand the culture, and maybe I can make some money and build a business in two years. That's what you thought. Okay, so what happened? Frank Li  10:58 So two years became more than two years very quickly. Yeah, when I first arrived in China, all the friends and connections and family people, pretty much were of the one opinion, I arrived too late. Okay? And I sort of questioned, well, what am I too late for? I mean, we can, we can have a good gig about it today. But back then, everything in China was about property. Everyone was invested in property. Everyone was into property. And, you know, I had actually sold my property in Australia to go to China. And I thought, if I actually wanted to get into property, I should just say, back in Australia, I'm not here to jump into property, although, having said that, you know, if you look at the property prices between 2002 versus what it is today, maybe I should have, because the increase is astronomical, more more than 10 times. Mike:  11:50 Yeah, I've never really understood property in China. I must admit, I've got a slight declare an interest, because I I earned a whole foreign enterprise in Dongguan and lived up in Hong Kong and spent quite a bit of time in China. This is 20 years ago now, but I could never compute the property prices and land values versus wages correct. Frank Li  12:10 So it doesn't compute right? And the thing is, and I think it's a case of, we're using the Western mentality of trying to work out my income and property price, and how can I actually afford the mortgage? Yeah, whereas in China, it's not just you, it's the whole family. It's potentially three generations pouring the money into that one property, okay, to help you fund that and also help you pay for that so, and I think that's where that's effectively driven the pricing. Well, I don't know about that. I'm Look, I don't understand property in China, no, which is why I didn't get into it. No, okay. And you know, if you look at my history being Australia, it was in beverages. And when I sold the business in China, it was in beverages, okay, so background in Carlton, United brewers, right? Mike:  12:57 So you understood beverages. You understood, you know, distribution, you understood branding. So, so what? How did that business of yours? It's called just beer, right? I know it was called just Frank Li  13:10 No, no that that was okay. That was the first business that I ventured into with a couple of partners that didn't go so well, okay, but that was, that's interesting. Mike:  13:20 So that was beer and other alcoholic beverages, really in China, correct? Okay, so always interested in in the failure before the success. So what actually happened, and what did you pull out of it? So, obviously, not a lot of money, but what did you pull out of it from a learning point of view Frank Li  13:36 From a learning point of view, pick your partners wisely. Okay, do a lot of due diligence before you jump in. Okay, ask the hard questions, embarrassing questions that you need to ask beforehand. Okay, because it's gonna cost you a lot down the track. Yeah. Okay. So what happened with that business was, it was, I wouldn't say we were very successful, but we were pretty solid. We got to get good distribution across China. But ultimately, what failed was when you have partners who are embezzling money from the business, okay, and other partners find out about it, and then not fessing up to the fact that they were doing that, and then really fighting it, that does not end. Well, no, no. And so that's what ultimately drove that business to the grave, if you like, okay? And the other part with that business was we ended up having four partners. In the end, all three other partners left China, right, and I was expected to stay there and run the business whilst everyone else was getting the same so I think the equity around that didn't actually quite work out too well for me. Mike:  14:42 No, okay, so you, you left that big lesson, pick your partners wisely, do your DD and you know, make sure the arrangements are thought through. And then you got into your own business center. So you had a major, major success with 31Jiu, right? Frank Li  14:59 Correct. So tell us about this. So that was a business we started at the at the end of the previous business. And I was very fortunate that I had a very good friend who backed me, because, you know, coming out of the previous business, I didn't have a lot of money, right? And as you know, with any business, you need to have a startup capital to actually get it going. So he was very good. He provided the finance behind the business, yeah, because he knew me as a person. And this is, I think, a classic case of, you know, you hear about investors talking about, when they invest early stage in businesses, they don't really invest in the business, they invest in the people, yeah. So this is where he didn't even see the business plan. He didn't even see any numbers, but he said, How much do you need? Here? It is interesting. And so that really helped, yeah, to get rid of the pressure as to where the money's going to come from, in terms of running, in essence, a startup business. Mike:  15:55 And then, so that's interesting. I mean, there's an old saying that says money follows management, really. So when you know the money's backing the people, fundamentally, because the ideas, some of them are great, some of them are not so good. But one thing you do know about planning is everything's going to change when you hit reality. But good management find a way. I think that's the difference. So it's interesting that you got back there, but what was the problem that you were solving? What was the opportunity that you'd identified? What is it that got you to start 31Jiu Frank Li  16:27 So that the thesis remained the same? You know, I understand Australia. I understand Western business mindset, I understand Chinese culture, and I want the new generation of Chinese people who can afford it to enjoy what I enjoy growing up in Australia. Now, it just so happened I understand beer and beverages, yeah. And so that's where we started. The name 31Jiu. I mean, the 31 is the latitude of Shanghai, yeah. Joe the Jiu, the character is actually the Chinese character for alcohol. So within the name itself, he you hadcombination of where we operate, who we are, and also what we do. So there was no confusion in that. Yeah, and Joel is actually your English, of course. I mean, we were in China targeting Chinese, so, so the name was so people would have just immediately got older. Well, no, they didn't. But once you explain to them, oh, then I know. Okay, okay. And the funny thing is, everyone in Shanghai who has an ID card the first two numbers is 31 okay. And, and all Chinese businesses in or Shanghai businesses, their tax file number is 31 okay. And so anyone who's in business should know, yeah, where 31 comes from? Very good, if they thought about it, yeah. And so, you know, it was a case of bring a little bit of what I know to be good quality products to China so that Chinese people can enjoy it. And that was, if anything, the underlying starting point for, you know, the business that we did then over the years that grew too we had Italian beers, we had American beers, we had Welsh beers, we had so beers from different parts of the world that we're actually building. And also, Mike:  18:13 There was an emerging market in Shanghai and China for, you know, Western alcoholic beverages, right? And you were tapping into those sort of specialist niche brands, bringing them to China. Frank Li  18:25 Yeah, there was that. Then also, you know,coincidentally, in 2004 and 2005 both line, Nathan and fosters both decided to leave China, okay, and, and that was a bit of a and I saw that as a bit of an opportunity, okay, as you know, you know, large corporates, when they make a decision like that, they're probably not going to turn around within five years and say, we're going to go back. And so I saw at least a five year window in which I can do their products in China, yep, and and have a go without the brands coming back in a big way, right? So, so that that was the aspect of of doing Australian beers, okay? Mike:  19:09 And then Simon, who introduced us, was telling me that things really took off for you around ginger beer and Bundaberg, so you got the license for that, effectively, for China, right? Frank Li  19:23 So we, we got the distribution rights for Bundaberg in China, yeah, in 2016 okay? And that massively resonated with that, with the China market, right, correct? So, so we were in the So, so the Bundaberg range of products, so this, just to be very clear, it's not Bundaberg rum, it's Bundaberg brew drinks. Brew drinks. So in Australia, we know the Bundaberg ginger beer, but in China, they know the passion fruit, the pink grapefruit, okay, the fruit flavors a lot more than they know ginger beer. Okay? Ginger Beer, if anything, is more of a Western flavor, more of a Western Palette, more English, if you like, yes, then the fruit flavors, whereas ginger in an indulgence product is not, does not go down well in China, Ginger is known more for health and medical benefits. So, so that that really so when we came into the market, a couple of things were happening globally. There was a Moscow Mule movement in the West, and Moscow Mule is made with ginger beer. And Bundaberg tapped into that in the in USA, yeah, and a couple of other markets around the world that was using ginger ale or ginger beer, that there was a bit of a movement around that. And at the same time, the likes of Coca Cola was playing around with Coca Cola ginger ale or Coca Cola ginger flavor drinks. So there was a quite a few brands out there that was in the ginger space, which helped us to get ginger beer into China. Then, when we first started with Bundaberg products, we didn't know what the market was going to be like. We just saw it as an opportunity to bring another Australian product into the country. So there wasn't a, you know, like a corporate world, we have a five year plan of what your brand's going to do, what your marketing plan you got the rights you out of the rights. This was just another set of rights. And you see how it goes. It's an opportunity. It's another it was also a very much plannedstrategy on our part to move away or or to add to our beer portfolio. Okay, you know, if you look at the McKinsey's horizons, if your core horizons beer, if you want to de risk a little bit, if you want to move away from that little bit, if you want to add revenue streams, you don't add more beers. You add something that's adjacent to it. So for us, that was soft drinks. We could have done wine, but wine is actually a lot more capital intensive. Yeah, as many companies in the world have shown that it doesn't work. It's not a fast turnover cash products. Mike:  22:12 So Frank, you sign it up, right? How quickly did you know it was okay, it was going to be a winner and transform everything, Frank Li  22:19 When you were on to win a even before the first shipment arrived. Is that right? Because we actually sold it, okay, pre sold it. So good sign. So that was a good sign. It was also, it also goes to show that we had a good customer base, okay? And we actually sold the first container, first shipment of 1400 cases, before you actually arrived right, which was great for cash flow, in that sense, because you know you're getting cash in before you even pay for taxes. Mike:  22:49 So you started this in 2013 So when was this on that? And then you sold out in 23 So where were you on the journey when you got hold of the, the the Bundaberg opportunity. Frank Li  23:03 I mean, we're still very early stage, you know, journey, still trying to, still trying to play around with our business model. Okay, so by that, I mean, you know, a lot of people who do distribution in China, there's couple of ways to cut the cut up the cake, if you like. You could actually do national distribution yourself, yeah, which is very resource intensive, very capital intensive. Mike:  23:31 So you, you tapped into a distributed network, did you Frank Li  23:35 Or you could actually do what we end up doing or choosing to go down the path of is using a network of distributors to grow the business, yeah. Now, obviously, when you go from the first model to second model, there's a whole question around margins, because when you add in a layer of distribution, I'm going to give away giveaway margins. But with China, what you get is a huge uplift in volume. Okay? As we get rights from the brands to distribute in China, we also then give rights away to our distributors to distribute within either a certain channel or within a certain geographic region, okay? And that gives them some certainty that if they grow their business, they're not going to get cut out by someone else. Yeah, and having that sort of certainty for our business partners in China actually was what I think really helped us get on the escalator to grow in our business. And you already had those relationships. We had some of those relationships. We didn't have a lot, because our business model in 2013 was very much with your distribution ourselves, okay? Because, you know, on paper, look great, yeah, margins are great, yeah, when you actually go through the other model, you got to give away not a few percentage points, quite, a quite a bit. Yeah. But what you do get is growth, growth and and without the capital to fund. Well, you know, you don't need to have your own staff to go to each venue, right? You your distributor, have do that one. Mike:  25:12 And were these venues different to the alcoholic venues? I mean, with it, was it a separate yes or no? Frank Li  25:18 I mean, retails, retail, onlines online, but pretty much for us on premise was, by and large, still the same venues that we went to. So we will go to a bar and sell our soft drinks and beer. And it just so happened, the soft drink, the Bundaberg soft drink, sat in that space where people either a didn't want to drink, yeah, which is a trend now globally, the young, younger generation, but they still want to go out. They don't want to drink, either because they don't want to drink or because they need to drive, okay? And China has a zero tolerance to drink driving. Okay? And so we sat in that fridge space by ourselves in a category that was came out of nothing, okay? And it was at a price point that was just a little bit below the beer price, or about the same. And so people you know were getting the same drink size, having a good night, enjoying themselves. And you have a product that look great, taste the Great, yeah, which is also very, very important. And so we were able to leverage that, and in that sense, the markets that we sold to for beer was the same markets or channels that we sold to for Bundaberg. Okay, so there were synergies in that, and with the growth of that, we then developed on trade off trade, so retailers and then E commerce took off as well, Mike:  26:43 And you'd been there since oh seven, so you'd had some of those relationships for a while, and you'd learned a lot aboutabout China, because you were new to China. So you'd learn a lot about the culture and the game by that stage. Frank Li  26:55 So because it is different, isn't it, it's very different. The relationships that we had in oh seven were very different to the relationships we had in 2013 okay, because our business model is different, it changed pretty much overnight. We didn't have distributors. I mean, we had to find new distributors in different parts of the country, which is new for us so and we then took on things like doing trade fairs to try and find distributors. We brought on wholesale managers whose only job was to go and find distributors around the country, and then we will qualify them, and we will, you know, look, bring them on board, and then we work with them. Yeah, for us, it was a case of having a little bit of success with that business model of using distributors and then doubling down on that Mike:  27:44 Okay, so were you considered local Frank at that point that people saw you as local Chinese boy, you know?  So the business crew became successful. When did you get your knock on the door? When who approached you? And how did that come about? Frank Li  27:52 So what I think the easiest answer to that question will be, it depends, okay, to to the Western person in China that considered me as local, okay, to the Chinese person in China that considered me as foreigner, okay, I had a good friend who said, did that help you or hinder you? It helps, because I can actually play both sides, okay? And I understood both sides, okay. You know, people talk about the whole Chinese banquet culture, where you got to drink lots of alcohol, my staff knew that I didn't drink a certain I don't drink the Chinese white white liquor, the rice spirit. And so whenever we have a meal with a client, they would say, I only drink beer or wine, okay? And that's, you know, stated up front, because they say in China, I might look Chinese, but because my growing up in Australia, I don't, I'm not used to that. So I'm actually used to be so setting those sort of things early on with our customers, our distributors, was good, yeah, yeah. So, so I was able to, you know, play both sides, if you like, yeah, in that sense, yeah. So I my daughter was born in 2012 Okay? And, you know, we were quite happy in Chinathroughout all the years. Yeah, I think couple of turning points. One was realizing that, you know, one of the holidays back here, that okay, maybe when you think about education for for my daughter when she's a bit older, and this is not, not to say that Chinese international education is not good, if anything, you know, China, or Shanghai at least, has some of the best education in the world in terms of academics and so forth. So it wasn't so much about that as more so around the more well rounded education that, you know, okay, you would get in Australia versus, say, China. Okay, so that was one, I think one, one thing that we that was probably important, and then the other aspect was probably around COVID, okay? Um.And for anyone who lived through the lockdown in China, that was probably,if you like, the last straw, yeah, but you know, we were well on the way towards an exit, or looking for an exit, just before that. Mike:  30:15 Okay. I mean, for those that don't know, it was fairly brutal. I mean, Simon Minetti, as you know, work works for us. And was up there during the lockdown, and, you know, I mean, he said it was pretty he couldn't wait to get back. Frank Li  30:29 So, so Simon, you know that they had a tough because they had two very young kids, and they were, they were getting, if you like, getting the full on Chinese treatment, yeah. Whereas for us, put us right. We were locked inside for 66 days. Okay? And I speak to people you know in Australia, talk about about LockDown. They say, Yeah, we have lockdown. We had 100 odd days in Melbourne, or whatever it was in Sydney. And you know when, when I explained to them the Shanghai style of lockdown versus what they had? Yeah, it's chalk and cheese. I mean, we were not allowed to leave our front door, right when you think about it, you live in an apartment block, yeah? And you can't leave your front door, wow. Let's put it this way, a person in jail has better rights than we had at the time if you're in jail, yeah, let's get let out for bit of time for sunlight during the day. Yeah, we were not even allowed to leave for that. Okay? The middle it got better towards about a month in. But, you know, in the first two weeks, Mike:  31:32 It was a remarkable time. Was it was emotional. It was a remarkable, I mean, it was almost biblical. I mean, I mean, it's understandable, Frank. I mean, I remember I was able to come to the office, but I remember looking up and down George Street, there's just nobody there. It was just, I mean, it's a big by Australian Standard. Sydney's a big city. There was literally nobody out. It was amazing. Frank Li  31:58 I mean, at the end of March, 2022 he had one of the vice mayors of Shanghai come out on international news saying, We will never do a lockdown. Now, typically, when someone from the government says something like that, that means they're not going to do it. Okay. But on the first of April, even before that, Shanghai started with a four day and four day quarantine between the east of the city and the west of the city. So pu Dong and pushy So the city is divided by the river.The Financial guys knew that it wasn't been more than four days they actually send their traders into the office and told them, You stay inside right because they needed to trade right now. Either they had foresight, they had more news. They were just well prepared, whatever it might be they did that they had traders who stayed in there for two and a half months. Is that right now they were well fed because they were getting food brought in by their company. But I was fortunate in that I live in one of the best parts of Shanghai, if you can think of a mix of a double bay lifestyle with Harbor Bridge sort of environment. That's what I lived in Shanghai, so I wasn't doing badly, but for the first two weeks, we had no food. I mean, you can imagine that in a city of 27 million people, we had no food. How does that happen? Yeah, right. So, so that was incomprehensible in that sense. I mean, when you live in China as a guests of the country, you're always gracious to the host. You're always respectful of the rules and the laws, etc. But for that to happen so suddenly in Shanghai, it was incomprehensible, not just for me, but and I think for a lot of locals as well as expats who live there. So so that if anything sort of made us say what you know, we probably need to think about in terms of just lifestyle. Mike:  34:17 So you sold your bus, you remember you sold your business just before COVID? Did you Frank Li  34:23 We sold our business at the end of COVID? So October, 2022 was when we closed the deal Mike:  34:28 And what happened to the business during COVID. So if anything, may 2022 was our best month ever. Wow, in terms of sales, wow. And this is this goes to, you know, and I have to say, both myself and my team were very good at what we do. So we're very, very good at getting products from A to B, right. You know, during, if you look at 2021 when Australia and China had its political bust up in. You like, Yeah, we actually cleared products through the port within two days, right? Whereas a lot of people who were bringing non one products, non green products, that were not on the banned list were having the product stack of port. Okay, so in channel 21 we actually, how was that? Frank Li  35:15 How are you able to do that? You had relationships. Well, what was going on? Combination of having good service providers, yeah, with strong relationships, yeah, yeah. And also, you know, leveraging our service providers in our time of need, okay, right? And then wording them up prior to that. So, so once people are ready for the fact that, you know, we need to, then, yeah, we need them. Then to, you know, pick up their game. Yeah. So who bought you and how did they approach you? We went to market with a financial advising company, okay, in the end, we decided on a company that was a small investment company. They called EJ Makai, okay, it's a small, boutique investment firm with China footprint and USA. Footprint, okay, the founder of that James, James Lee. He's based most of the time in Boston, but he also travels with China quite a few times a year, and also goes to the Scandinavian countries, okay, regularly, because that's where his connections are, okay. So we work with them. And then so, because they were actually very good, that they got our proposal out to many, many companies, and in early 2022 we got a inquiry from Jebsen. So Jebsen group is a Hong Kong based Danish company, okay, they've been in the region for about 130 years. Wow, so long history. I think they're now into the fifth generation, or sixth generation of Mr. Jebsens. They started off life as shipping merchants, I think so, shipping goods from Europe to China, and then they developed into product distribution. Today, the businesses running couple of geographies, so Hong Kong and mainland China, they operate couple of verticals. So automobiles is one of the major verticals. They're the dealer. They own a dealership for Porsche cars, consumer products. So electronics, like watches, vacuum cleaners, electronic goods that you see around the house, they have a vertical around that. And beverages is one of the other verticals that they have. So they're the owners of the blue girl beer brand in Hong Kong. So put it in Hong Kong, you will know that pre brand, yeah, that brand commands something like 30% market share. And the gypsum beverage beer business in Hong Kong has something like 50% market share of the Hong Kong Mike:  37:50 Okay, so they and so you're ostensibly the agreements that you had with various IP owners and manufacturers, the Bundaberg one was a big Did you have a fight, you know, some kind of long agreement with them, or, yeah. Frank Li  38:11 So we had a long term agreement with Bundaberg. So we had, that's what you were assigning, really, to them. That's one aspect of it. So we, we had a business that top line that was growing wrapper, right? Not small digit, no, not small number, double digits. It's quite, quite high. I won't go into that with numbers, sure. And our ebook percentage was actually quite high. Again, double digit, all right, so we, I operate very lean ship, if you like, yeah, because I'm across all aspects of the business. And I think that is probably because my both, both the Fosters and BOC gas experience that I had, and also the agsm training that I had that actually allowed me to see all facets of the business, Mike:  38:59 Just as a matter of interest. When did you, did you manage to pay your, your partner back? That how you found he was paid? Frank Li  39:06 He was paid handsomely within the first 12 months. It's outright, isn't that great? It was many years. He didn't have to wait too long. No, it was, it was early, which is great, because he risked his position, right? And even towards him whenever we needed, you know, as you know, with any business that's growing, you cannot be self sufficient in terms of funding for the business. And our business was always cyclical. It's a summer intensive business. And in terms of cash flow, you know, was always January through to August. Was very tough. September through to about Christmas time was always very good. And so, so it's always around about, you know, each year we would go back and say, Well, next year we need, okay, a bit of a bridging loan. Already. Season, more funding. Quite predictable. But seasonal. Yeah, seasonal, very seasonal. And, and, you know, when you get consistent growth and, and, you know, we, I believe in what you promise to people you actually do okay if you can't do it, don't promise. It's not just about setting low expectations, but it's also being who you are as a business person, you know, any any brand that we take on board, be it Bundaberg or it was cub back in the day, or whoever might be, we never actually talk trading terms. No, there was always a given that I would pay them cash up front, right? So we get that out of the way. Yeah, I have no history with you. Well, why should you give me terms? But if we show some, you know, trading history, and we show that we pay our bills on time, and we show that we are consistent with what we do and we deliver on what we say, then that is a start of a building of a trust. And we do that with not just the international brands we work with, but we do that with all of our local Chinese suppliers as well. Yeah. So, so you, you're able to exit successfully. The Danish backed Hong Kong guys bought you. And were you out straight away? Or did you have to do some kind of Yeah? So, so I worked till the end of last year, so, okay, for about 15 months in the business. Cool. And you know that Jebsen is very good. They again, they deliver on what they say they will do. And you know they, they went to find a replacement for me, going to market for that. we interviewed a lot of high profile, very talented, very experienced China operators, okay? So, so they, you know, definitely went to, went to do that work very well. Okay, that didn't sting on, you know, trying to get someone on the cheap. So, so, because, you know, one of the questions earlier, what are the bias? One is for the contractual rights that we have, because that then shows that they have some longevity as a distributor. But the first and foremost is we were a very profitable business that was growing very quickly. And then we also actually had real customer database. A lot of people, when they talk about China, they say, yeah, we'll get your products into China. But what they really means that they know someone who might know someone, and they'll land your product on a shelf somewhere, yeah? But they don't actually do any sell through, yeah? So not we were, not only were we good at selling into a retailer or selling into a bar, we actually actively help them to sell out, all right, which means you had that consumer pool, yes, so that then gave you longevity and sustainability in all the channels, in all the markets that you work. And we were very good at doing that. And you know, when we saw the business, we had 11 offices around the country, okay, where we have sales staff on the ground to help our distributors, yeah, do that? Do, do the distribution business and do or do the sales, if you like, yeah. So Jefferson saw that part of our business, and at the same time, I think strategically, they were looking for growth. As you know, you can either get organic growth or you can acquire it. And we came along, I think, you know, perfect timing as to where their business journey was for China at the time, and we had a basket of brands that they were interested in, fascinating. And, you know, they've now re they now have a whole new business division called Jebsen wellness, okay, purely because they now bit that they have our business unit that's sitting there, which, so it was very strategic for them. Yes, absolutely, yeah. Mike:  43:45 And so you, you worked on and then you, when did you get back to Australia, Frank Li  43:51 January of this year Mike:  43:52 Okay, great. So ostensibly, you are a definite, you've got a great pedigree there in China. So you, you've really set up as a China market specialist now in Australia to help brands and companies that want to break the Chinese local market, which is very difficult to do, yeah. Frank Li  44:10 So, you know, my original idea of coming back to Australia was, relax. Do not much. Play a bit of golf. Do a bit of sailing.And, you know, say, long into retirement, yes. But I think you know when you when you go from a market and environment like China to Australia,you know people talk about China speed and China speeds about and you know you lived in Hong Kong, so you understand what Hong Kong speeds. Like China speeds Hong Kong, but on steroids, yeah,to come back to Australia, where it's almost,I don't know, to put it nicely, maybe, maybe not the best term, but it's almost like a retirement village sleeping, right? You know, many people don't pick up phone calls. It goes to voicemail and Um, try and get off someone after five o'clock is almost impossible. If you want to trade it to come around you, you'd be expecting at least two weeks for them to turn up, or if you or if you want to turn up today or tomorrow, you're paying a lot of money that that was a bit of a, if you like, reverse culture shock. But not just that. It's, it's the lack of, I guess, intellectual stimulation as to where I've come from to where I'm at now. And I think I realized that, you know, a lot of what I have to give is still pretty much related to China. A lot of the connections I've got is still much related to China. Yeah, and there are still a lot of brands, even when we were, you know, in China, but even after came back, people were approaching me about how to get into China. Yeah. So I thought, Well, why not bit of mental stimulation, leveraging what I already know, yeah, why not? Why not get back into it, not in the same level of intensity that I was when I was operating my own business, but to the level where I can hold someone's hand on their entry into China, and then hopefully on their first couple of steps of growing in China. It's almost like, you know, if you think of a child, right, you can hold, you can hold their hands up to maybe primary school before they start to go. You know what? Thanks. I can look after myself now. So, so it's almost that sort of a pathway, interesting, yeah, and Mike:  46:30 So you, you spend some time up there. You, you back and forth to, Frank Li  46:35 I've been, I've been up to China. So, so I was just up there for a bit of holiday, for October holidays, but I'm actually up there in two weeks, okay, in about 10 days, actually. Yeah, cool. And so we left a brand that I that's engaged me to go up to China, yeah. Mike:  46:48 So let's talk we let's get your insight, Frank, so let's talk a little bit about China and the kind of geopolitical state of the place. So certainly you mentioned earlier, and I think it was very striking to Australians, how China fell out with Australia,around the comments that were made by our then prime prime minister about a lot of things, but yeah, yeah. Well, I mean, ostensibly we understood he was quite keen to know, yeah, how this thing came about that affected the world Tedra that was really taken badly, wasn't it by the Chinese? Frank Li  47:24 I think it wasn't just one thing. It was a combination of many things. And I think just got worse and worse and worse Mike:  47:30 And it really, it's really effective relationship. I mean, I mean, we've got, we've got clients that are in the wine industry that have been dramatically affected by some of the fallout rate from that which still isn't fixed. Frank Li  47:47 Well, the one, if you like, it's called a tariff. Call it a ban, whatever you want to call it. When someone loves 206% tax on you, call it whatever you like. That's the end of that. That's the end of that as a market, as a product category. So I think look, if there's any learnings from it, you look at Australia, you look at New Zealand, throughout all of recent history, New Zealand does business with China. Australia does business with China. Australia stated China is our largest trading partner. Yeah. I mean import and export, right? Yeah. But at the same time, if you're the largest trading partner, do you say bad things about your trading partner in a global environment, in the public news, if you have a gripe, maybe you've seen a say it in the background. It's, you know, we spoke a bit about soccer at the start. If a coach has a problem with their captain, as Chelsea's coach had a problem with his captain, you don't say that in the news. You say that in the dressing room, you know, one on one, you don't broadcast it to the world that this is our issue, right? So you can see from China's perspective whether if that was one thing or many things. Yeah. And you know, if you read in the news, you know, when the previous Chinese Premier came out to Australia, around about 2015 or 16, he was meant to sign the Belt and Road Initiative at Parliament. And I think it was the day before he was meant to sign Australia walked it back. Now, you've invited the premier to come here. He's meant to sign it, yeah. And at the 11th hour, you said we're not going to sign it, yeah? You don't give a real proper explanation, yeah, the guy walks back with his tail between his legs. That's loss of face, yeah, yeah. That, you know, you know, you sometime, some point down the track, there's going to be payback, yeah? All right, yeah. And so I think it's combination of many things, but I think China's also pretty smart. They didn't do it unilaterally across all categories. They only picked a few. Well, they didn't pick iron ore correct, and they didn't pick mining, even though mining was on a bit of a gray area. For No pun intended. It was in a bit of a gray area for a little bit. Yeah, they did pick iron ore because they know they needed it. Yeah, and if anything, during those years, iron ore prices went up. Yeah, right. So, so look, it's politically, I think was a slap on the wrists. But you know, a lot of lot of business people, a lot of Australian citizens, a lot of farmers, a lot of people were hurt by it. Mike:  50:27 Yeah, no, no, definitely. It's interesting where we are now, because we're a few years on from that. Now we've got a new government here. There's been, certainly overtures. Perhaps it's not mended entirely, but certainly there's, there's improved diplomacy. I think going on, what would you agree? Frank Li  50:45 I agree. I mean, I think if you, if you show some sort of respect, show a bit of show that you were maybe potentially not doing the right thing. And I think having a change of government allows that message to the hell didn't it, right? Because, you know, the Liberal government of even if there was a, let's say Prime Minister Albanese didn't get into government, it was another liberal Prime Minister, I think would be pretty much in the doghouse, still, not more difficult, but having a switch in government, which, in terms of, you know, the ethos and the way of thinking is very different. It allows the government to walk a lot of things back, which is why you see us in the situation that we are now. Mike:  51:26 But what about the future? Because, you know, if you look at China's our largest trading partner, both import and export. You know, the Chinese is largest trading partners the USA still. So we hear things about, you know, that President Xi is under pressure. We hear things about the crisis, the property crisis and the financial we hear things about the demographics, right? There's a huge demographic cliff. Go, what are your views on all that? Because we've still got 1.3 is it 1.3 billion people up there? Frank Li  51:59 No. 1.3 or 1.4 Yeah. So give or take, yeah. Mike:  52:02 And, I mean, at one time that was being talked about at 1.6 so there's definitely been a downward spiral there. But, but for Australia, I mean, Australia has to, you know, you know, has to develop this relationship further. I think, Frank Li  52:20 Absolutely, I think Australia is in a very unique situation where, you know, we, we are now in a very good spot with China in terms of relationship, okay, Mike:  52:30 You think that you would describe it as a good spot. What better than what it was back in 2000 Frank Li  52:35 I mean, it couldn't have been a lot worse there. I mean, right? I mean, some of the language coming out of China is fairly dramatic Mike:  52:39 Absolutely, right. You know, I think China, in a lot of lot of ways, are very pragmatic. At the end of the day, there's 1.4 billion people to feed, yeah, if you look at a lot of things that they're doing today, it's about security, yeah, be it national security, food security, whatever it might be, it's around security, okay? And so, and I said, Australia is in a very unique situation in that it's one of the bigger western world partners, and at the same times, it's one of the countries that's actually doing relatively well with China, yeah, so it's, if anything, it's a good conduit to have conversations with China about different global issues without upsetting, yeah, too many people.  I mean, it's interesting, you know, we look at the M and A market and, you know, obviously, I mean M and A is my day job, and, I mean, I got into this about 15 years ago, specifically. And there was a lot of talk at the time about, you know, Chinese companies wanted to perhaps buy Australian business assets. That's never happened. I mean, at the big end of town, we saw some food security. Horrible land. Interestingly, I looked earlier that Chinese owned about 2.2% of our property in Australia. So not that high. The Dutch and the US and the UK are more property China's. But we, all we talk about is the fact Chinese have bought all our apartments, right? So, but so that's fairly modest, but certainly on the business front, in the five, $200 million enterprise value range, there are no Chinese mainland business buyers in the market. And that surprises me, and I do think it'll come. I probably won't be around when it comes, but I particularly manufacturing. So we do a lot in manufacturing assets, and I've been surprised we haven't been able to tap into interest from mainland China, particularly where there's strong IP and that can be leveraged and brought back to China. But I just think culturally, we're not there yet. But I think one of the things that I'm seeing is that, as you know, we're a generation on from when I started now 15 years ago, A Lot of the Chinese business owners now who are emerging have been trained in the West. They've been educated in the West. And I do think we'll see more integration coming out of matter. What are your views on that? Frank Li  55:15 It's an industry that I'm not really into, but just very broad strokes. If you look at Chinese investment in terms of waves, a lot of it would be, I mean, the top end of town will be driven by the government. If government says, Go, Go this way, yeah, then the SOEs and the southern funds would go that way, okay? Mike:  55:43 So that, because we've got a, you know, the the the Chinese Communist Party got a tremendous struggle hold on the country. I mean, let's have it, right, and, and they're probably the most watched and recorded people in history, right? But so ostensibly, the government set the agenda, really, for what, where we're going to invest in Frank Li  56:02 so, so, you know, there's been a, I listened to a number of podcasts, and really, pretty much about China and global economies. If you look at where, you know, in 2015 china set up the Made in China 2025, roadmap, and that's coming up next year. If you look at the key areas where they wanted to succeed, and I think the report card is pretty much that in a lot of areas, they've succeeded. The only one they haven't is probably silicon chips, and that's driven by USA not allowing them to grow. But you know, something like EVs, they probably outperform, then against the expectations. So if you look at, you know, where China's headed, and as a result, where they might want to invest, you look at the high level documents, such as Made in China 2025 which actually does extend it into 2030 and then all you got to do is read their five year plan. Now, we are now in the FYP 14. You look at where a lot of Chinese investments go. It comes out of the high level central government documentation. If you listen to all of that, then you know, okay, directionally, where they're going to go as a result, that may then define an industry. It may then define a geography, and that may then define a particular industry, right? So, and I think a lot of people who become successful overnight. I mean, not so much overnight, as we said before. About BYD is because when they see something that actually the government wants you to invest in and head in, everyone jumps into it. Okay, it's interesting, yeah. And if you look at the EY industry as an example at the moment, because it's quite a hot topic globally, right in China, there's something like 200 200 plus EV service provider or EV manufacturers, yeah, and that's because everyone jumped into it, yeah? Not because, I mean, yes, there was government subsidies, but everyone jumped into it, and now there's over, over capacity. So, so that's, that's why they, you know, some companies are actually not profitable, but unless it's still trying to sell their cars, yes, Mike:  58:24 Because I know 20 years ago, when I was up there, we there was, you know, a lot of forget the name of it now, but they're a lot of government owned companies. So you had, what were they called? Again, the state, state owned enterprise, SOEs, yeah. So in Chinese, we call them gorge and young, yeah. So, so, fortunately, the less of those now is, Frank Li  58:42 There's still a lot is, I mean, you know, it's everyone, you know. I think one of the biggest gripes USA has with China in terms of market access is that the SOEs get better market access than private enterprise, right? So by that, I mean, you know, if we look at EV as an example, yeah, if the government decides that EVs will be an industry that we want, they want business to get into electric vehicles, yeah, they will then support certain companies in EV by giving them better, better loans, by having local government give them cheaper land to build factories, by Giving them better, better, uh, concessions and better opportunities, whereas small business or individual operators will get less of that. Yeah, okay, okay, yeah, because at the end of the day, you know that the government looks after itself. That's something that you know the Australia and maybe to an extent, America, don't actually have as a as a sector. Mike:  59:39 Yes, yeah. I mean, certainly. I mean, my experience of setting up a wo fee in China was, I mean, they've taken bureaucracy to a new level of China. So you said yours up about 20 years ago, right? So that would have been a nightmare. So I remember was a complete Yeah. I'm not even sure it's even set up. Yeah, right. Yeah. Frank Li  1:00:00 So it is a, I mean, it's not the intent of the central government to have that sort of bureaucratic nightmare. In my experience, the red tape is because the different departments don't know how to work with each other to actually get you all the paperwork that you need. They're like, you know, tax Bureau is doing its work, doing its job, and it's got its requirements. The Business Bureau is doing its job and it's got its requirements. The bureau that gives hands out liquor license, they do their job, so they all have their requirements, which are pretty much written in law for Chinese businesses. And so when it comes to wolf, is like, Well, what do we do? Mike:  1:00:42 I mean, corruption was pretty rife up there 20 years ago, I can tell you, right? But do you think, and I know that the xi government is trying to clean that up. I mean, do you think that's worked? Do you think there is do you think they've eliminated a lot of that kind of government type corruption? Frank Li  1:00:59 I don't know what the numbers are these days, but I do recall. It's always hard to know. I do recall some, some, something like 2015 was the third year of President Xi's reign, if you like, because he came to pass in 2012 I think was 2015 there was some data around over 1 million Chinese politicians. So this is from local government, although, after central government were either indicted or investigated for corruption, yeah, yeah. I mean, put that into perspective, there's not even 1 million Australian politicians, from councilors up to federal level, sure. And that was in 2015 Yeah. And I think, I think, from a Chinese perspective, is those individuals either because they can or because they have no choice, yeah, will take that risk. Yeah, right. I mean, you look at it from a someone holding office, if someone comes and sees you in hands of a bag of money and insists that you take it, what are you going to do? Yeah, there's a certain implication, if you don't take it, Mike:  1:02:04 Yeah, no, it's interesting. But, I mean, you're, you're now on the ground, seeing, you know, taking, you know, organizations into China, in terms of trying to secure them, distribution. Now, is it, is it a bit easier now, is it, is it less, problematic when you're trying to get set up Frank Li  1:02:24 In terms of finding business partners, it's easier, okay, there, you know, I started there in 2004 so that's a generation ago. Yeah, there are, there's the new generation, by and large or speak some level of English. Okay, so, so we know one of the barriers is less. So the language barrier is a bit less. The current generation, if they got wealthy parents who sent them overseas for education, would have had some Western cultural experiences where they've lived overseas for a year or two or three. So that's remove another barrier around cultural misunderstandings, okay? And so that, in that sense, has become a bit easier, okay? You know, in the FMB sector, which is still, I mean, FMB is not finance, it's not high finance, we know. So, so it's not as attractive and lucrative as that sort of business, so that the people who who end up working in FMB don't have the same skill sets as someone who goes to the Ivy League school and finishes, you know, an MBA school. So but by and large, that they will have some English, they'll have some overseas experience, yeah, it becomes easier to find the right partners and so and because of technology, you know, things like that smartphone, yeah, in terms of connectivity, it's easier to then connect with people. Mike:  1:03:56 Okay? I mean, that's a very good point about connectivity, because, you know, there's obviously no YouTube up there, no Facebook, no Twitter. You've got WeChat and others so, so all those platforms you mentioned, Frank Li  1:04:07 YouTube is equivalents i chi, yeah, yes, yeah. Mike:  1:04:11 And look, the Chinese have been very, you know, they've been very effective at that, haven't? They've got a kind of war around the place, and, and, but they're very wide because, you know, I was probably there 20 to 25 years ago, and as technology was kind of emerging, but they effectively missed the whole desktop computer thing. They went straight to a phone, right? And so apparently, the 50% of people buy all their clothes and shoes online, in charge. So this they really adopted. As soon as that iPhone came out, that smartphone came out, God, did they adopt that online game? Frank Li  1:04:54 I think you know that that is probably one of the things that you. So that's about China in, you know, adopt, adoption of new technology, yeah, which probably goes to the culture of, you know, China's, you know, the modern China's gone through the cultural revolution where they've, you know, you look at couple 100 years ago in terms a lot of technology, China was the leading country in the world to, at the end of the Cultural Revolution, they were falling way behind everyone else, so that there is that mentality now, Chinese people are very proud people. Chinese people are very intelligent, and they want what is the best for themselves and for their kids and for their family, so for their child and for their family. Yeah. So they will. They're willing to try new things, yes, rather than assess then and then say yes or no, that they're willing to try a lot of new things. Yeah? So I think that's what you're seeing in the modern day. Yeah? China, yeah. And also, you know, with the smartphone, your example, buying buying clothing online, I think things like having a good user experience. Now, the one thing you don't see is that, of the 50% who buy their clothes online, how much of that gets returned? Okay, right? Because China allows you to have a free return policy, okay? Now, I don't know what it's like with Amazon and eBay and all the different e commerce platforms in Australia. Mike:  1:06:19 I think some are better than others. But, you know, it does seem to be a phenomenon where clothes, they allow you to send them back, right? So, so I'm an expert at this, not because I buy but my wife, in fact, the first week of COVID, I thought she was dealing drugs. We had so much, so many parcels, so many parcels arriving. Frank Li  1:06:36 So, so I think the use experience allows the person to try without the hassle of dealing with someone in store, right? So there's no pressure. Mike:  1:06:48 Yeah, okay, so, and I think that's something that is that cultural thing. Do you think? Do you think they they prefer to be in control than we do? Frank Li  1:06:59 I don't know. No, I mean, Mike:  1:07:01 Or do you think that's just a kind of universal thing if, because that's it, I suppose it's the convenience of it. I mean, I can't stand doing other I mean, I'm, I'm going to London in December. I tried to book a hotel the other night. I gave up after 20 minutes, and thought, you can stick that and I'll figure it out another way. I'll probably get my wife to do, I guess I'll get someone here to do, because I was just in a loop. I got in the loop, and I just don't have the patience for it. Yeah. Frank Li  1:07:28 So I think there's a generational thing, definitely, the older generation do not do that, that they want to touch and feel. And you know, how can I buy clothes online? Because it might not be the right size, the fabric might feel different, the colors might not be what I want, etc, etc. So I think there's bit of that. And so definitely, the younger generation are willing to try and for them. There's no costs, because we don't like it. Send it back. There's no cost. Got it right? And if you lower the barrier of entry, really, that just said, yeah, it's a no brainer. Yeah. And you know, the large e commerce platforms in China allow them, facilitates that experience. Mike:  1:08:06 Yeah, okay, very interesting discussion, Frank, and I'm very grateful that you came in. I mean, certainly we, they're our largest trading partner, import and export. China's a reality. I'm glad that the waters a bit smoother between us. You wouldn't have wanted that to continue down the road it was going particularly So, yeah, great stuff. And look good luck with you. I know you're certainly a specialist. You're going to be a great help to companies that want to find their way up to China. It's a very exciting place, isn't it? You mentioned the speed there. I mean, I lived in Hong Kong, and I remember used to commute every couple of weeks, and I would come back to Australia, and just, I just couldn't get over what was going on. I mean, you couldn't get on a Monday night in Sydney, you couldn't get anything to eat after about six o'clock at night. But in Hong Kong, I could get anything I wanted, any time of the day seven, right? Yeah. So, I mean, Hong Kong was genuinely one of those 24 hour cities, so that was a bit of a shock for me. I think I've now slowed down to Australian speed, but, but yeah, it's certainly very, it's a very exciting place, isn't it? Frank Li  1:09:18 It is so so you know, on that, on that experience of yours with Hong Kong. So in China, in Shanghai, you probably take it to the next level. Wow. If you're hungry at two in the morning, you just get your phone out. You order something, it'll be there in half an hour. Yeah. Man, is that two in the morning? Amazing, right? So now, obviously, not every city is the same, but definitely, if you're living in Shanghai or Beijing, on either large cities, or even that, some of the tier two cities you will get that service, yeah. I mean, Mike:  1:09:45 Hong Kong was a sort of gateway to China for a long time, but now, I think people are just, it's not the same. Frank Li  1:09:51 Well, I think now Shanghai is a gateway. We were talking about that 20 years ago. Shanghai will be the new Hong Kong, effectively, yeah. Yeah, people go straight there. And in the interesting Hong Kong's change, because 95% of the visitors now are mainland Chinese. So that whole Hong Kong market is is got itself together around that those visitors, rather than before, it was the it was a stop offer all the Westerners come in. Mike:  1:10:17 Yes, correct. So it's changed a lot as well. Yes. Frankie, thanks for coming in. Good luck with everything. Thank you. Frank Li  1:10:24 Thank you very much. Thanks for having me. Mike:  1:10:29 Wow. Being in lockdown in Shanghai was clearly not much fun. So there you have it. Frank Li arrives in Sydney. Can't speak a word of English. Seven years later, he's Ducks of the school. I hope you enjoyed my discussion with Frank as much as I did. Now, a quick shout out to our sponsors, Oasis partners, the only m&a firm I know who passionately believe in truly leveling the playing field for their clients, who are selling, often to much larger buyers. So if you think it might be time for you to consider your strategic plans about the future. Give the guys a call at Oasis partners. Finally, if you like today's episode, do share it with your friends until next time, stay safe. Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/]]> https://www.oasispartners.com.au/wp-content/uploads/2024/12/Picture2.png clean no 1:11:19 No no https://www.oasispartners.com.au/podcast/tim-hutchinson/?utm_source=rss&utm_medium=rss&utm_campaign=tim-hutchinson Tue, 12 Nov 2024 02:23:11 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17572 https://www.linkedin.com/in/hutchinsontim/ Website: www.skillsgpt.ai SkillsGPT is a full-service Artificial Intelligence studio, designing, delivering, and managing enterprise-grade AI solutions. Supported by Microsoft and InnovateGPT - Australia’s largest ecosystem of generative AI companies - SkillsGPT drives strategic AI adoption. Beyond solution-building, SkillsGPT is ahead in educating organisations and their leaders to think strategically about AI. Through ‘AI Mindshift’ education and mentoring services, SkillsGPT establishes foundational AI knowledge and a mindset to adopt AI purposefully, ensuring sustainable success by aligning AI with organisational goals. Learn more at www.skillsgpt.ai Points of Interest 6:23 Tim Hutchinson’s career in recruitment 11:14 How Tim got started in AI 17:51 Adopting AI 21:24 Using data with AI 22:38 Skills GPT 30:19 Potential security risks with AI 33:10 Examples of AI helping a business transform 39:17 Will AI take out jobs 41:56 Why you need to educate yourself on AI 46:27 Who are the winners 50:47 Advice for organisations wondering about AI Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me, your host, Mike McGrath, now today's guest, Tim Hutchinson is the co founder and CEO of Skills GPT. Tim started out in zoology, before falling into a career in recruitment, and then recently moving into the emerging world of AI. Tim now helps organizations harness the potential of generative AI to transform their organizations. So sit back as I seek to uncover fact from fiction in the new world of AI. Now a quick shout out to our sponsors, Oasis partners, corporate advisors with a practical bias. They may not know much about AI, but they do know a fair bit about getting a deal done. So if you're considering an exit, talk to the team at Oasis. 500 deals done and counting.  So Tim Hutchinson, welcome to the troubleshooters podcast. Tim Hutchinson  01:03 Thank you, Mike, glad to be here. Michael McGrath  01:04 No look, it's great. And I know we've known each other for a little while, but when I bumped into your recent I thought we must get you in to have a chat about AI, because I'm sure a lot of our listeners who are business owners and people in corporate hearing lots of things about AI and generative AI and what it is and what it isn't. And I thought you being, you being an expert, in fact, CEO of Skills GPT, I thought you might be a good guy, a good go to guy to sort of try and unpack, let's hope AI So, yeah, welcome. Tim Hutchinson  01:35 I can certainly share my experiences Mike Michael McGrath  01:37 Look Tim, just going back, what's your journey and what got you into AI originally, I know that originally you you had a sort of HR recruitment background, so tell us about that, and, and, and how you've made the switch. Tim Hutchinson  01:52 Absolutely. I'll try to shorten what is a relatively long story, because I'm not in the first flushes of youth. Mike. Having studied zoology originally, which was a bit of a left field educational background. Michael McGrath  02:08 Now, for the uninitiated, including me, what's zoology? Tim Hutchinson  02:12 Well, take the zoo part. And is that right? I guess it's the science of animals. Is that right? There we go. Michael McGrath  02:18 So I presume the career options were fairly limited. And you thought, I'm perhaps going to look outside of this area Tim Hutchinson  02:24 a little bit. At the time. So we're talking about 1990 the environmental movement was becoming very much fashionable from a corporate perspective. And actually did a master's in environmental management, all right, which was a highly almost vocational degree, yeah. I went from that to be an environmental management consultant, okay, with a large global construction firm, wow. And we were essentially doing so on the one hand, the construction firm was winning projects like the Hong Kong harbor crossing, yeah. And there was separation between the divisions, but we were doing impact assessment work, okay? Got it related to that, those sort of things. I did that for two or three years. It says something about me, because all while I enjoyed the learning aspects, which is really, it's entirely a knowledge base career. I did feel at the time it was too slow. You had to really earn your stripes. It was okay. The people above me had done 20 years hard time, yeah, so I resigned, yeah. So I then I actually worked. I almost fell, as a lot of people do, into the world of recruitment with Hayes in London at the time, and frankly, absolutely loved it, yeah, and I loved it for the same reason I found the environmental work challenging, because recruitment is not slow, no, and the recruitment in the 90s, in London, it was, it was really taken off. It was like a trading floor, yeah, there are 100 of us in one room. You know, shouting, screaming, but also learning real commercial, yeah, realities, which I still lean on today, because, Michael McGrath  04:00 I mean, I think companies started outsourcing after that recession in 1990 so it's a huge outsourcing, get get employees off your books. And my brother built his recruitment business based on that, right on contract labor. So he had hundreds of drivers or forklift truck guys. He had literally had hundreds of them out. He was taking a margin, but, but that, have we always had that permanent recruitment where you take a cut of the first year salary? Is that always? Tim Hutchinson  04:26 No, I think it became more popular around that time, certainly 80s into the 90s. I mean, it's, it is, although I, I probably have a love hate relationship with recruitment. Yeah, I spent 20 years in the industry, and the last 10 years, until a couple of years ago was one of the owner directors of a tech recruitment firm in Sydney, right? Michael McGrath  04:47 Well, it's very mature now, so it's kind of become a bit commoditized, hasn't it rose? Yes, early on there was, you know, there was great margins, and it was emerging, and people were kind of using it and seeing value in it, correct? Perhaps, and and then I suppose, like a lot of things, it takes that, I think it's called the Signet curve, you know, it kind of flattens out. And then everyone, you know, the world and his dog have figured it out, and they're all cutting each other's throats, I suppose, however, Tim Hutchinson  05:12 Absolutely, however, the learnings from it. I, as I say, I still, you know, I talk to friends from Hayse days, and whatever we're now doing, whether it's me as the CEO of an AI business, yeah. Well, then in other walks of life, we still draw upon the first of all the work rate. We worked really hard, yeah, yeah. There was absolute, I'm going to use the word brutal, transparency over results. So the idea of measuring what matters was baked in 30 years before it became a, you know, a repeated saying. Michael McGrath  05:47 So, I mean, what got you in to AI and what got you out of that more traditionally? Because, I mean, AI 10 years ago, you couldn't make a living doing AI 10 years ago, couldn't you? Tim Hutchinson  05:55 I think, well, unless you were, I think, highly specialized and highly technical ahead of the game, pioneering the things that we now see as widely available, I think. Michael McGrath  06:06 So, what got you into AI? And then I'm really interested in the difference between AI and a generative AI. Like, I mean, is there a difference? Because everyone's talking about generative. Tim Hutchinson  06:18 We'll get to that. You give me some time to distill my thoughts. So what got me into AI, so just going back to that recruitment career towards the end of my time in recruitment, yeah, this. So this is sort of, I guess, four years ago, approximately three or four years ago, right when I exited Ember, the recruitment company, the we had noted a shift. This is when there was a real skill shortage, particularly in technical roles. And we were a tech recruitment company, right? And clients had started to talk about clients had perhaps started to open their minds, and rather than just transactionally saying, Can you find us a head of cyber security? Yeah, they recognize that. First of all, there weren't unlimited heads of cyber security available. Yeah. And salaries were going up exponentially, yeah, because you get to a point where you're all poaching each other's people. Yeah. And the candidate moves, in some cases, for a 30k increment. Well, that's like, can't go on indefinitely. So clients started to, with our help, break down roles into the actual skills, the buckets of skills people needed, okay, and also to start to think about roles in that way. And this is the notion that has some traction now of the skills based organization now we, I guess, having hopefully entrepreneurial mindset, was exploring what that really meant and why that conversation was shifting. Yeah, and we became involved in a SaaS skills management business as part owners, the contact of mine in the UK had done the dev work and built this very rich skills taxonomy with 100,000 plus, sorry, 30,000 plus roles broken down into constituent skills, interesting with granular descriptors and map them. And which, at the time, and the world has changed again at the time, was, you know, essentially leading edge, yeah? So we started to work with companies to try and help them, using that SaaS software to understand their roles and their people by their skills. And then you start to do some of the wiz stuff, yeah, overlays of those two things, and start to shift away from the idea of linear careers, and think about a person, think about the whole person and what their capabilities might be, right now, I You may ask me how that went. Well, I now describe it as a period of heroic failure, okay, which I think we've only got a few few periods of them. I was about to say good periods, as long as there's some heroic still not just failure. Why do I say that? So, first of all, we learned a huge amount, which I think is a theme, hopefully of today, but also of today's world, where this idea of continuous learning is becoming increasingly important. Yes, so we learned a huge amount, and we also actually transacted and delivered some really awesome work. We became skills consultants to one or two government departments, right? And really sort of moved to dial in some of these areas. Where we were hamstrung, and it may got to certainly take some of the responsibility, but the tech was in some ways clunky at that time, okay? And what I mean by that is, if you bring it down to a very simple example, to skills profile an individual, yeah, they themselves, at some point, ended up sitting looking at a skills taxonomy, right? You know, it's phenomenally dull. And I shouldn't be so blunt, but I am so it's phenomenally dull, and people used to get to sort of the fifth skill in the list of 100 and start to zone out, okay? And the other thing is, we're not necessarily self aware about what our own skill sets are, yeah, at a granular level. Okay, so people would traditionally think I'm a marketing person, okay, but if you ask them to break that down into 30 skills, quite difficult to do. I mean, I mean just on that point. Michael McGrath  10:18 I mean, marketing is completely splintered in terms of or segmented, really, hasn't it? I mean, if you look at marketing, when I was first in business, in the late 80s, you know, there were three or four core disciplines in marketing and and now there's, like, 35 and far fewer channels to market as well. Yeah. So you've got this whole digital you know, you so, I mean that that will be one area where there's been an explosion of, you know, where that whole idea of, of, you know, buckets of skills and that the role is actually, you know, we've got a role here now, Matt Smith, you just met him, but, you know, Matt's doing four jobs, and we've begun to break down. Okay, well, what are those four areas? Absolutely, at what stage do we have to specialize in bringing people to do that? Because, I mean, most small businesses go through this, where they have to kind of start thinking through, okay, well, you know, we can't keep doing it. You know, people can't keep doing everything. Tim Hutchinson  11:14 Absolutely. And it has to be there a level of self awareness of the business as to, as to what skills are required. And yeah, and we'll get onto this in the AI conversation, particularly because that's a lot of what's driving our work. But in terms of how I got into AI, one of the clients we were talking with at the time had been a successful tech entrepreneur, right? And with the advent of was it November, I'm going to say 22 with open AI and chat GPT. Essentially this, what this widespread access to generative AI tools?We probably, for about half an hour, thought it might spell the death knell of what we were doing right, and then very quickly recognized that it could well be the unlock to the things I've described as problematic, such as an individual looking at a list of skills, doesn't happen anymore because of the natural language interface, right? You can have a conversation, and skills can be inferred from that now. So these are huge shifts in what's possible, and very quickly, we're able to roll in, at the time, our sort of vertical expertise in skills, workforce management and all those related areas, right, right, really, from from nose to tail, for want of a better phrase, from, you know, sourcing individuals for a company, onboarding them, understanding them, upskilling them, etc, that whole piece. Michael McGrath  12:40 So that was 2022, when open AI came out with the whole kind of chapt, GPT thing? Tim Hutchinson  12:45 Correct. So at that time, we became, you know, I think you'd agree there's element of luck and timing to a lot of things in life, but you keep striving, you keep working hard, you keep your eyes open to opportunity, and that, that conversation, that relationship, has seen us become one of circa 15 companies in the ecosystem of a business called innovate GPT. And innovate GPT variously describes himself as a value add Gen AI venturing studio. So what they brought and bring to the party is very deep, generative AI expertise, with a lot of Microsoft alumni in the team, access to capital where necessary, and perhaps most importantly, sort of a cross pollination of ideas between the companies who are supported by innovate. So if you think of a hub and spoke model, innovate, sit at that hub, and then us and other businesses are that are the spokes. Michael McGrath  13:01 So what was the business in 2022 you know, open AI came along, produced chat GBT went from like zero to off the chart. Tim Hutchinson  13:59 Fastest ever uptake of technology to 100 million users, I think in three months Michael McGrath  14:03 What was the business case coming out of that? That you spotted and said, Okay, well, what's now needed is x. Tim Hutchinson  14:09 I think we had people talk about falling in love with the problem. So our clients had, in their own way, many clients articulated their skills challenges, whether that related to hiring the right people, whether it related to trying to train people more quickly and more efficiently, whether it was about putting together powerful teams rather than you know, based on some actual underlying knowledge. And also there was starting to be a trend of which is really accelerating. Now, businesses are quite concerned, or very concerned, about the pace of change out there. And part of that, AI, is part of the solution, part of the problem. Frankly, yeah, because, Michael McGrath  14:55 I mean, around that time, 2022 Yes, salaries were like, there was a huge. Yeah, the balance shifted to the employee, after being with the employer, probably for a long time, really, yes, yes. And then all of a sudden, the employees were able to start demanding. And there had been some wage stagnation, I think. I mean, we forget that, but, but there was a big catch up going on there, I think. And employers, for the first time, you know, we're really having to face the idea that they couldn't get people, and if they were going to get people, they're gonna have to pay for them at levels they hadn't even dreamt up. \ Tim Hutchinson  15:30 And although we'd moved away directly from the recruitment world, these were all recurring challenges. So I think, I think what really crystallized a business case for us is that we'd already, although it's already shifting, we'd essentially defined the skills problem that organizations face. It's a it's a basket of problems, essentially. So we'd fall in love with the problem, but we're aware, as I said, that there were challenges in solving it with with legacy tech, you know, things like a lot of the data organizations, for years in the HR space and the workforce space have been obsessed with collecting data. So there's vast amounts of siloed employee data, but very little, very, very little insights found from it, and certainly not actionable insights. So I think, you know, we had, again, the benefit of the Innovate guys who had been building AI based tools for a decade. You know, they were some of the early developers of, for example, what they would describe as very clunky booking systems on airline websites a decade ago. So they've really earned their stripes. So with their benefits as well and their knowledge, we were able to recognize what a massive unlock for some of these problems, generative AI could be, because in this ability to just essentially analyze vast amounts of structured and unstructured data, find the signals in the noise for the first time, and sort of infer, as I said, either by the skills profiles or career pathways, etc, and allow users to interact without being expert in a system.  It was a huge but of course, at that time, when we now look back even 18 months down, down the line, and you realize how naive you are at every stage. Michael McGrath  17:24 I suppose, this is new, isn't it? I mean, you know this. I mean 2002 we're talking about, but I mean the business case. I mean, so, you know, people can download chat GBT and get information. What you're saying the business case was that you guys were able to provide a service that allowed you to do you know, allowed you to help you know, for your customers, for your clients, you you're able to Yeah, I see what you're saying. Yeah, yeah. So what? How are you? Tim Hutchinson  17:51 Let me there are obviously multiple ways to adopt AI, and we're hopefully good people to talk about this, because I'm very proud to announce that we or to share that we're one of four organizations granted a federal government grant under the AI adopt scheme where our goal over the next three years, under that initiative is to help 75,000 regional SMEs to adopt AI in forestry, fisheries, agriculture and clean energy.But to to sim, to simplify in terms of that AI adoption piece, you know what, what organizations are doing out there essentially is, and this is mirrored in a three step process that we now apply. First of all, there's sort of a step one of trying to get people to a shared level of understanding. Of generative AI, get them a baseline understanding of what is this technology, what's possible? How fast is it changing? And amidst all the hype of the noise, what? What are the practical, real world use cases that are starting to appear? We then, we then help clients with a sort of a step second step, which is, we are absolutely of the opinion that the AI initiatives should originate in the boardroom and not the server room. This is not a tech play in one sense, this is a business play. It's about working in our instance, we work through a design thinking process with organizations. It is not a technical conversation. The goal is to have a number of sort of representatives from the organization different disciplines, and try to capture what their big hairy problems are. Or, I think I think it's a phrase big, hairy opportunities and and then distill, distill that down into the most relevant use case to then go to step three and develop a proof of concept AI model for them. So this is, this is really very deliberate Starting off small and bite sized, because you've got a veryyou've got a technology that is evolving weekly, daily. I mean, it's the pace of change is massive, which presents its own opportunities and challenges. And then you've got organizations all with their unique challenges, the solutions are not cheap, whatever that really means, so therefore you can't, I mean, AI is fun. Everybody knows chatgpt is awesome. It's fascinating. But you can't, as an organization, really head off on a vanity play. You've got to think about what success would look like, embracing, adopting AI, how you're going to measure that, what that return on investment looks like. So we try to work to that proof of concept, to help people understand and see the art of the possible, and to start to get some metrics prior to scaling. Michael McGrath  21:01 Is this predominantly about about the data held by organizations and actually going to work on synthesizing that and making sense of that through through tools, or is it about more broadly, looking at at, you know, what's, what's available in the public domain and synthesizing that, or is it both? Tim Hutchinson  21:24 It's a fair question. It's essentially both. But I think the real, the really actionable insights and the really fascinating stuff happens when you're accessing the client's data, because again, there are so many, so this is data that's hell, but not really been used. There are so many. I mean, I obviously can't mention any names, and have to be really careful. But you know, for example, you might talk. You can if you want. I mean, we won't tell anyone. You get it in the edit. Only got six. Who are they? You can take, for example, a major retailer, who, by their own admission, have to date, been really achieving next to no insights from their sales data. If you think about a retail organization, who are I mean, what are they doing? They're gathering data in real time. Yeah, it's massive scale. Yeah, through every point of sale, etc. Michael McGrath  22:19 Mind you, if there's only two of you, and you've got 70% market share, I suppose you don't, you know, it's a bit like being the government. It's a kind of tax on So, I mean, the, I mean, necessity is a mother of invention, isn't it? And generally, we, you know, we, it's the problems that drive the innovation and solutions, but it's good that they're waking up to that. Tim Hutchinson  22:38 But, well, let me give you an example then, which is probably not probably would be a combination of those two broad sources of data you touch on, a lot of our work at Skills GPT is really trying to find opportunity and disruption for organizations, particularly around their workforce. Now what I mean by that is we've got some fairly massive disruptions happening. They are macro disruptions. So, AI, the emergence of AI, of course, people are concerned about what that means to jobs. Michael McGrath  23:15 So give an example of some of the disruptions that you're seeing.  So that's binary, really, you you're not talki Tim Hutchinson  23:18 I'll give you an example from a conversation yesterday where, yeah, a client in the energy sector, because a lot of our work is, is, is moving to sectors such as under transition. So the transition to clean energy, yeah, from Legacy sources, okay, is a brilliant example of workforce disruption, okay? Because you've got, fundamentally, you've got legacy jobs rolling off in simple terms, from, you know, the coal, gas industries, yeah, and you've got an increasing demand for people with knowledge and skills around renewables, okay, you know, making connections to solar, to work, etc.  well, so that that's, that's a big external disruption that's happening from, I mean, from a tech perspective. So sorry, I was going to explain even in that instance. So there's, there's that sort of macro disruption, yeah, and then they so, there are challenges there in terms of finding the right staff. They don't actually exist at scale with those renewables experience. Okay? So they started to look at efficiencies in the existing workforce as a starting point. Yeah, even if you can find one or 2% efficiencies, it all helps. Okay? So, you know, at one point in time recently, they're looking for more people with scheduling, rostering, planning experience, yeah, but two or three months down the track, recognize that some of the AI tools are able to perform that task, right? So, as opposed to the needing people with rostering experience. You pivot. And what you actually need is people with the ability to right size those AI rostering models, right so that and this, this, these are they different kinds of people. So they're used talking about technical people versus, you know, project management type people, in simple terms and this. And this is where you start to think, Well, what actually is, where does knowledge fit for people? Is it? Is it functional knowledge? Is it technical knowledge? Yeah, and this is, there is no answer to it, because this is a rapidly moving piece. We're not building product at this stage. No, we're not building out of the box SaaS product, because in most cases, we're trying to find a highly effective point solution for a priority problem around workforce, and then to develop from there. Michael McGrath  25:52 Look, I mean, I suppose the real challenge is that, I mean, you know, most of probably listen to this podcast are small business owners, right? About 40% of them are apparently. So there's, you know, hundreds of small businesses that are going, you know, they hear AI, they get the fin review, you know, that they read articles like, will AI be a bust? Tim Hutchinson  26:15 And and, surely not the binary, the binary press, yeah. Michael McGrath  26:19 And so we're looking at, okay, how do I harness this? How what? What's in it? For me, because, you know, you think about woolworths or coles and all their data, and you go, Okay, well, you know, you can think, you can play the long game. You can, you can invest in this. There's such a business case there. I mean, you can already see from the amount of data they must have, if you could start to do something with that dynamically and get insights. Tim Hutchinson  26:44 And the proven ROI is already massive, yeah, so it's off the chart, yes, but was it? Michael McGrath  26:51 You know, your small business, they employ 50 people, and they're trying to think through, okay, well, how do we harness this thing, other than we've got chat GPT on the desk, or Microsoft co pilot, and we're just plugging in questions, yeah? Tim Hutchinson  27:05 Well, yeah, but, but even that, actually, I mean even even that part. So you know, if you think about chat GPT, and I'm sure listeners are using it for various tasks at home and, dare I say, at work, but with the security concerns, very quickly, small organizations started to get their own sort of secure instance through 365, so they therefore can have that conversation with chat GPT securely. And it's a good point, because actually organizations you start to the people who efficiently are finding good use for it, are the workers. So if you actually ask people what they're using it for, and have an open, honest conversation, that's where you learn the insights. And people will be using it for report writing. They'll be using it for structuring reports. They'll be using it for planning their week. Every possible sort of entry level use, if you like. But I think what's happened is, I think you mentioned the newspaper there. You know, we have this strange binary press where you have to go through a hype cycle, don't you? Where, first of all, it's, it's incredible. It's, it's, it's going to solve all the problems in the world, and then a week later, it's going to, going to be the end of all work. Yeah, all jobs are gone to let that pass. And then, you know, now we're at a stage where companies are trying to or beginning to understand what's possible, yeah, and trying to find these practical solutions. However, you know, there is, I mentioned cost earlier, and actually, for SMEs, there is a cost factor, yeah, and in many cases, to, you know, to have a we get a lot of requests from people who, I think I'll think of one very close to home. The other week, a recruitment company who said to us, Hey, we've, of course, got a CRM with 100,000 candidates on it. Could we, you know, put put that in their terminology, put that into AI and find interesting things right now. The answer is, yes, absolutely, okay. Does it come at a cost? Yes, absolutely, yeah. And because of this pace of change in the world, you can't, in good conscience, stitch somebody a solution together and leave it with them. No, you actually need to then, sort of offer a managed service, yeah, to continually help that model develop, because it's a continuous improvement thing. You know, there's, there is a difference between, um, so I'd say two things broadly, and they're not, they're not their objective, hopefully not in any selfish interest one is with AI, the best thing to do is to get started. Now by that, let me clarify. I don't mean get started. Start throwing money at the problem. I mean start learning about it. Start reading about it, start trying to at least understand what it is. If anyone wanted to reach out. LinkedIn, afterwards I've, we've got various resources that point to, you know, a nice, a nice checklist of 20 resources they can go to for free to start that learning journey, yeah, because I think you need to understand it first of all, yeah, you know. And then, and then the other piece is probably to to talk, to talk, to talk to existing staff, because people will be using chat GPT, and rather than pretending they're not, from a security perspective. Michael McGrath  30:29 So tell me about the security risk, right? So you know someone in a small business, so there's 20 staff, and half a dozen of them start, you know they you know that they're using chat GBT, and they haven't told anyone. So where are the risks for the business there? Tim Hutchinson  30:45 Well, I think, I mean, the the risk is that you are essentially sharing information publicly. So very I remember quite early on we had, and it feels like a lifetime ago, but it but it was a year ago, a CFO was stood up in a meeting we were in and sort of, um, laughing about it, said, Oh, I've uploaded the annual accounts, and I've started to get some insights. Okay, it's really, really not a good idea. Wow. Now, generative AI chat, GPT is not a search engine, no. So as such, that packet of information, that set of accounts, isn't sitting there to be accessed in its entirety. However, it's something of an unknown as to what aspects are. So absolutely you shouldn't be sharing sensitive information. But as we all know, straight censorship is not an answer to anything. So I think you need a discussion with staff and really understand, yeah, okay, because that's again going to that point about it originates in the boardroom, not the server room. Take the workforce as a proxy for the boardroom. Find out what people are using it for. Find out where the efficiencies are. And the other thing I'd say I quite like this is I've got a colleague, Ray Fleming, who tries to explain generative AI in simple terms and says, treat it as an intern. Okay? I quite like it, because if you think about an intern, you get the best out of them by giving them the best direction, simple, structured direction. You find value in the work, typically quickly, but you typically, or should check the work. And that's very much the same with generative AI. You know, there are phenomenal insights, but I think you do have to also take it with a pinch of salt, because of hallucinations people will have heard of and make certain that you're either applying your own critical thinking, or the guys who built the models for you have thought about what, how the information that surfaced is is verified and against what. Michael McGrath  32:56 So can you give us some examples, Tim of of you know, good use cases where, you know, the the the ability to do some of the things that you've been talking about has really helped a business, you know, transform Tim Hutchinson  33:10 I can. This is where I have to be careful, because some of the detail is, is, it's very specific. I'm going to give you an example that that was a very early use case that we prototyped, because I think it, in one sense, it's very simple, and in the other sense it's also it's very much a people first example, which I like. I don't want to give deeply technical examples. So we were working with an organization who are essentially helping disadvantaged job seekers to secure work so disadvantage for a range of reasons, but sometimes mental health challenges, socioeconomic challenges, etc, now, and it talked about A large organization now, the challenge they had is that despite working hard and wanting to do the best by their clients, it often ended up as a somewhat binary matching exercise. So if somebody had done some cleaning work in the past, they would look through their opportunities and find a cleaning job. It achieves something. It also misses out on that point I made about other things they could do, yeah, yeah. What do they aspire to? What are their motivations? Okay, what else are they capable of? Now, again, as I said earlier, that's a cohort of people who perhaps find it harder than others, yeah, to self select and understand what their aspirations or their skills are. Yeah, now we then applied generative AI to both sides of that, the supply and the demand piece of that problem. So on the demand side, the job seeker, we're able to build something called role narrator, okay, so. Which essentially they had a conversation, an actual conversation, not even a typed conversation based on a series of questions, which really focused on just what they enjoy in life and what work they've done and what they enjoyed about that work. Okay, no pointed questions around open questions really open and express themselves. Yeah. Now from that, you can very effectively infer what somebody's skills are, but perhaps as importantly or more importantly, what are their motivations, what are their aspirations, what are their fears about work, whole range of things. Now, if you do that as well, not so much conversation, but if you start to look at the roles on the supply side and think about them again, beyond the job title, okay, and what the attributes are, you start to find adjacencies, yes. And you know there were some very, very specific examples where you know somebody in that instance, who was aspergic had made a comment around preferring to work alone. And it seems really simple, but they'd actually been overlooked for a whole range of cleaning roles. In the cleaning instance, because, of course, there's people in the offices, etc. But then it started to think about some of the skill sets, some of the skills, yeah, around handling equipment or handling certain chemicals, whatever it might have been. And, you know, a role pops up, which I think from memory was It was certainly a night shift role, which might seem obvious, but people don't make these connections at scale, yeah, normally, and it was in a completely different discipline. Michael McGrath  33:56 No, no, that's good. And, you know, I really like that example. So ostensibly, you've got these, you know, you're breaking down a role from a time to a bucket of skills, and then you're getting much more insight into the candidates and what it is that may have done in the past, or what they could do, what they like, what they don't like, and then you're trying to intuitively put that together in a way that it wasn't being done before, certainly. Because, I mean, I mean, what little I know about recruitment is it's so easy to get pigeonholed in any recruitment Never mind. Yeah, absolutely, you know. And you know, often, you know, we'll talk to people who really want to make a move it's in a traditional recruitment sense that's very difficult. Tim Hutchinson  37:24 Oh, absolutely, yeah, absolutely, if not impossible, you know. And perhaps, I mean, I've given a recruitment example, essentially, and I really, I need to make it clear that we've moved far beyond recruitment, and, you know, broadly talking about workforce. But even a recent example,you know, if you take any of these industries that are transforming rapidly, and I will mention the energy one again, because it's really the largest global initiative of all time, the shift to clean energy now, when you talk to clients in that space, even forget the internal challenges they have around workforce. They're very aware that they don't necessarily know what they don't know about the sector they work in. And what I mean by that, there's vast amounts of information out there about battery energy storage systems, about solar projects, all of this stuff you can now assimilate that information at scale and start to make you know, as is, insights around demand and project demand, and hence workforce demand, but also you can start to make predictive ideas about where is our industry heading. What might that mean in terms of the skills required, headcount required, the costs, and what are the levers that are going to impact that? Now, what you find is, when you start to look, you start to see things, and you know, in that instance, you have a new challenge evolves, which is the biggest lever in that external piece is regulatory landscape, which you can't really necessarily dictate. So then you have to look at, what can we again, what do we measure to allow us to plan ahead? And a lot of organizations are remarkably in the dark currently. Michael McGrath  39:17 I mean, there's a lot of talk about AI taking out jobs, and you know, the workforce going to be dramatically affected. And you know, those predictions were being made in the in the late 80s, with the advent of the computer, really. I mean, there was a lot of talk about, you know, I mean, when I left school, there's 10% unemployment if you're under 25 that was about 25% and so there was a lot of talk about computers are going to take over, and there's going to be no jobs. And yet, we haven't seen anything like that, have we, really. So, I mean, AI is now talking about that as well, but it's going to take it now. I mean, is that going to happen? Or, in fact, are we just going to see a pivoting, really? And.And a redistribution of of work, Tim Hutchinson  40:03 Honestly, I think it's hard to predict, because you'll hear every variation in the answer, yeah. I mean, absolutely categorically, certain jobs will disappear, yeah, and other jobs will significantly change in terms of their profile, right? But does that lead to wholesale loss of people? I don't think so, because, probably broadly, for two reasons. One is that that pace of change just does not impact that quickly. People are no there's inertia in the system. People organizations are slow to adapt. Yeah, perhaps rightly so. Michael McGrath  40:38 I mean, and you wonder where the triggers are. I mean, if you take, I mean, when you get to my age, you can look back a bit. So the if you look at websites, have been spoofed in the 90s as the answer to everything, yes. And you know, I kept, you know, being convinced that I had to look at it, and then I'd, I'd ever go online, and then, you know, I'd see the dialog, remember the old dialog? And it would take like, five minutes to load a page, yes, and it was like a brochure online. And I remember thinking, what a lot of fuss about nothing. And then everyone was going on and on about that. And literally from the early 90s right the way through 2000 and then it the whole penny dropped when the iPhone appeared in 2008 and all of a sudden we went to commerce, yes. And speed and convenience, yes. And that was a catalyst for a massive, I mean, look at the amount of commerce done online now, absolutely. Tim Hutchinson  41:29 So look at what that's led to in terms of allied industry, exactly. So you wanted housing, logistics, distribution, yeah. Michael McGrath  41:36 So what are the triggers, you know, for AI, maybe you know what, what's going to make the chain the wholesale change there in terms of adoption and utilization. It's hard to know, isn't it? Tim Hutchinson  41:45 Honestly, I think it's very hard to predict. I think, um, I mean in practical terms, I would say to organizations again, this is not going anywhere. Michael McGrath  41:56 So I think so get hold of it. Educate yourself. Hold of it. Understand, trialing stuff slowly, methodically. You know, what can we do Well, either the fees go down or they keep hold of the fee. I mean, I mean, that's the thing is, does that get anywhere? Tim Hutchinson  42:06 At an individual level, the same this, this sort of idea of, you know, lifelong learning. You know, it's an, it's an oft repeated phrase now, but that you're not going to lose your job to AI. You're going to lose your job to somebody using AI. And, you know, people are very it's, again, go back to that intern idea. It's almost as if each employee has an intern supporting them. Now, if you get that right, there are just massive efficiencies and upside now, whether they're, I mean, you can, it's hard to come up with examples on the fly, but you can look at certain industries where there will be wholesale change. But actually, you talk to people in those industries, they don't necessarily, they can't necessarily predict where that will end. So take something like the legal profession, for example. You'll it. I was with a group of lawyers the other day who both have a they have a legacy law firm, traditional, successful law firm, and also for moving into the generative AI space. Now they've almost done a parallel run, an AB split testing on work that they do repeatedly. And I think roughly they'd said it would take a team of four people three weeks.Traditionally, they've now got that down to 20 minutes with an AI model. Now clearly that's a fundamental change. What does that mean?   The fees probably remain relatively high and then erode as it becomes more apparent that that that's the case. But for the but for the lawyers, um, you know, they've gained back a lot of time there. So is there, you know, the the simple answer is that there's value add work they can be doing. I did hear I've got to be careful here as well. So I'll edit this a little bit very early on again. And I'm talking a couple of years ago, I was talking to a CIO of a fashion business who was very head of the generative AI curve, and partly because their CEO was essentially from that world, the Chief Information Officer, right? Yeah. So the CEO is from an AI world previously, and then the CIO, therefore had that influence early on, the CIO quite quite a bit of a character, had presented to the design team and others around generative AI and in real time, typed in some of their design cues as an organization, and asked it to produce an item that they typically produce, yeah, and it did, so, okay. And it was arguably, well, certainly was very similar to what they produced previously designed, and I'm being careful with my detail, but actually, many ways, was better. And he deliberately left them in. Sort of looking glum for a while, as if, right? Well, that's us done. And then a bit like in a reality show, where they start, they then turn up the turn up the color, and turn up the rousing music in Grand Designs or something. He does the uplifting part where he says, hey, you know that thing on our sort of to do list that we've all wanted to get to, which is looking at a new sustainable material to replace leather. Now, we can do it. We've never got to it, have we? We could be doing this. So there's this shift of adding value, adding value, hopefully doing the work we're more interested in. Yeah, of course. Look, I'm an optimist at heart, and I think that's an exciting future. Yeah. Will there be collateral damage along the way? Of course. But I heard an example the other day as well from image and computers in the 80s. The chap I saw presenting was talking about the motor car at the turn of the century, you know, whatever it was. You know, late 1898, 1900 and, you know, there was something like 30 or 50,000 people working in the horse stabling industry in London, yeah, um, now the motor car came along. Yeah. There were fewer horses. Yeah. Now what happened? That happened over a period of time, blacksmith started helping in the car industry, yes, etc. So, you know, look, I'm not the person to predict, and I think anybody who does Michael McGrath  46:27 Look, who are the winners here? I mean, if you look at open, AI, right? I heard the other day they started out as not for profit, but I heard they flagged the other day they're going to a profit model, right? So who's going to be the winners here, right, in terms of the economic model, and who's going to, kind of, you know, the big, are the big tech guys going to own this space, and we're all going to get the scraps, or, in fact, is it? Is it going to be a genuine democratization of publicly available information? Tim Hutchinson  46:54 It's possibly a bit of both. It sounds like a fudge, but bear and bear this in mind. So in so many areas of technology, it's technology has been pioneered by the small niche players and subsequently acquired by the big tech. Yeah, this is one of the first instances where it's the it's the exact opposite. So almost overnight, big tech have released this phenomenally powerful technology, and it's now the smaller players who are trying to work out what to do with it, yeah, and how to commercialize it best. Now where that will will lead to, my best guess is, as in a lot of industries, you will end up with people with highly specialized, niche capability that's highly effective, right? So the guys who are pioneering, for example, you know, looking looking at radiography or cancer scans and doing very niche work there very effectively in terms of identifying cancers. Of course, there's commercial upside in that, whilst doing good work. But you'll also have, presumably, a handful of big players who win in the space. Yeah. So if it you know, and and again, another cliche, the idea of selling shovels to gold miners. I mean, look at Nvidia and their chips and their share price. Well, they're so well placed to to service the entire industry, regardless of what's been, what the use cases are, yeah, interesting. I mean, I think in our world, it's a very good point as sort of, you know, founder of a scaling, generative AI business, we have to think about these where our commercial future is, yeah, and in some ways, that's you certainly can't determine that hard and fast from day one, no. So I think, I think what we try to do amidst the noise is to pick out the things that are tangible. So, for example, that grant wind delivering AI, yes, helping 75,000 organizations adopt AI. And if you want to see more about that, you can check out arain.com.au Australian regional AI network. That for us, is an enormous opportunity, because amidst all the noise and all the hyper generative AI, that's a vote of confidence in us, and it's a tangible roadmap to helping organizations at scale. Wow, some of these initiatives may ultimately lead into, you know, repeatable use cases that then lead into product. And we're almost doing some of the market testing, you know, with with a with a large cohort, if you like, what we're very aware of, we cannot be all things to all people. So I think it's one of those businesses. Certainly for us, we're running our business with no sacred cows, as they say, yes. So I think the best thing we can do as a leadership team is is put everything on the table every quarter, yeah, and determine, again, to measure what matters, determine our direction. Yeah. And, you know, put, put our, put our efforts into those things that have future. Michael McGrath  50:07 In some ways, we're, we're back to the beginning. We're applying timeless principles to, you know, to technology, hard work, measurement, results, you know, figuring out how something can be harnessed to be useful and constructive and positive and absolutely remembering people in human in the loop, critical, yeah, and there are downsides everywhere, like there is with everything, including the internet. But, but if we, you know, if we can keep, you know, if we can keep positive and constructive, we can, we can, perhaps, you know, carve out a better future certainly been the the history of mankind really, is that we, we have moved, found a way to move forward really absolutely. Tim Hutchinson  50:47 And I would honestly say to people, I'm probably repeating myself, but I think now, if you're an organization wondering about AI, interested in AI, terrified by a whatever it might be, don't worry about the technology for the moment, other than,I think, accepting that it's here to stay and will be ultimately have a bigger impact, I think, than the internet. Yeah, but don't worry about the tech. Park that bit of conversation and think about your business, and think about those areas where you deem there to be really significant opportunity or that have been the bottlenecks to growth. Now,despite running an AI business, I'm repeating another phrase you hear a lot. Just because you have a very large AI hammer doesn't mean that everything is an AI problem, right? So it's not the solution to everything, no, but the starting point is to identify the business challenge and to work back from there and determine whether and to what extent AI might produce a new unlock to that problem, right? And that's where you then start to actually find tangible benefit, or determine that at this stage, or for your business, it's not appropriate. Michael McGrath  52:04 Yeah, get it. That's interesting. Look fascinating. Tim. And on the subject of lifelong learning, I mean that idea that we're, you know, we've all got to become kind of lifelong learners and students, I think. And now, with the democratization of intelligence and information, really, you know, via the internet, we've got so much more available to I wasn't going to Tim Hutchinson  52:23 Sorry to interrupt Mike. I was reflecting on something walking down here, which is, in some in some ways, as a, as a 50 something chap, I'm a, I'm a bit of an example of this idea of lifelong learning, and I kind of reflect the the pace of change in the world. So, you know, obviously, studied early on in life. I imagine I learned a few things in the interim. However, I kind of got busy with work. It's in this last three or four year period where I've massively embraced the idea of learning, and I am loving it, because my brain feels just alive and but I think a lot of people suffer from imposter syndrome, don't they? Which? And they sort of feel they can't enter a new world, or they're not worthy of it. I heard a funny enough, a stand up comedian, the other day saying these people don't have imposter syndrome. What they what they don't realize is they're suffering from a healthy dose of self awareness. So, in fact, a lot we don't know. We don't know a lot of stuff. And I think it perhaps comes with age or something where I no longer care whether I know what I need to know in a situation, because most people don't know everything, and there's a lot what I'm getting to I think, is saying this pace of change in the world is in some ways great, because nobody's got all the answers. So I'm in meetings where I've gone back to basics, where I'm applying perhaps recruitment skills. I ask questions in a humble, unafraid manner. Might be a bloody basic question. I have no idea, but I asked the question, and I listened to the answer, and I think in that, and that's a good way of looking at looking at AI, which is try and understand it, try and explore and, you know, get involved, because people don't have all the answers. You know, if something's released, you know, constant new releases on a weekly basis, you can know as much as anybody else in a week's time. Michael McGrath  54:18 Yeah, look, Tim, thank you for that look. It's a fascinating world ahead of us, and we certainly got to be alive and awake, haven't we, and I'm very grateful for you coming in today and sharing with us your insights. We'll put your details in the show notes. I appreciate the opportunity, Mike, and we wish you well at skills GPT, thank you very much. Good luck. Tim Hutchinson  54:39 Thank you very much. Take care. Bye. Michael McGrath  54:44 So there you have it, generative AI. Thanks to Tim for helping unpack how AI is being developed at the practical level. And whilst the future is always uncertain, what's not uncertain is that AI is going to be part of it. That's for sure, if you want to chat with Tim at Skills GPT, the details are in the shadows now, a final shout out to Oasis partners, our generous sponsors of this podcast, Oasis help the shareholders of private companies wishing to exit strategically. So if you want to know more about what they do, talk to Don hunter and the CEO of Oasis. So if you enjoyed this episode, please tell your friends, and if you're feeling generous, leave a like until next time. Take care you. Link to previous episodes: https://www.oasispartners.com.au/podcast/nick-armstrong-unlocking-the-power-of-ai/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 27 2 https://www.linkedin.com/in/hutchinsontim/ Website: www.skillsgpt.ai SkillsGPT is a full-service Artificial Intelligence studio, designing, delivering, and managing enterprise-grade AI solutions. Supported by Microsoft and InnovateGPT - Australia’s largest ecosystem of generative AI companies - SkillsGPT drives strategic AI adoption. Beyond solution-building, SkillsGPT is ahead in educating organisations and their leaders to think strategically about AI. Through ‘AI Mindshift’ education and mentoring services, SkillsGPT establishes foundational AI knowledge and a mindset to adopt AI purposefully, ensuring sustainable success by aligning AI with organisational goals. Learn more at www.skillsgpt.ai Points of Interest 6:23 Tim Hutchinson’s career in recruitment 11:14 How Tim got started in AI 17:51 Adopting AI 21:24 Using data with AI 22:38 Skills GPT 30:19 Potential security risks with AI 33:10 Examples of AI helping a business transform 39:17 Will AI take out jobs 41:56 Why you need to educate yourself on AI 46:27 Who are the winners 50:47 Advice for organisations wondering about AI Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  00:10 Welcome to the troubleshooters podcast with me, your host, Mike McGrath, now today's guest, Tim Hutchinson is the co founder and CEO of Skills GPT. Tim started out in zoology, before falling into a career in recruitment, and then recently moving into the emerging world of AI. Tim now helps organizations harness the potential of generative AI to transform their organizations. So sit back as I seek to uncover fact from fiction in the new world of AI. Now a quick shout out to our sponsors, Oasis partners, corporate advisors with a practical bias. They may not know much about AI, but they do know a fair bit about getting a deal done. So if you're considering an exit, talk to the team at Oasis. 500 deals done and counting.  So Tim Hutchinson, welcome to the troubleshooters podcast. Tim Hutchinson  01:03 Thank you, Mike, glad to be here. Michael McGrath  01:04 No look, it's great. And I know we've known each other for a little while, but when I bumped into your recent I thought we must get you in to have a chat about AI, because I'm sure a lot of our listeners who are business owners and people in corporate hearing lots of things about AI and generative AI and what it is and what it isn't. And I thought you being, you being an expert, in fact, CEO of Skills GPT, I thought you might be a good guy, a good go to guy to sort of try and unpack, let's hope AI So, yeah, welcome. Tim Hutchinson  01:35 I can certainly share my experiences Mike Michael McGrath  01:37 Look Tim, just going back, what's your journey and what got you into AI originally, I know that originally you you had a sort of HR recruitment background, so tell us about that, and, and, and how you've made the switch. Tim Hutchinson  01:52 Absolutely. I'll try to shorten what is a relatively long story, because I'm not in the first flushes of youth. Mike. Having studied zoology originally, which was a bit of a left field educational background. Michael McGrath  02:08 Now, for the uninitiated, including me, what's zoology? Tim Hutchinson  02:12 Well, take the zoo part. And is that right? I guess it's the science of animals. Is that right? There we go. Michael McGrath  02:18 So I presume the career options were fairly limited. And you thought, I'm perhaps going to look outside of this area Tim Hutchinson  02:24 a little bit. At the time. So we're talking about 1990 the environmental movement was becoming very much fashionable from a corporate perspective. And actually did a master's in environmental management, all right, which was a highly almost vocational degree, yeah. I went from that to be an environmental management consultant, okay, with a large global construction firm, wow. And we were essentially doing so on the one hand, the construction firm was winning projects like the Hong Kong harbor crossing, yeah. And there was separation between the divisions, but we were doing impact assessment work, okay? Got it related to that, those sort of things. I did that for two or three years. It says something about me, because all while I enjoyed the learning aspects, which is really, it's entirely a knowledge base career. I did feel at the time it was too slow. You had to really earn your stripes. It was okay. The people above me had done 20 years hard time, yeah, so I resigned, yeah. So I then I actually worked. I almost fell, as a lot of people do, into the world of recruitment with Hayes in London at the time, and frankly, absolutely loved it, yeah, and I loved it for the same reason I found the environmental work challenging, because recruitment is not slow, no, and the recruitment in the 90s, in London, it was, it was really taken off. It was like a trading floor, yeah, there are 100 of us in one room. You know, shouting, screaming, but also learning real commercial, yeah, realities, which I still lean on today, because, Michael McGrath  04:00 I mean, I think companies started outsourcing after that recession in 1990 so it's a huge outsourcing, get get employees off your books. And my brother built his recruitment business based on that, right on contract labor. So he had hundreds of drivers or forklift truck guys. He had literally had hundreds of them out. He was taking a margin, but, but that, have we always had that permanent recruitment where you take a cut of the first year salary? Is that always? Tim Hutchinson  04:26 No, I think it became more popular around that time, certainly 80s into the 90s. I mean, it's, it is, although I, I probably have a love hate relationship with recruitment. Yeah, I spent 20 years in the industry, and the last 10 years, until a couple of years ago was one of the owner directors of a tech recruitment firm in Sydney, right? Michael McGrath  04:47 Well, it's very mature now, so it's kind of become a bit commoditized, hasn't it rose? Yes, early on there was, you know, there was great margins, and it was emerging, and people were kind of using it and seeing value in it, correct? Perhaps, and and then I suppose, like a lot of things, it takes that, I think it's called the Signet curve, you know, it kind of flattens out. And then everyone, you know, the world and his dog have figured it out, and they're all cutting each other's throats, I suppose, however, Tim Hutchinson  05:12 Absolutely, however, the learnings from it. I, as I say, I still, you know, I talk to friends from Hayse days, and whatever we're now doing, whether it's me as the CEO of an AI business, yeah. Well, then in other walks of life, we still draw upon the first of all the work rate. We worked really hard, yeah, yeah. There was absolute, I'm going to use the word brutal, transparency over results. So the idea of measuring what matters was baked in 30 years before it became a, you know, a repeated saying. Michael McGrath  05:47 So, I mean, what got you in to AI and what got you out of that more traditionally? Because, I mean, AI 10 years ago, you couldn't make a living doing AI 10 years ago, couldn't you? Tim Hutchinson  05:55 I think, well, unless you were, I think, highly specialized and highly technical ahead of the game, pioneering the things that we now see as widely available, I think. Michael McGrath  06:06 So, what got you into AI? And then I'm really interested in the difference between AI and a generative AI. Like, I mean, is there a difference? Because everyone's talking about generative. Tim Hutchinson  06:18 We'll get to that. You give me some time to distill my thoughts. So what got me into AI, so just going back to that recruitment career towards the end of my time in recruitment, yeah, this. So this is sort of, I guess, four years ago, approximately three or four years ago, right when I exited Ember, the recruitment company, the we had noted a shift. This is when there was a real skill shortage, particularly in technical roles. And we were a tech recruitment company, right? And clients had started to talk about clients had perhaps started to open their minds, and rather than just transactionally saying, Can you find us a head of cyber security? Yeah, they recognize that. First of all, there weren't unlimited heads of cyber security available. Yeah. And salaries were going up exponentially, yeah, because you get to a point where you're all poaching each other's people. Yeah. And the candidate moves, in some cases, for a 30k increment. Well, that's like, can't go on indefinitely. So clients started to, with our help, break down roles into the actual skills, the buckets of skills people needed, okay, and also to start to think about roles in that way. And this is the notion that has some traction now of the skills based organization now we, I guess, having hopefully entrepreneurial mindset, was exploring what that really meant and why that conversation was shifting. Yeah, and we became involved in a SaaS skills management business as part owners, the contact of mine in the UK had done the dev work and built this very rich skills taxonomy with 100,000 plus, sorry, 30,000 plus roles broken down into constituent skills, interesting with granular descriptors and map them. And which, at the time, and the world has changed again at the time, was, you know, essentially leading edge, yeah? So we started to work with companies to try and help them, using that SaaS software to understand their roles and their people by their skills. And then you start to do some of the wiz stuff, yeah, overlays of those two things, and start to shift away from the idea of linear careers, and think about a person, think about the whole person and what their capabilities might be, right now, I You may ask me how that went. Well, I now describe it as a period of heroic failure, okay, which I think we've only got a few few periods of them. I was about to say good periods, as long as there's some heroic still not just failure. Why do I say that? So, first of all, we learned a huge amount, which I think is a theme, hopefully of today, but also of today's world, where this idea of continuous learning is becoming increasingly important. Yes, so we learned a huge amount, and we also actually transacted and delivered some really awesome work. We became skills consultants to one or two government departments, right? And really sort of moved to dial in some of these areas. Where we were hamstrung, and it may got to certainly take some of the responsibility, but the tech was in some ways clunky at that time, okay? And what I mean by that is, if you bring it down to a very simple example, to skills profile an individual, yeah, they themselves, at some point, ended up sitting looking at a skills taxonomy, right? You know, it's phenomenally dull. And I shouldn't be so blunt, but I am so it's phenomenally dull, and people used to get to sort of the fifth skill in the list of 100 and start to zone out, okay? And the other thing is, we're not necessarily self aware about what our own skill sets are, yeah, at a granular level. Okay, so people would traditionally think I'm a marketing person, okay, but if you ask them to break that down into 30 skills, quite difficult to do. I mean, I mean just on that point. Michael McGrath  10:18 I mean, marketing is completely splintered in terms of or segmented, really, hasn't it? I mean, if you look at marketing, when I was first in business, in the late 80s, you know, there were three or four core disciplines in marketing and and now there's, like, 35 and far fewer channels to market as well. Yeah. So you've got this whole digital you know, you so, I mean that that will be one area where there's been an explosion of, you know, where that whole idea of, of, you know, buckets of skills and that the role is actually, you know, we've got a role here now, Matt Smith, you just met him, but, you know, Matt's doing four jobs, and we've begun to break down. Okay, well, what are those four areas? Absolutely, at what stage do we have to specialize in bringing people to do that? Because, I mean, most small businesses go through this, where they have to kind of start thinking through, okay, well, you know, we can't keep doing it. You know, people can't keep doing everything. Tim Hutchinson  11:14 Absolutely. And it has to be there a level of self awareness of the business as to, as to what skills are required. And yeah, and we'll get onto this in the AI conversation, particularly because that's a lot of what's driving our work. But in terms of how I got into AI, one of the clients we were talking with at the time had been a successful tech entrepreneur, right? And with the advent of was it November, I'm going to say 22 with open AI and chat GPT. Essentially this, what this widespread access to generative AI tools?We probably, for about half an hour, thought it might spell the death knell of what we were doing right, and then very quickly recognized that it could well be the unlock to the things I've described as problematic, such as an individual looking at a list of skills, doesn't happen anymore because of the natural language interface, right? You can have a conversation, and skills can be inferred from that now. So these are huge shifts in what's possible, and very quickly, we're able to roll in, at the time, our sort of vertical expertise in skills, workforce management and all those related areas, right, right, really, from from nose to tail, for want of a better phrase, from, you know, sourcing individuals for a company, onboarding them, understanding them, upskilling them, etc, that whole piece. Michael McGrath  12:40 So that was 2022, when open AI came out with the whole kind of chapt, GPT thing? Tim Hutchinson  12:45 Correct. So at that time, we became, you know, I think you'd agree there's element of luck and timing to a lot of things in life, but you keep striving, you keep working hard, you keep your eyes open to opportunity, and that, that conversation, that relationship, has seen us become one of circa 15 companies in the ecosystem of a business called innovate GPT. And innovate GPT variously describes himself as a value add Gen AI venturing studio. So what they brought and bring to the party is very deep, generative AI expertise, with a lot of Microsoft alumni in the team, access to capital where necessary, and perhaps most importantly, sort of a cross pollination of ideas between the companies who are supported by innovate. So if you think of a hub and spoke model, innovate, sit at that hub, and then us and other businesses are that are the spokes. Michael McGrath  13:01 So what was the business in 2022 you know, open AI came along, produced chat GBT went from like zero to off the chart. Tim Hutchinson  13:59 Fastest ever uptake of technology to 100 million users, I think in three months Michael McGrath  14:03 What was the business case coming out of that? That you spotted and said, Okay, well, what's now needed is x. Tim Hutchinson  14:09 I think we had people talk about falling in love with the problem. So our clients had, in their own way, many clients articulated their skills challenges, whether that related to hiring the right people, whether it related to trying to train people more quickly and more efficiently, whether it was about putting together powerful teams rather than you know, based on some actual underlying knowledge. And also there was starting to be a trend of which is really accelerating. Now, businesses are quite concerned, or very concerned, about the pace of change out there. And part of that, AI, is part of the solution, part of the problem. Frankly, yeah, because, Michael McGrath  14:55 I mean, around that time, 2022 Yes, salaries were like, there was a huge. Yeah, the balance shifted to the employee, after being with the employer, probably for a long time, really, yes, yes. And then all of a sudden, the employees were able to start demanding. And there had been some wage stagnation, I think. I mean, we forget that, but, but there was a big catch up going on there, I think. And employers, for the first time, you know, we're really having to face the idea that they couldn't get people, and if they were going to get people, they're gonna have to pay for them at levels they hadn't even dreamt up. \ Tim Hutchinson  15:30 And although we'd moved away directly from the recruitment world, these were all recurring challenges. So I think, I think what really crystallized a business case for us is that we'd already, although it's already shifting, we'd essentially defined the skills problem that organizations face. It's a it's a basket of problems, essentially. So we'd fall in love with the problem, but we're aware, as I said, that there were challenges in solving it with with legacy tech, you know, things like a lot of the data organizations, for years in the HR space and the workforce space have been obsessed with collecting data. So there's vast amounts of siloed employee data, but very little, very, very little insights found from it, and certainly not actionable insights. So I think, you know, we had, again, the benefit of the Innovate guys who had been building AI based tools for a decade. You know, they were some of the early developers of, for example, what they would describe as very clunky booking systems on airline websites a decade ago. So they've really earned their stripes. So with their benefits as well and their knowledge, we were able to recognize what a massive unlock for some of these problems, generative AI could be, because in this ability to just essentially analyze vast amounts of structured and unstructured data, find the signals in the noise for the first time, and sort of infer, as I said, either by the skills profiles or career pathways, etc, and allow users to interact without being expert in a system.  It was a huge but of course, at that time, when we now look back even 18 months down, down the line, and you realize how naive you are at every stage. Michael McGrath  17:24 I suppose, this is new, isn't it? I mean, you know this. I mean 2002 we're talking about, but I mean the business case. I mean, so, you know, people can download chat GBT and get information. What you're saying the business case was that you guys were able to provide a service that allowed you to do you know, allowed you to help you know, for your customers, for your clients, you you're able to Yeah, I see what you're saying. Yeah, yeah. So what? How are you? Tim Hutchinson  17:51 Let me there are obviously multiple ways to adopt AI, and we're hopefully good people to talk about this, because I'm very proud to announce that we or to share that we're one of four organizations granted a federal government grant under the AI adopt scheme where our goal over the next three years, under that initiative is to help 75,000 regional SMEs to adopt AI in forestry, fisheries, agriculture and clean energy.But to to sim, to simplify in terms of that AI adoption piece, you know what, what organizations are doing out there essentially is, and this is mirrored in a three step process that we now apply. First of all, there's sort of a step one of trying to get people to a shared level of understanding. Of generative AI, get them a baseline understanding of what is this technology, what's possible? How fast is it changing? And amidst all the hype of the noise, what? What are the practical, real world use cases that are starting to appear? We then, we then help clients with a sort of a step second step, which is, we are absolutely of the opinion that the AI initiatives should originate in the boardroom and not the server room. This is not a tech play in one sense, this is a business play. It's about working in our instance, we work through a design thinking process with organizations. It is not a technical conversation. The goal is to have a number of sort of representatives from the organization different disciplines, and try to capture what their big hairy problems are. Or, I think I think it's a phrase big, hairy opportunities and and then distill, distill that down into the most relevant use case to then go to step three and develop a proof of concept AI model for them. So this is, this is really very deliberate Starting off small and bite sized, because you've got a veryyou've got a technology that is evolving weekly, daily. I mean, it's the pace of change is massive, which presents its own opportunities and challenges. And then you've got organizations all with their unique challenges, the solutions are not cheap, whatever that really means, so therefore you can't, I mean, AI is fun. Everybody knows chatgpt is awesome. It's fascinating. But you can't, as an organization, really head off on a vanity play. You've got to think about what success would look like, embracing, adopting AI, how you're going to measure that, what that return on investment looks like. So we try to work to that proof of concept, to help people understand and see the art of the possible, and to start to get some metrics prior to scaling. Michael McGrath  21:01 Is this predominantly about about the data held by organizations and actually going to work on synthesizing that and making sense of that through through tools, or is it about more broadly, looking at at, you know, what's, what's available in the public domain and synthesizing that, or is it both? Tim Hutchinson  21:24 It's a fair question. It's essentially both. But I think the real, the really actionable insights and the really fascinating stuff happens when you're accessing the client's data, because again, there are so many, so this is data that's hell, but not really been used. There are so many. I mean, I obviously can't mention any names, and have to be really careful. But you know, for example, you might talk. You can if you want. I mean, we won't tell anyone. You get it in the edit. Only got six. Who are they? You can take, for example, a major retailer, who, by their own admission, have to date, been really achieving next to no insights from their sales data. If you think about a retail organization, who are I mean, what are they doing? They're gathering data in real time. Yeah, it's massive scale. Yeah, through every point of sale, etc. Michael McGrath  22:19 Mind you, if there's only two of you, and you've got 70% market share, I suppose you don't, you know, it's a bit like being the government. It's a kind of tax on So, I mean, the, I mean, necessity is a mother of invention, isn't it? And generally, we, you know, we, it's the problems that drive the innovation and solutions, but it's good that they're waking up to that. Tim Hutchinson  22:38 But, well, let me give you an example then, which is probably not probably would be a combination of those two broad sources of data you touch on, a lot of our work at Skills GPT is really trying to find opportunity and disruption for organizations, particularly around their workforce. Now what I mean by that is we've got some fairly massive disruptions happening. They are macro disruptions. So, AI, the emergence of AI, of course, people are concerned about what that means to jobs. Michael McGrath  23:15 So give an example of some of the disruptions that you're seeing.  So that's binary, really, you you're not talki Tim Hutchinson  23:18 I'll give you an example from a conversation yesterday where, yeah, a client in the energy sector, because a lot of our work is, is, is moving to sectors such as under transition. So the transition to clean energy, yeah, from Legacy sources, okay, is a brilliant example of workforce disruption, okay? Because you've got, fundamentally, you've got legacy jobs rolling off in simple terms, from, you know, the coal, gas industries, yeah, and you've got an increasing demand for people with knowledge and skills around renewables, okay, you know, making connections to solar, to work, etc.  well, so that that's, that's a big external disruption that's happening from, I mean, from a tech perspective. So sorry, I was going to explain even in that instance. So there's, there's that sort of macro disruption, yeah, and then they so, there are challenges there in terms of finding the right staff. They don't actually exist at scale with those renewables experience. Okay? So they started to look at efficiencies in the existing workforce as a starting point. Yeah, even if you can find one or 2% efficiencies, it all helps. Okay? So, you know, at one point in time recently, they're looking for more people with scheduling, rostering, planning experience, yeah, but two or three months down the track, recognize that some of the AI tools are able to perform that task, right? So, as opposed to the needing people with rostering experience. You pivot. And what you actually need is people with the ability to right size those AI rostering models, right so that and this, this, these are they different kinds of people. So they're used talking about technical people versus, you know, project management type people, in simple terms and this. And this is where you start to think, Well, what actually is, where does knowledge fit for people? Is it? Is it functional knowledge? Is it technical knowledge? Yeah, and this is, there is no answer to it, because this is a rapidly moving piece. We're not building product at this stage. No, we're not building out of the box SaaS product, because in most cases, we're trying to find a highly effective point solution for a priority problem around workforce, and then to develop from there. Michael McGrath  25:52 Look, I mean, I suppose the real challenge is that, I mean, you know, most of probably listen to this podcast are small business owners, right? About 40% of them are apparently. So there's, you know, hundreds of small businesses that are going, you know, they hear AI, they get the fin review, you know, that they read articles like, will AI be a bust? Tim Hutchinson  26:15 And and, surely not the binary, the binary press, yeah. Michael McGrath  26:19 And so we're looking at, okay, how do I harness this? How what? What's in it? For me, because, you know, you think about woolworths or coles and all their data, and you go, Okay, well, you know, you can think, you can play the long game. You can, you can invest in this. There's such a business case there. I mean, you can already see from the amount of data they must have, if you could start to do something with that dynamically and get insights. Tim Hutchinson  26:44 And the proven ROI is already massive, yeah, so it's off the chart, yes, but was it? Michael McGrath  26:51 You know, your small business, they employ 50 people, and they're trying to think through, okay, well, how do we harness this thing, other than we've got chat GPT on the desk, or Microsoft co pilot, and we're just plugging in questions, yeah? Tim Hutchinson  27:05 Well, yeah, but, but even that, actually, I mean even even that part. So you know, if you think about chat GPT, and I'm sure listeners are using it for various tasks at home and, dare I say, at work, but with the security concerns, very quickly, small organizations started to get their own sort of secure instance through 365, so they therefore can have that conversation with chat GPT securely. And it's a good point, because actually organizations you start to the people who efficiently are finding good use for it, are the workers. So if you actually ask people what they're using it for, and have an open, honest conversation, that's where you learn the insights. And people will be using it for report writing. They'll be using it for structuring reports. They'll be using it for planning their week. Every possible sort of entry level use, if you like. But I think what's happened is, I think you mentioned the newspaper there. You know, we have this strange binary press where you have to go through a hype cycle, don't you? Where, first of all, it's, it's incredible. It's, it's, it's going to solve all the problems in the world, and then a week later, it's going to, going to be the end of all work. Yeah, all jobs are gone to let that pass. And then, you know, now we're at a stage where companies are trying to or beginning to understand what's possible, yeah, and trying to find these practical solutions. However, you know, there is, I mentioned cost earlier, and actually, for SMEs, there is a cost factor, yeah, and in many cases, to, you know, to have a we get a lot of requests from people who, I think I'll think of one very close to home. The other week, a recruitment company who said to us, Hey, we've, of course, got a CRM with 100,000 candidates on it. Could we, you know, put put that in their terminology, put that into AI and find interesting things right now. The answer is, yes, absolutely, okay. Does it come at a cost? Yes, absolutely, yeah. And because of this pace of change in the world, you can't, in good conscience, stitch somebody a solution together and leave it with them. No, you actually need to then, sort of offer a managed service, yeah, to continually help that model develop, because it's a continuous improvement thing. You know, there's, there is a difference between, um, so I'd say two things broadly, and they're not, they're not their objective, hopefully not in any selfish interest one is with AI, the best thing to do is to get started. Now by that, let me clarify. I don't mean get started. Start throwing money at the problem. I mean start learning about it. Start reading about it, start trying to at least understand what it is. If anyone wanted to reach out. LinkedIn, afterwards I've, we've got various resources that point to, you know, a nice, a nice checklist of 20 resources they can go to for free to start that learning journey, yeah, because I think you need to understand it first of all, yeah, you know. And then, and then the other piece is probably to to talk, to talk, to talk to existing staff, because people will be using chat GPT, and rather than pretending they're not, from a security perspective. Michael McGrath  30:29 So tell me about the security risk, right? So you know someone in a small business, so there's 20 staff, and half a dozen of them start, you know they you know that they're using chat GBT, and they haven't told anyone. So where are the risks for the business there? Tim Hutchinson  30:45 Well, I think, I mean, the the risk is that you are essentially sharing information publicly. So very I remember quite early on we had, and it feels like a lifetime ago, but it but it was a year ago, a CFO was stood up in a meeting we were in and sort of, um, laughing about it, said, Oh, I've uploaded the annual accounts, and I've started to get some insights. Okay, it's really, really not a good idea. Wow. Now, generative AI chat, GPT is not a search engine, no. So as such, that packet of information, that set of accounts, isn't sitting there to be accessed in its entirety. However, it's something of an unknown as to what aspects are. So absolutely you shouldn't be sharing sensitive information. But as we all know, straight censorship is not an answer to anything. So I think you need a discussion with staff and really understand, yeah, okay, because that's again going to that point about it originates in the boardroom, not the server room. Take the workforce as a proxy for the boardroom. Find out what people are using it for. Find out where the efficiencies are. And the other thing I'd say I quite like this is I've got a colleague, Ray Fleming, who tries to explain generative AI in simple terms and says, treat it as an intern. Okay? I quite like it, because if you think about an intern, you get the best out of them by giving them the best direction, simple, structured direction. You find value in the work, typically quickly, but you typically, or should check the work. And that's very much the same with generative AI. You know, there are phenomenal insights, but I think you do have to also take it with a pinch of salt, because of hallucinations people will have heard of and make certain that you're either applying your own critical thinking, or the guys who built the models for you have thought about what, how the information that surfaced is is verified and against what. Michael McGrath  32:56 So can you give us some examples, Tim of of you know, good use cases where, you know, the the the ability to do some of the things that you've been talking about has really helped a business, you know, transform Tim Hutchinson  33:10 I can. This is where I have to be careful, because some of the detail is, is, it's very specific. I'm going to give you an example that that was a very early use case that we prototyped, because I think it, in one sense, it's very simple, and in the other sense it's also it's very much a people first example, which I like. I don't want to give deeply technical examples. So we were working with an organization who are essentially helping disadvantaged job seekers to secure work so disadvantage for a range of reasons, but sometimes mental health challenges, socioeconomic challenges, etc, now, and it talked about A large organization now, the challenge they had is that despite working hard and wanting to do the best by their clients, it often ended up as a somewhat binary matching exercise. So if somebody had done some cleaning work in the past, they would look through their opportunities and find a cleaning job. It achieves something. It also misses out on that point I made about other things they could do, yeah, yeah. What do they aspire to? What are their motivations? Okay, what else are they capable of? Now, again, as I said earlier, that's a cohort of people who perhaps find it harder than others, yeah, to self select and understand what their aspirations or their skills are. Yeah, now we then applied generative AI to both sides of that, the supply and the demand piece of that problem. So on the demand side, the job seeker, we're able to build something called role narrator, okay, so. Which essentially they had a conversation, an actual conversation, not even a typed conversation based on a series of questions, which really focused on just what they enjoy in life and what work they've done and what they enjoyed about that work. Okay, no pointed questions around open questions really open and express themselves. Yeah. Now from that, you can very effectively infer what somebody's skills are, but perhaps as importantly or more importantly, what are their motivations, what are their aspirations, what are their fears about work, whole range of things. Now, if you do that as well, not so much conversation, but if you start to look at the roles on the supply side and think about them again, beyond the job title, okay, and what the attributes are, you start to find adjacencies, yes. And you know there were some very, very specific examples where you know somebody in that instance, who was aspergic had made a comment around preferring to work alone. And it seems really simple, but they'd actually been overlooked for a whole range of cleaning roles. In the cleaning instance, because, of course, there's people in the offices, etc. But then it started to think about some of the skill sets, some of the skills, yeah, around handling equipment or handling certain chemicals, whatever it might have been. And, you know, a role pops up, which I think from memory was It was certainly a night shift role, which might seem obvious, but people don't make these connections at scale, yeah, normally, and it was in a completely different discipline. Michael McGrath  33:56 No, no, that's good. And, you know, I really like that example. So ostensibly, you've got these, you know, you're breaking down a role from a time to a bucket of skills, and then you're getting much more insight into the candidates and what it is that may have done in the past, or what they could do, what they like, what they don't like, and then you're trying to intuitively put that together in a way that it wasn't being done before, certainly. Because, I mean, I mean, what little I know about recruitment is it's so easy to get pigeonholed in any recruitment Never mind. Yeah, absolutely, you know. And you know, often, you know, we'll talk to people who really want to make a move it's in a traditional recruitment sense that's very difficult. Tim Hutchinson  37:24 Oh, absolutely, yeah, absolutely, if not impossible, you know. And perhaps, I mean, I've given a recruitment example, essentially, and I really, I need to make it clear that we've moved far beyond recruitment, and, you know, broadly talking about workforce. But even a recent example,you know, if you take any of these industries that are transforming rapidly, and I will mention the energy one again, because it's really the largest global initiative of all time, the shift to clean energy now, when you talk to clients in that space, even forget the internal challenges they have around workforce. They're very aware that they don't necessarily know what they don't know about the sector they work in. And what I mean by that, there's vast amounts of information out there about battery energy storage systems, about solar projects, all of this stuff you can now assimilate that information at scale and start to make you know, as is, insights around demand and project demand, and hence workforce demand, but also you can start to make predictive ideas about where is our industry heading. What might that mean in terms of the skills required, headcount required, the costs, and what are the levers that are going to impact that? Now, what you find is, when you start to look, you start to see things, and you know, in that instance, you have a new challenge evolves, which is the biggest lever in that external piece is regulatory landscape, which you can't really necessarily dictate. So then you have to look at, what can we again, what do we measure to allow us to plan ahead? And a lot of organizations are remarkably in the dark currently. Michael McGrath  39:17 I mean, there's a lot of talk about AI taking out jobs, and you know, the workforce going to be dramatically affected. And you know, those predictions were being made in the in the late 80s, with the advent of the computer, really. I mean, there was a lot of talk about, you know, I mean, when I left school, there's 10% unemployment if you're under 25 that was about 25% and so there was a lot of talk about computers are going to take over, and there's going to be no jobs. And yet, we haven't seen anything like that, have we, really. So, I mean, AI is now talking about that as well, but it's going to take it now. I mean, is that going to happen? Or, in fact, are we just going to see a pivoting, really? And.And a redistribution of of work, Tim Hutchinson  40:03 Honestly, I think it's hard to predict, because you'll hear every variation in the answer, yeah. I mean, absolutely categorically, certain jobs will disappear, yeah, and other jobs will significantly change in terms of their profile, right? But does that lead to wholesale loss of people? I don't think so, because, probably broadly, for two reasons. One is that that pace of change just does not impact that quickly. People are no there's inertia in the system. People organizations are slow to adapt. Yeah, perhaps rightly so. Michael McGrath  40:38 I mean, and you wonder where the triggers are. I mean, if you take, I mean, when you get to my age, you can look back a bit. So the if you look at websites, have been spoofed in the 90s as the answer to everything, yes. And you know, I kept, you know, being convinced that I had to look at it, and then I'd, I'd ever go online, and then, you know, I'd see the dialog, remember the old dialog? And it would take like, five minutes to load a page, yes, and it was like a brochure online. And I remember thinking, what a lot of fuss about nothing. And then everyone was going on and on about that. And literally from the early 90s right the way through 2000 and then it the whole penny dropped when the iPhone appeared in 2008 and all of a sudden we went to commerce, yes. And speed and convenience, yes. And that was a catalyst for a massive, I mean, look at the amount of commerce done online now, absolutely. Tim Hutchinson  41:29 So look at what that's led to in terms of allied industry, exactly. So you wanted housing, logistics, distribution, yeah. Michael McGrath  41:36 So what are the triggers, you know, for AI, maybe you know what, what's going to make the chain the wholesale change there in terms of adoption and utilization. It's hard to know, isn't it? Tim Hutchinson  41:45 Honestly, I think it's very hard to predict. I think, um, I mean in practical terms, I would say to organizations again, this is not going anywhere. Michael McGrath  41:56 So I think so get hold of it. Educate yourself. Hold of it. Understand, trialing stuff slowly, methodically. You know, what can we do Well, either the fees go down or they keep hold of the fee. I mean, I mean, that's the thing is, does that get anywhere? Tim Hutchinson  42:06 At an individual level, the same this, this sort of idea of, you know, lifelong learning. You know, it's an, it's an oft repeated phrase now, but that you're not going to lose your job to AI. You're going to lose your job to somebody using AI. And, you know, people are very it's, again, go back to that intern idea. It's almost as if each employee has an intern supporting them. Now, if you get that right, there are just massive efficiencies and upside now, whether they're, I mean, you can, it's hard to come up with examples on the fly, but you can look at certain industries where there will be wholesale change. But actually, you talk to people in those industries, they don't necessarily, they can't necessarily predict where that will end. So take something like the legal profession, for example. You'll it. I was with a group of lawyers the other day who both have a they have a legacy law firm, traditional, successful law firm, and also for moving into the generative AI space. Now they've almost done a parallel run, an AB split testing on work that they do repeatedly. And I think roughly they'd said it would take a team of four people three weeks.Traditionally, they've now got that down to 20 minutes with an AI model. Now clearly that's a fundamental change. What does that mean?   The fees probably remain relatively high and then erode as it becomes more apparent that that that's the case. But for the but for the lawyers, um, you know, they've gained back a lot of time there. So is there, you know, the the simple answer is that there's value add work they can be doing. I did hear I've got to be careful here as well. So I'll edit this a little bit very early on again. And I'm talking a couple of years ago, I was talking to a CIO of a fashion business who was very head of the generative AI curve, and partly because their CEO was essentially from that world, the Chief Information Officer, right? Yeah. So the CEO is from an AI world previously, and then the CIO, therefore had that influence early on, the CIO quite quite a bit of a character, had presented to the design team and others around generative AI and in real time, typed in some of their design cues as an organization, and asked it to produce an item that they typically produce, yeah, and it did, so, okay. And it was arguably, well, certainly was very similar to what they produced previously designed, and I'm being careful with my detail, but actually, many ways, was better. And he deliberately left them in. Sort of looking glum for a while, as if, right? Well, that's us done. And then a bit like in a reality show, where they start, they then turn up the turn up the color, and turn up the rousing music in Grand Designs or something. He does the uplifting part where he says, hey, you know that thing on our sort of to do list that we've all wanted to get to, which is looking at a new sustainable material to replace leather. Now, we can do it. We've never got to it, have we? We could be doing this. So there's this shift of adding value, adding value, hopefully doing the work we're more interested in. Yeah, of course. Look, I'm an optimist at heart, and I think that's an exciting future. Yeah. Will there be collateral damage along the way? Of course. But I heard an example the other day as well from image and computers in the 80s. The chap I saw presenting was talking about the motor car at the turn of the century, you know, whatever it was. You know, late 1898, 1900 and, you know, there was something like 30 or 50,000 people working in the horse stabling industry in London, yeah, um, now the motor car came along. Yeah. There were fewer horses. Yeah. Now what happened? That happened over a period of time, blacksmith started helping in the car industry, yes, etc. So, you know, look, I'm not the person to predict, and I think anybody who does Michael McGrath  46:27 Look, who are the winners here? I mean, if you look at open, AI, right? I heard the other day they started out as not for profit, but I heard they flagged the other day they're going to a profit model, right? So who's going to be the winners here, right, in terms of the economic model, and who's going to, kind of, you know, the big, are the big tech guys going to own this space, and we're all going to get the scraps, or, in fact, is it? Is it going to be a genuine democratization of publicly available information? Tim Hutchinson  46:54 It's possibly a bit of both. It sounds like a fudge, but bear and bear this in mind. So in so many areas of technology, it's technology has been pioneered by the small niche players and subsequently acquired by the big tech. Yeah, this is one of the first instances where it's the it's the exact opposite. So almost overnight, big tech have released this phenomenally powerful technology, and it's now the smaller players who are trying to work out what to do with it, yeah, and how to commercialize it best. Now where that will will lead to, my best guess is, as in a lot of industries, you will end up with people with highly specialized, niche capability that's highly effective, right? So the guys who are pioneering, for example, you know, looking looking at radiography or cancer scans and doing very niche work there very effectively in terms of identifying cancers. Of course, there's commercial upside in that, whilst doing good work. But you'll also have, presumably, a handful of big players who win in the space. Yeah. So if it you know, and and again, another cliche, the idea of selling shovels to gold miners. I mean, look at Nvidia and their chips and their share price. Well, they're so well placed to to service the entire industry, regardless of what's been, what the use cases are, yeah, interesting. I mean, I think in our world, it's a very good point as sort of, you know, founder of a scaling, generative AI business, we have to think about these where our commercial future is, yeah, and in some ways, that's you certainly can't determine that hard and fast from day one, no. So I think, I think what we try to do amidst the noise is to pick out the things that are tangible. So, for example, that grant wind delivering AI, yes, helping 75,000 organizations adopt AI. And if you want to see more about that, you can check out arain.com.au Australian regional AI network. That for us, is an enormous opportunity, because amidst all the noise and all the hyper generative AI, that's a vote of confidence in us, and it's a tangible roadmap to helping organizations at scale. Wow, some of these initiatives may ultimately lead into, you know, repeatable use cases that then lead into product. And we're almost doing some of the market testing, you know, with with a with a large cohort, if you like, what we're very aware of, we cannot be all things to all people. So I think it's one of those businesses. Certainly for us, we're running our business with no sacred cows, as they say, yes. So I think the best thing we can do as a leadership team is is put everything on the table every quarter, yeah, and determine, again, to measure what matters, determine our direction. Yeah. And, you know, put, put our, put our efforts into those things that have future. Michael McGrath  50:07 In some ways, we're, we're back to the beginning. We're applying timeless principles to, you know, to technology, hard work, measurement, results, you know, figuring out how something can be harnessed to be useful and constructive and positive and absolutely remembering people in human in the loop, critical, yeah, and there are downsides everywhere, like there is with everything, including the internet. But, but if we, you know, if we can keep, you know, if we can keep positive and constructive, we can, we can, perhaps, you know, carve out a better future certainly been the the history of mankind really, is that we, we have moved, found a way to move forward really absolutely. Tim Hutchinson  50:47 And I would honestly say to people, I'm probably repeating myself, but I think now, if you're an organization wondering about AI, interested in AI, terrified by a whatever it might be, don't worry about the technology for the moment, other than,I think, accepting that it's here to stay and will be ultimately have a bigger impact, I think, than the internet. Yeah, but don't worry about the tech. Park that bit of conversation and think about your business, and think about those areas where you deem there to be really significant opportunity or that have been the bottlenecks to growth. Now,despite running an AI business, I'm repeating another phrase you hear a lot. Just because you have a very large AI hammer doesn't mean that everything is an AI problem, right? So it's not the solution to everything, no, but the starting point is to identify the business challenge and to work back from there and determine whether and to what extent AI might produce a new unlock to that problem, right? And that's where you then start to actually find tangible benefit, or determine that at this stage, or for your business, it's not appropriate. Michael McGrath  52:04 Yeah, get it. That's interesting. Look fascinating. Tim. And on the subject of lifelong learning, I mean that idea that we're, you know, we've all got to become kind of lifelong learners and students, I think. And now, with the democratization of intelligence and information, really, you know, via the internet, we've got so much more available to I wasn't going to Tim Hutchinson  52:23 Sorry to interrupt Mike. I was reflecting on something walking down here, which is, in some in some ways, as a, as a 50 something chap, I'm a, I'm a bit of an example of this idea of lifelong learning, and I kind of reflect the the pace of change in the world. So, you know, obviously, studied early on in life. I imagine I learned a few things in the interim. However, I kind of got busy with work. It's in this last three or four year period where I've massively embraced the idea of learning, and I am loving it, because my brain feels just alive and but I think a lot of people suffer from imposter syndrome, don't they? Which? And they sort of feel they can't enter a new world, or they're not worthy of it. I heard a funny enough, a stand up comedian, the other day saying these people don't have imposter syndrome. What they what they don't realize is they're suffering from a healthy dose of self awareness. So, in fact, a lot we don't know. We don't know a lot of stuff. And I think it perhaps comes with age or something where I no longer care whether I know what I need to know in a situation, because most people don't know everything, and there's a lot what I'm getting to I think, is saying this pace of change in the world is in some ways great, because nobody's got all the answers. So I'm in meetings where I've gone back to basics, where I'm applying perhaps recruitment skills. I ask questions in a humble, unafraid manner. Might be a bloody basic question. I have no idea, but I asked the question, and I listened to the answer, and I think in that, and that's a good way of looking at looking at AI, which is try and understand it, try and explore and, you know, get involved, because people don't have all the answers. You know, if something's released, you know, constant new releases on a weekly basis, you can know as much as anybody else in a week's time. Michael McGrath  54:18 Yeah, look, Tim, thank you for that look. It's a fascinating world ahead of us, and we certainly got to be alive and awake, haven't we, and I'm very grateful for you coming in today and sharing with us your insights. We'll put your details in the show notes. I appreciate the opportunity, Mike, and we wish you well at skills GPT, thank you very much. Good luck. Tim Hutchinson  54:39 Thank you very much. Take care. Bye. Michael McGrath  54:44 So there you have it, generative AI. Thanks to Tim for helping unpack how AI is being developed at the practical level. And whilst the future is always uncertain, what's not uncertain is that AI is going to be part of it. That's for sure, if you want to chat with Tim at Skills GPT, the details are in the shadows now, a final shout out to Oasis partners, our generous sponsors of this podcast, Oasis help the shareholders of private companies wishing to exit strategically. So if you want to know more about what they do, talk to Don hunter and the CEO of Oasis. So if you enjoyed this episode, please tell your friends, and if you're feeling generous, leave a like until next time. Take care you. Link to previous episodes: https://www.oasispartners.com.au/podcast/nick-armstrong-unlocking-the-power-of-ai/]]> https://www.oasispartners.com.au/wp-content/uploads/2024/11/Picture1-1.png clean no 55:32 No no https://www.oasispartners.com.au/podcast/nick-armstrong-unlocking-the-power-of-ai/?utm_source=rss&utm_medium=rss&utm_campaign=nick-armstrong-unlocking-the-power-of-ai Wed, 23 Oct 2024 00:26:18 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17552 https://www.linkedin.com/in/nicholas-w-armstrong/  and learn more about Chirp here https://www.trychirp.com/ Nick Armstrong highlights his entrepreneurial background and the launch of his latest venture, Chirp. Nick shares his early entrepreneurial journey, starting a business at university and taking advantage of free office space at Sydney University. Nick discusses the early stages of sustainability in Australia and how he got involved in the carbon credit schemes through his father's connections. Nick's first business, Greentricity, was acquired by AGL, and he reinvested the money into similar ventures. Nick introduces Chirp, his latest venture, and explains its role as an AI co-pilot for sales teams. Nick explains how Chirp uses AI to analyse conversations and fill out CRM entries, freeing up sales reps' time. He highlights the benefits of Chirp, including closing deals faster, improving win rates, and automating research on meeting participants. Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  Welcome to the troubleshooters podcast with me your host, Mike McGrath, now today's guest, Nick Armstrong is a genuine entrepreneur. He started his first business at uni before selling it just a year later. He's gone on to start multiple ventures, and he's currently just launched his latest venture, chirp, which is a new technology that helps organizations enhance and improve their revenues by harnessing AI to improve their pipeline conversion. Quick shout out to our sponsors, Oasis partners, corporate advice for the practical bias. Now, the guys at Oasis know a thing or two about getting a deal done. So if you're considering an exit, talk to the team at Oasis. Over 500 deals done and still counting. Nick Armstrong, welcome to the troubleshooters podcast. Thanks for coming in today. We're very grateful to have you join us now. You are the entrepreneurs, entrepreneur, for sure, and you, you've been on a hell of an entrepreneurial journey, haven't you since? Well, since you left school, pretty much since you left uni. In fact, you started a business at uni than you I did. Nick Armstrong  Thanks, Mike I didn't know any better. I was actually taking taking advantage of the free office space at Sydney Uni upstairs. Michael McGrath  Is that right? Look, we'll come back to that. I know that you've just launched a venture called Chirp, which is very exciting. We've just been chatting about it. It's a sort of AI. I mean, you can sort this out later, but I'm going to butcher this, but it's effectively a cool AI tool that really helps quantify and qualify the quality of your pipeline. Nick Armstrong  It's a co pilot for sales teams. It does, it does that. It doesn't be more than that. Michael McGrath  Okay, let's not get into that. Now come back. So I want to go back to the beginning and just get a bit of a handle on your story, right? So, you started a business in the sustainability area. Was it greentricity in Uni. Is that, right? That is spot on. Okay, so tell us about that, because this is back in, I mean, you're not that old, but this is back in 2005 right? So that was fairly that whole sustainability thing was really at the early stages then, wasn't it? Nick Armstrong  Yeah, it was actually the New South Wales Government had just come out with a scheme to create so these are the carbon credit schemes, estate based. Yeah, that's right. My dad goes back. My dad was a stockbroker, and he introduced me to some of his stockbroking mates just down the road, actually, in Australia square, and I had never drunk cappuccino before, and took me down, and they got me so buzzed up on caffeine. And I thought this was great. I was so excited by that. That's great. And and they told me about that they'd seen some of these companies doing, doing, you know, this, this stuff in sustainability. And I went home and read up all about and wrote this, this proposal to the government to get a license ended up getting granted one. And by Joe Tripodi, who, who later got, I think, done by ICAC for for doing some naughty things. But, yeah, got a license. That business got acquired very soon after, luckily, and I took that money and reinvested into pretty much the same sort of business straight after. So that's interesting. So you started a business at uni, you developed it and then you sold it. It's still going, isn't it? I think I looked up on the website, well, that, yeah, that business got bought by what is now AGL. So it's still going. It's well done. It's been consumed by AGL. I wish I'd held on to my stock, but okay, classic thing that we all do is sell it and reinvest it. Classic thing, Mike, as I'm sure you know from your businesses, is, if all I'd done was sit on my stock back then, yeah, you know, it would have paid itself. Michael McGrath  Yeah. Well, it's a sort of Warren Buffett buy, hold, you know, never sell. But so what did you do then you you got out of that. You're in sustainability. I mean, just, going back before that. What? What? What do you think? What? When did you first start thinking you might be an entrepreneur, or that you wanted to do stuff by yourself, for yourself? Well, when did that first germinate that idea? Nick Armstrong  Yeah, I think, I mean, I was at school. I was school captain at Sydney Boys High and 2001 and I ended up doing a bunch of things at school that I suppose school captains hadn't done for a while, okay, turning muck up day into a revenue positive day for the school, okay, but it involves shutting down traffic on Moore Park Road and not letting traffic go until they would actually donate money to a charity. Michael McGrath  That's amazing. So you obviously had a bit of a, you're a bit of a leader around that idea. And you, you like to monetize things, right Nick Armstrong  Yeah, well, I think monetization is, is key. Like I've done 25 funding rounds now I think you know all of those still to this day, I'm back raising money. And if each funding round is as hard as the last one, and it's all you know, investors are looking for the same thing. They're looking for customers, they're looking for revenue. They're looking for it's all the stuff you you see in businesses on a daily basis that cash is king and even in startups, people are looking for, you know, we, I go back to that company, Groupon, a while like, do you remember Groupon? They were, they were handing out coupons for a while back, okay? And Groupon, they used to, used to pay $100 to get $50 in revenue, right? Needless to say, they went bust pretty quick so, you know, and that I just go back to those, those sort of things that still applies to startups Michael McGrath  So you left. So you started your first business. You left it. Then what did you do? So you stayed in the energy game. Nick Armstrong  I did. I mean, I had some businesses on the side that aren't on my LinkedIn profile. I was laughing because, you know, I saw you had Gino's, Gino's pizza. I actually set up a business called food by web, which was online food ordering. Same time. Michael McGrath  I was a bit before you, so I was in pizza and delivery. So that was, that was before the web, really, but we were taking it from, you know, before, before deliveries. I mean, people, everything gets delivered. Now, literally everything. But back in the mid 80s, it was a complete novelty that you could take some food to somebody's address like that was outside of London. That was just not a thing. So, yeah, fantastic. Nick Armstrong  I mean, that's we did a similar thing, but it was just before the iPhone. But the mistake we made was that our orders were going over fax machine, and the fax machine was still in the office, and so the office closed on Fridays at 3pm generally, yeah, so the kitchen wouldn't get the order, and so that business didn't last too long Michael McGrath  Yeah, look, my kids have never heard of facts for share, but that because they they came very quickly, and they went just as quickly, didn't they? Yeah, okay, so, so you then started that business as the energy link, and you were eight years there, so that was a good body of work. That wasn't it, yeah. So well that that was called co zero. Nick Armstrong  So as opposed to CO two, we were trying to co zero, have co zero, which was no carbon dioxide. Again, it was based on the trading schemes that existed at the time. And in 2011 that business was the fastest growing company in Australia. I was, I think at that time, was on the young rich list with my co founder, which was one of those claim to fames that I that I'm ashamed to have because it didn't do anything. Michael McGrath  It's only the kiss of death. Actually, it was, but no but, but still impressive, though. So you were really trying to get into that whole helping people calculate their carbon footprint and offsetting it. Nick Armstrong  We initially were, but then it turned into a trading desk, basically. So we built a an app that let you create your roof top solar credits, your rebate, and then you could then trade that with a corporate that had to buy those rebates to offset their, their their government mandated requirement. So not a not a voluntary requirement, but it but a government mandated requirement. And at that stage, that was something like, I'm pulling a number out here, but it was something like 8% of their of the electricity they purchased had to be accompanied by their certificates. So that was underpinned by, you know, some regulatory drivers. Needless to say, those regulatory drivers changed as the government's changed, yeah, and that's what ultimately led to me needing to pivot that business in 2012 right? So I had investors at the time. The investors were, one of my investors was a Japanese corporate. The Japanese corporate couldn't, couldn't understand how a government would change the policy that it was unheard of in Japan, under, you know, I think a pretty stable sort of long term, yeah, stable, stable regime. So these were state based legislated schemes that were effectively changed all the time. Well, state and federal, yes. I mean, they both were, and I know you've got some experience In this through other board directorships with so, so you would be familiar with it. But yes, they do change all the time. It's one of the the unfortunate things about making long term investment decisions in this space. I hear it from institutional investors all the time, which is one of the reasons why I left the renewable energy space right, is it is just virtually impossible to, you know, I can't imagine being a super fund in Australia and having to make a long term investment decision in energy, right? Like it's just, you know, yeah, it's impossible. Michael McGrath  Yeah. I mean, I suppose that the advantage of legislation, I'm on the board of health, safety and hygiene business, the advantage of legislation for us is that, you know, companies are compelled to do certain things and to keep certain standards, which drives, helps drive our business. The flip side of that is that, you know, when they change. You know, everything can, everything can fall apart. Nick Armstrong  Yeah, you can make a lot of money or lose a lot of money overnight, yeah. And in our case, we lost a lot of money overnight. And I think it's, you know, it's once been twice shy for me in that space, and it's probably why I moved into, well, I moved into one of the most highly regulated spaces, which is financial services. Michael McGrath  Okay, yeah. So tell us about that. This is a business that you eventually listed, right? Yeah. So this is called identity. Nick Armstrong  Double down on the regulation, yeah. So identity, which, which didn't start again. I tend to like changing company names, but it didn't where you actually started life as a neobank, believe it, on 2014 Michael McGrath  so for the uninitiated, what's a neo bank. Nick Armstrong  A challenger bank. No, so you might be familiar. So not one of the big four, yeah, not one of the big four, and not even one of the big five or six. But like the UK, your, your mother mother tongue, or our mother tongue, I should say, is the leader here with Revolute, Monzo, Starling. These type, you know, these, these names that some Australians would be familiar with and are probably customers of. They they're digital first banks, yeah, you can sign up and get better exchange rates, and they don't have the legacy of it's all online. They haven't got the costs. But, yeah, they don't have the legacy. And they start doing well, but they normally then get bought by one of the bigger banks. They they do, but in the case of revolute, it's an amazing story. I mean, they're now worth more than NatWest, RBS. There. I mean, it's just, is that, right? It's quite phenomenal. I think their last valuation was over 40 billion pounds sterling. Okay, interesting. No, that's good. I mean, look, we need, we need the banks, you know, we need competition. Well, you know, yeah, you need, and that's the thing that's sort of lacking, I think, in Australia, but which is why I wanted to start a challenger bank, but I couldn't get it funded in Australia. Everyone thought. They said, Nick, what's wrong with the with the current banking system? So I had to pivot that business and and the big problem that identified at the time, and this was actually identified to me by by HSBC, who I was working with at the time, was that anti money laundering fines that just hit 200 billion US dollars globally, and that was a big cause of payments being held up. When was the last time you sent money overseas? Can't remember. Well, I can tell you that I did it about six months ago through a normal bank, and it took three days for that money to arrive. I guess that's interesting. Michael McGrath  Actually, I do remember now I had to send some money to Hong Kong, and I had to put one of my guys on it for a week to get it done because I needed a banker's draft, and that everyone has stopped doing them in covid. Yeah. So we had to join the get this. Had to join the police bank. I couldn't join it because I wasn't Australian citizen at the time. I am now. But my wife had to join the police bank because they're the only guys who did it, and she joined it, just to get the draft so we could send it to Hong Kong. What a bloody so they took a week. Nick Armstrong  They call it. They still call it a telegraphic transfer. And you're probably old enough to remember, yeah, remember the telegraph Michael McGrath  Dear mom, run out of money, please send some. Nick Armstrong  That's right. So they, yeah, that's and it's a hangover from the time when banks would still, and I'm making a tapping signal, for those who can't actually see me, telegraph would be sent. A wire would be sent between two banks, and they would tap below Morse code. It was a Morse code instruction, that's right. And so they would have, and Mike, believe it or not, they'd have a wire room in a bank. Michael McGrath  So, what was our identity, and what was the genesis of that then? And how did that evolve? Because it very few people are able to start a business then they list on the stock exchange. That's pretty impressive story. So tell us a bit about that. Nick Armstrong  Yeah. I mean, I can't claim to have come up with the with the idea it was HSBC that turned around and said, Nick, if you can help us solve this money laundering challenge, then we'll become a customer. And I can't necessarily say that we solved it, but what I what I can say, is that, you know, we patented the idea, and the company is currently suing JP Morgan for patent infringement at the moment. Okay, right, okay, and there's a live case in Delaware at the moment, so it was worth summing that pattern. Then I presume, well, it's being cases live so and what's the date? Today's September 20. So, yeah, so it's currently live. So, so that could be a large settlement. Who knows? But, yeah, so, so HSBC turned around and said, If you can help us solve this challenge. So we were using Blockchain technology at the time. Blockchain is a new technology that is the technology that underpins Bitcoin. It is a shared Well, I mean, we're just having a conversation both before the podcast about, you know, technology and, I mean, it's a shared database, effectively, like a big Excel spreadsheet that can be viewed by multiple parties. So it's a great technology for sharing data between parties that don't necessarily trust each other, like banks. So we thought, well, great, let's use this technology to help banks share personal, personally identifiable information, right? Things like your passport, yeah, your date of birth, your other identifiable information, the sort of stuff that you had to give police bank, okay, yeah, because I guarantee that police bank are probably keeping that on a database somewhere within their bank. Yeah. And the reason it took seven days for that money to clear is because they've had to manually pick up a phone and call HSBC in Hong Kong and tell them that you're, you know the Michael McGrath that that you say they are, yeah, or they say you are, that's just now I own them as well. That's right. And they know, they probably know where you live now as well. Michael McGrath  Yeah, so, so you use blockchain, and that was pretty I mean, Blockchain is a real thing isn't, I mean, Blockchain is extremely widespread now Nick Armstrong  As a technology definitely is. I mean, the thing that I think the general public have sort of, I suppose, forgotten now, is because AI has really taken the media's attention. Is that the blockchain wave has sort of been forgotten about, and it was the technology that was going to change the world. And now I AI has now sort of is now changing the world. But is AI drawing on the on the data that the blockchain allows access to or what, oh, listen, I call them all frontier technologies. So I don't necessarily think they're, they're, they're, I mean, they're interdependent of each other. I don't necessarily think that they are dependent on each other, but, yeah, they they're all frontier technologies. So, you know, most of the big companies, the fangs, or the the mangs, as I think you call them, now, they are all, they all have large research and development budgets going into all of these frontier technologies. So blockchain is definitely not gone by the wayside. It's just that it's not talked about as much now because AI has taken the lead Michael McGrath  And so, so you solve that problem. So tell us about that business  then. So how did you, how did you get to list it? Nick Armstrong  Yeah, so we, I mean, we did the typical sort of seed. Well, you started pre seed generally. So, I mean, for those who aren't familiar, you know, the typical sort of fundraising path of a startup is sort of a pre seed round before you have revenue, a seed round once you've posted some revenue from customers, and then then a series, a round once you are ready. Sort of like the coin the slot machine. Once you're ready to scale up the business, you found product market fit, you know what your customer acquisition cost is, and you're ready to scale the business. So we did, I would say, up to a series a funding round. And. Yeah, we kind of got to a point where we we had some early investors who were looking for liquidity. So they were looking for the ability to sell their shares, and we wanted to, but we still the company was hungry for more money. So we had this sort of, we had this difficult situation whereby the board had to kind of manage, you know, how do we, how do we deal with with the need for more money, but the need to provide liquidity to existing shareholders? And, you know, at the time, there weren't many secondary options available in Australia that there are now. So there are, there are now funds in Australia that will provide that a secondary funds that will come in and buy out existing shareholders. So there weren't, this was 2018 so so there weren't a huge amount of those. And in any event, we were in quite a niche part of the market. If you were in the UK, yeah, there are reg tech specific, yeah. Investors, yeah. In Australia, there are generalists, okay, tech investors, so, so you decided to list, right, which is normally a kind of three year journey. What did you expedite that we did, but we didn't do it through a backdoor, okay? So a lot of people say, Oh, Nick, you just Yeah. Did you do that? No, we did a front door list. Is that? Right? So we did a clean, fully regulated listing Michael McGrath  Because that's not cheap. I mean, that, you know So, I mean it, I mean, typically it's three quarters of a million, maybe a million dollars to list. Oh, it was, at least, that was it. And then normally it's the compliance costs are normally, three quarters a million dollars every year. Nick Armstrong  It's not cheap, and it's not easy. So, so, you know, ASX has very stringent requirements. They have profit test, asset tests, yeah, you know, you have to provide three years fully ordered accounts. You have to provide, you have to have a board of directors that has qualified, full qualifications. You have to have directors that have previous experience running listed companies. You have to pass all the probity checks. Yeah. I mean, it's not something that I would recommend any small company does. And having been there and done that, you know, the costs, it's not even a cost is it's, it's the time and energy that it takes for management to jump through all the hoops, basically, and not just initially, but ongoing as well. I mean, completely. And you know, I had three and a half thousand shareholders, so okay, you know, prior to listing, I had 100. Yeah, you gotta take an account broker fees so you know, the lawyers, you'd be lucky to get away with a half a million dollars in what, in legal fees. Michael McGrath  So you listed it and and then you ran it as a listed business for a while. Nick Armstrong  Still listed. Ideate Michael McGrath  Ideate, okay, and it's a payment data, business, basically payment. Nick Armstrong  That is correct, exactly right. So they, you know, customers are, there's an announcement today on the market that customers, Bendigo Bank, Robo bank, Master. Michael McGrath  And are you still involved there? Nick Armstrong  No I'm not full disclosure. I'm not, okay, yeah, no, it's good. Michael McGrath  Okay, so you, you kind of moved on from that. I mean, you're piling up a lot of learning here, a lot of lessons, right? Nick Armstrong  A lot of sleepless nights. Michael McGrath  Yeah, I bet, I bet. So, so, so bring us to Chirp then. So this is your current venture, which How long have you been working on this? Nick Armstrong  Well, I took some time off between identity and I did some time in Singapore, okay, with a venture builder run by Temasek, which is a large sovereign wealth fund. So did you spend some time in Singapore? It's been about a year, because I earn it's really happening there. And there's a lot of Hong Kong money move there, and there's a lot of private equity and family office. Yeah, they, they, they relax the laws. Well, they, they incentivize the laws for family offices to set up in Singapore. So Right? I mean it, it isn't. It isn't. I think Singapore does a good job of of sort of marketing themselves as being open for business, and it definitely is open for business, don't get me wrong, yeah, but you know, in terms of early stage venture capital, Australia has a lot of incentives for early stage businesses. We have the research and development tax incentive which which is unmatched in most markets. It's pretty good, three and a half cents back in the dollar. Yeah, no. Helps a lot. I mean, Michael McGrath  I'm on the board of some manufacturing businesses that have really, you know, really been helped by that. Nick Armstrong  Yeah, usually. So, you know, there's not, I mean, Singapore has some tax grants, but, but there's nothing like that in Singapore, No, there's nothing like that in Hong Kong. Hong Kong has some science and development parks that. But you know, for me as a entrepreneur in the early stages, Australia is a pretty damn good place to set up a business. Having said that, you know, developers. I have a lot of software developers in there. When I say a lot, nothing like I used to have so but the costs that we pay our engineers in Australia is, is hasn't really changed much in the last five years. Maybe it's dropped slightly, but on maybe, maybe kept up with inflation. So, but, but to come back to your question, so I came back the end of last year, so I've been working on this now for about seven or eight months. Okay, but, but, Mike, this has been 20 years of hard knocks. Like in 20 years, I have struggled with founder led sales, and I've struggled with sales broadly. And I can put it down to two things really. One is that I haven't qualified deals properly, right? And what I mean by that? Well, you're probably familiar with these simple, you know, frameworks that we use, qualification frameworks. Band is the simplest one, budget, authority, need and timeline, yeah. And am I talking to somebody, you know, that's got authority? Yeah. Is there a burning need for my product, yeah, is there a timeline to buy? So this is as an entrepreneur, you, you know, you've continually, you know, seen the challenges of trying to secure consistent sales revenue. Because, you know, 90% of business problems are solved by more sales, normally, right? Well, nine, yeah, 90% save solves all problems. Sales solves all problems, and, but, but, but somewhere between 90% Yeah, that's right. But also 90% of the solution is to hire more sales reps, right? And that doesn't work. Michael McGrath  So, so, so what you're saying is, with all that pain and all that sort of angst over the last 20 years, you put that into this solution you're now calling Chirp, which is the AI sidekick. Sidekick to AI which? So tell us, you know, I'm a I'm running a midsize business. I've got 10 reps. Yeah, we're trying to get more sales. Give me the tell me what you're going to be able to do for us. Yeah, so, well, I can tell you what the benefits are. We're going to help you close deals quicker. Oh, I like the sound of that already, and we're going to help you improve your win rate. Okay, so if you're closing 50% of deals that come into your pipeline from marketing, will help you close 75. So we do it in a few different ways. The first one is we help you qualify deals better using a framework like band, okay, and but the way that we qualify better, yeah, using band, because we analyze the conversation and we so we pick out words and phrases in the conversation that express budget authority, need and timeframe. So if you say something like, you know, I I don't have any budget, or the converse of that, which is, yeah, I've got $20,000 to spend this year. We will pick that out using AI, and we'll fill out a little it's basically a spreadsheet, but it's, it's, it looks a lot prettier than that, but we'll fill that out for you, and that'll get updated in your CRM.  But shouldn't the a sales guy, listen for that. So what you're saying is that we do it for you. You'll monitor those conversations, synthesize all that and then represent it with the insights Nick Armstrong  And fill out the CRM for you, okay, and, and, because, all right, salespeople spend according to Salesforce, or just down the road, yeah, salespeople spend sales and build them, right? You did. You've contributed towards their retirement plans, but salespeople spend 72% of their time not selling.  So what's that time being spent on? So that that time is spent on researching who they're going to meet with, like finding out that you set up Gino's pizza, yeah, Matt, filling out a CRM, yeah? And taking notes during meetings and and basically typing up those notes, right? And then, basically, you know, booking follow up meetings, sending case studies, writing emails, okay, that sort of stuff. Michael McGrath  So, so effectively, if I want to engage, if we want to engage with, with, with your business, your new business, Chirp, we're buying a platform. Is it a platform? Nick Armstrong  It's software as a plugin. It's software as a service. Michael McGrath  Okay, yeah, so if you've got a CRM, this is a plugin. Nick Armstrong  It sits on top of your CRM. And again, it's a sidekick or a co pilot. And our view at the moment is that the CRM is only one part of the sales, what we call the sales stack, or the the tools that you have in the sales suite these days, there's often, there's a there's there's marketing software, there there's email, there's calendar booking tools, there's a call recording tool, And there's prospecting tools, etc. So, so we orchestrate all of that together and and then, as I mentioned, we overlay this qualification framework. And then the other, the other thing that we'll do is is automate the research on who you're meeting with for you. So we use chat GPT to call out to all of the different public data sources to find out exactly who you're meeting with, and so we can find out things like, you know, what school they went to, what they started at university, what sports they played, what, what, what they like doing in their spare time, whether they ran a marathon last weekend. Michael McGrath  So you synthesize all that public information effectively. Cutting down the time that a rep or a sales person has to spend pulling that together. That's right. If he pulls it together at all, Nick Armstrong  That's right. So typically, you know, most people go to LinkedIn before they go to a meeting, and you might do that 10 minutes before you go to a meeting. We can find you a lot more than you would in LinkedIn. I can tell you if a company has just raised a round of funding, if they're about to go bust, if they're, Michael McGrath  Yeah, okay, interesting. So, so, so, effectively, this is a, this is a bolt on, as you said. It goes over the top of your CRM and then pulls together the various tools, including the CRM, but not just the CRM to to help synthesize and cut down qualified deals. Yeah. Okay, yeah, exactly. Nick Armstrong  And then there's a third part, which happens after the meeting, and that's what we call next best action. And that really is just telling you what we think you should do next, or what what the AI thinks you should do next to help close the deal. Yeah. Now Mike, as someone that's been doing this for a long time, a very long time,you will know what to do next, naturally, but your juniors might not, no, so I'm not sure I do either. But yeah, okay, I've got the point. Yeah, I've got the point. So sobly. This is a, this is bringing AI to life, really. This is saying this is a good use case for AI. This is a real, tangible use case for AI. And I'm going to throw another buzzword in there, just for good measure. This is what we call agentic AI. So agentic AI is the next evolution of chatgpt. So chatgpt is a large language model, it gives you context, so you can use it to find context and to ask it a question. It can't book you a flight, but what Chirp can do is take an action for you, right? So it can write you an email, right, or it can book you a meeting with someone, right? Or it can actually take an action, okay, so the next evolution of what we call these AI agents is, is this agentic AI? And that's and that's the space we play in. Michael McGrath  Have you got productivity cases for that? Yeah. I mean, does that? Does that save? I mean, obviously saves time, but does that start saving money? Nick Armstrong  Well, our play is a revenue gain. So we, we say, we make you more money less staff. It's, it's effectively more revenue. It's more revenue per member. That's right. So keep Your 10 sales reps, yeah, you're gonna, you're gonna uplift your revenue by, I mean, I can't give you the exact numbers now, because we're only seven months in, but if you know, as I said before, if you, if you're doing a 50% win rate, if you can take that to 75% win rate, you know, do the numbers on that. Michael McGrath  So for anyone listening to this, right, what's the, you know, what in your view, what's, what's the best sort of company that can you know, which, where's your sweet spot, and where do you think this technology and these tools are most effective? Nick Armstrong  Yeah. I mean, I can tell you that we chirp are targeting B2B, SAS companies, software companies, and, and we just have to be quite specific on who we target, because we're very small and we've only just started out, but the and, and it's five to 20 sales reps, so that That's where we think we can help the most, but I think more broadly, the AI agentscan can help, can really help anyone that's that, that's, you just got a CRM in place, and that is looking at automation in their sales stack. So if you are using a call recording tool and you're using some sort of marketing automation software, so you're doing outbound emails, you're doing any type of outbound cold calling, that type of thing, then I think AI agents can help now. Chirp might not be, you know the software for you today, but you know, my hope is that, is that we'll grow over very quickly. I hope there will be an Aussie success story, because I'm not here to fuck around. Michael McGrath  So it's a SaaS model, right? So effectively, yeah, it's a simple SaaS Yeah. So, you know, the the technology gets loaded. Someone pays monthly, Nick Armstrong  Yeah, it's a monthly net now, just, is it for a user. It's a per user per month, but there's a consumption charge as well. That kicks in over a number of meetings. Now there's a The reason there's a consumption charge is because AI is one of these, as as, as your listeners would know, is one of these things where there's a large computing cost to this. So we have to pass on some of that. We can't consume all that because the more people use our software, the more we get charged. Software, typically has had a very high gross profit margin up upwards of 90% typically software as a service. That is now that's not the case with AI compute. Ai compute is very expensive. It will come down over time, but it's not there yet. Michael McGrath  No, okay, okay, so effectively, it's, it's a it's a monthly cost per user, cost per user, and the more you use it, the it kicks in over a certain level. That's right, interesting. And so where do you think all this is going? I mean, do you think that? I mean, there's a lot spoken about now, at the moment, a lot of people worried about it. A lot of people think it's getting it's going to get out of control. Well, what's your own view? Nick Armstrong  Well, I've just come back from San Francisco, literally, last week, where I was I had the fortune, or misfortune, to jump in a self driving car that was run by Waymo, which is a subsidiary of Google. And I was just saying to Simon, one of your colleagues, that's, you know, it's quite disconcerting, because they still have, they've left a steering wheel on, which baffles me why that would lead to steering wheel on a self driving car. And the only reason I could think of is that if a car happens to go haywire and starts veering off the road, you can so where did you see in the front of the back I sat as far away from the controls as possible, because I'm a very bad backseat driver, and I Yeah, yeah, yeah. I presume the brake on the in the passenger seat doesn't work the same as in my do say in the instructions when you sit in there, that if it does happen to start mowing people down on the road, that you can override the controls. Michael McGrath  So, wow. So no, I mean, that's pretty scary. You know that idea that the roads could be full of cars. Well, it's happening. It's not scary. Well, it is scary, but it's, I know it's happening on the mine sites because I'm involved in a company that's providing the aftermarket harnesses and technology, and that's been going for quite a while. Nick Armstrong  Yes, it's been going for more over 10, well, 10.Is, Michael McGrath  I think, because technology isn't new, it's more around what people will accept Nick Armstrong  That's right. And trucking, I think, is the sixth largest employer in the US or transport. I you'll have to fact check that on me. Do you fact check? I don't know. No, we do. I mean, we do, if there's money involved, there's no money. I mean, we try selling a trucking company. Michael McGrath  We try and get our actually, we don't. We're not keen on transport. The margins of quite tight. There's some nice niches, but generally we we stay away from from haulage. Really understand Nick Armstrong  It's a pretty, yeah, pretty heavily dominated Michael McGrath  Very important, and expanding, actually, yes. So we like some of the supply. We call it mobs and buckets. So we like the supply side to that the manufacturers, manufacturers, trailers, tippers, tankers, that, that world's, you know, growing, because there's more and more moving by road, especially in Australia. It's a big country. There's populations growing, so that's more movement. And we don't have much of a train infrastructure to speak of, really, so the roads are still the king here. Nick Armstrong  Well, that's, I think that's where we may start to see some of this happening, because I know that, I know that Google is definitely looking into self driving truck infrastructure and but I also tried on the Apple vision pro while I was in San Francisco, and I can tell you, as an early adopter of the Oculus Rift, well, what's that? Just the vegan goggles? Yeah, so Apple's vision Pro is their new 3d goggles. But I'm not doing it justice by saying that, but it's just incredible. I mean, the implications that this will have for retail and FMCG is huge. Is that right? I mean, like you can do, and training businesses, for example, like you could do. You could run a full training course through these goggles. If I was, you know, I think back to doing a course at McDonald's that, you know, I don't think I ever did, but you could run a full course, you know, through these goggles. And it's just phenomenal. Michael McGrath  So it's a sort of simulation, you know, being able to replicate, you know, real environments, environments, yeah, hazardous environments, confrontational environments, Nick Armstrong  Yes, it's just so, so I think, you know, they the sort of doom and gloom scenarios that are painted that, you know, AI is going to sort of the end is nice, yeah. I mean, I think where we may end up is sort of in this, you know, leisure generation, where, where we're all going to end up as drug addicts and sex addicts. And, you know, I don't think that's necessarily a reality. That's yeah, so maybe we, we just end up with, you know, we don't have to work four hours a day, yeah. And I'd be quite happy to go sailing on the harbor. Yeah. Well, most of my stuff had it will work four hours a day. Anyway, Michael McGrath  My dad used to, sort of, you say, how many people work here? About half of them. Nick Armstrong  Well, you're the chairman now, so, yeah, you probably play golf. Michael McGrath  You're joking. I'm the executive chairman. That's preserved for the non executive chairman, so I'm still hard at it. Okay, well, that's been fascinating. Well, we wish you all the best with Chirp, and it's been interesting to hear a little bit about your 20 year journey. I'm sure there's lots of other stories that we could have gone into, but we're out of time. But again, Nick, thanks for coming in and all the best to you and to Chirp. And for anyone who's listening, if you've got some sales reps and you want to start improving your productivity, why don't you give Nick Armstrong Nick Armstrong  The website is trychirp.com Michael McGrath  There you go. That's easy enough, even I can do that www.trychirp.com Nick Armstrong  Thanks for having me. Mike. Michael McGrath  Okay, thank you. Bye. Well, there you have it. There's no stopping. Nick Armstrong, if you want to know more about Chirp, the details will be in the show notes. Now, if you're enjoying this content, be sure to tell your friends and those who may also enjoy the content, thanks for listening. Until next time. Link to previous episodes: https://www.oasispartners.com.au/podcast/sheree-sullivan-turning-grit-into-gold/]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 26 2 https://www.linkedin.com/in/nicholas-w-armstrong/  and learn more about Chirp here https://www.trychirp.com/ Nick Armstrong highlights his entrepreneurial background and the launch of his latest venture, Chirp. Nick shares his early entrepreneurial journey, starting a business at university and taking advantage of free office space at Sydney University. Nick discusses the early stages of sustainability in Australia and how he got involved in the carbon credit schemes through his father's connections. Nick's first business, Greentricity, was acquired by AGL, and he reinvested the money into similar ventures. Nick introduces Chirp, his latest venture, and explains its role as an AI co-pilot for sales teams. Nick explains how Chirp uses AI to analyse conversations and fill out CRM entries, freeing up sales reps' time. He highlights the benefits of Chirp, including closing deals faster, improving win rates, and automating research on meeting participants. Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  Welcome to the troubleshooters podcast with me your host, Mike McGrath, now today's guest, Nick Armstrong is a genuine entrepreneur. He started his first business at uni before selling it just a year later. He's gone on to start multiple ventures, and he's currently just launched his latest venture, chirp, which is a new technology that helps organizations enhance and improve their revenues by harnessing AI to improve their pipeline conversion. Quick shout out to our sponsors, Oasis partners, corporate advice for the practical bias. Now, the guys at Oasis know a thing or two about getting a deal done. So if you're considering an exit, talk to the team at Oasis. Over 500 deals done and still counting. Nick Armstrong, welcome to the troubleshooters podcast. Thanks for coming in today. We're very grateful to have you join us now. You are the entrepreneurs, entrepreneur, for sure, and you, you've been on a hell of an entrepreneurial journey, haven't you since? Well, since you left school, pretty much since you left uni. In fact, you started a business at uni than you I did. Nick Armstrong  Thanks, Mike I didn't know any better. I was actually taking taking advantage of the free office space at Sydney Uni upstairs. Michael McGrath  Is that right? Look, we'll come back to that. I know that you've just launched a venture called Chirp, which is very exciting. We've just been chatting about it. It's a sort of AI. I mean, you can sort this out later, but I'm going to butcher this, but it's effectively a cool AI tool that really helps quantify and qualify the quality of your pipeline. Nick Armstrong  It's a co pilot for sales teams. It does, it does that. It doesn't be more than that. Michael McGrath  Okay, let's not get into that. Now come back. So I want to go back to the beginning and just get a bit of a handle on your story, right? So, you started a business in the sustainability area. Was it greentricity in Uni. Is that, right? That is spot on. Okay, so tell us about that, because this is back in, I mean, you're not that old, but this is back in 2005 right? So that was fairly that whole sustainability thing was really at the early stages then, wasn't it? Nick Armstrong  Yeah, it was actually the New South Wales Government had just come out with a scheme to create so these are the carbon credit schemes, estate based. Yeah, that's right. My dad goes back. My dad was a stockbroker, and he introduced me to some of his stockbroking mates just down the road, actually, in Australia square, and I had never drunk cappuccino before, and took me down, and they got me so buzzed up on caffeine. And I thought this was great. I was so excited by that. That's great. And and they told me about that they'd seen some of these companies doing, doing, you know, this, this stuff in sustainability. And I went home and read up all about and wrote this, this proposal to the government to get a license ended up getting granted one. And by Joe Tripodi, who, who later got, I think, done by ICAC for for doing some naughty things. But, yeah, got a license. That business got acquired very soon after, luckily, and I took that money and reinvested into pretty much the same sort of business straight after. So that's interesting. So you started a business at uni, you developed it and then you sold it. It's still going, isn't it? I think I looked up on the website, well, that, yeah, that business got bought by what is now AGL. So it's still going. It's well done. It's been consumed by AGL. I wish I'd held on to my stock, but okay, classic thing that we all do is sell it and reinvest it. Classic thing, Mike, as I'm sure you know from your businesses, is, if all I'd done was sit on my stock back then, yeah, you know, it would have paid itself. Michael McGrath  Yeah. Well, it's a sort of Warren Buffett buy, hold, you know, never sell. But so what did you do then you you got out of that. You're in sustainability. I mean, just, going back before that. What? What? What do you think? What? When did you first start thinking you might be an entrepreneur, or that you wanted to do stuff by yourself, for yourself? Well, when did that first germinate that idea? Nick Armstrong  Yeah, I think, I mean, I was at school. I was school captain at Sydney Boys High and 2001 and I ended up doing a bunch of things at school that I suppose school captains hadn't done for a while, okay, turning muck up day into a revenue positive day for the school, okay, but it involves shutting down traffic on Moore Park Road and not letting traffic go until they would actually donate money to a charity. Michael McGrath  That's amazing. So you obviously had a bit of a, you're a bit of a leader around that idea. And you, you like to monetize things, right Nick Armstrong  Yeah, well, I think monetization is, is key. Like I've done 25 funding rounds now I think you know all of those still to this day, I'm back raising money. And if each funding round is as hard as the last one, and it's all you know, investors are looking for the same thing. They're looking for customers, they're looking for revenue. They're looking for it's all the stuff you you see in businesses on a daily basis that cash is king and even in startups, people are looking for, you know, we, I go back to that company, Groupon, a while like, do you remember Groupon? They were, they were handing out coupons for a while back, okay? And Groupon, they used to, used to pay $100 to get $50 in revenue, right? Needless to say, they went bust pretty quick so, you know, and that I just go back to those, those sort of things that still applies to startups Michael McGrath  So you left. So you started your first business. You left it. Then what did you do? So you stayed in the energy game. Nick Armstrong  I did. I mean, I had some businesses on the side that aren't on my LinkedIn profile. I was laughing because, you know, I saw you had Gino's, Gino's pizza. I actually set up a business called food by web, which was online food ordering. Same time. Michael McGrath  I was a bit before you, so I was in pizza and delivery. So that was, that was before the web, really, but we were taking it from, you know, before, before deliveries. I mean, people, everything gets delivered. Now, literally everything. But back in the mid 80s, it was a complete novelty that you could take some food to somebody's address like that was outside of London. That was just not a thing. So, yeah, fantastic. Nick Armstrong  I mean, that's we did a similar thing, but it was just before the iPhone. But the mistake we made was that our orders were going over fax machine, and the fax machine was still in the office, and so the office closed on Fridays at 3pm generally, yeah, so the kitchen wouldn't get the order, and so that business didn't last too long Michael McGrath  Yeah, look, my kids have never heard of facts for share, but that because they they came very quickly, and they went just as quickly, didn't they? Yeah, okay, so, so you then started that business as the energy link, and you were eight years there, so that was a good body of work. That wasn't it, yeah. So well that that was called co zero. Nick Armstrong  So as opposed to CO two, we were trying to co zero, have co zero, which was no carbon dioxide. Again, it was based on the trading schemes that existed at the time. And in 2011 that business was the fastest growing company in Australia. I was, I think at that time, was on the young rich list with my co founder, which was one of those claim to fames that I that I'm ashamed to have because it didn't do anything. Michael McGrath  It's only the kiss of death. Actually, it was, but no but, but still impressive, though. So you were really trying to get into that whole helping people calculate their carbon footprint and offsetting it. Nick Armstrong  We initially were, but then it turned into a trading desk, basically. So we built a an app that let you create your roof top solar credits, your rebate, and then you could then trade that with a corporate that had to buy those rebates to offset their, their their government mandated requirement. So not a not a voluntary requirement, but it but a government mandated requirement. And at that stage, that was something like, I'm pulling a number out here, but it was something like 8% of their of the electricity they purchased had to be accompanied by their certificates. So that was underpinned by, you know, some regulatory drivers. Needless to say, those regulatory drivers changed as the government's changed, yeah, and that's what ultimately led to me needing to pivot that business in 2012 right? So I had investors at the time. The investors were, one of my investors was a Japanese corporate. The Japanese corporate couldn't, couldn't understand how a government would change the policy that it was unheard of in Japan, under, you know, I think a pretty stable sort of long term, yeah, stable, stable regime. So these were state based legislated schemes that were effectively changed all the time. Well, state and federal, yes. I mean, they both were, and I know you've got some experience In this through other board directorships with so, so you would be familiar with it. But yes, they do change all the time. It's one of the the unfortunate things about making long term investment decisions in this space. I hear it from institutional investors all the time, which is one of the reasons why I left the renewable energy space right, is it is just virtually impossible to, you know, I can't imagine being a super fund in Australia and having to make a long term investment decision in energy, right? Like it's just, you know, yeah, it's impossible. Michael McGrath  Yeah. I mean, I suppose that the advantage of legislation, I'm on the board of health, safety and hygiene business, the advantage of legislation for us is that, you know, companies are compelled to do certain things and to keep certain standards, which drives, helps drive our business. The flip side of that is that, you know, when they change. You know, everything can, everything can fall apart. Nick Armstrong  Yeah, you can make a lot of money or lose a lot of money overnight, yeah. And in our case, we lost a lot of money overnight. And I think it's, you know, it's once been twice shy for me in that space, and it's probably why I moved into, well, I moved into one of the most highly regulated spaces, which is financial services. Michael McGrath  Okay, yeah. So tell us about that. This is a business that you eventually listed, right? Yeah. So this is called identity. Nick Armstrong  Double down on the regulation, yeah. So identity, which, which didn't start again. I tend to like changing company names, but it didn't where you actually started life as a neobank, believe it, on 2014 Michael McGrath  so for the uninitiated, what's a neo bank. Nick Armstrong  A challenger bank. No, so you might be familiar. So not one of the big four, yeah, not one of the big four, and not even one of the big five or six. But like the UK, your, your mother mother tongue, or our mother tongue, I should say, is the leader here with Revolute, Monzo, Starling. These type, you know, these, these names that some Australians would be familiar with and are probably customers of. They they're digital first banks, yeah, you can sign up and get better exchange rates, and they don't have the legacy of it's all online. They haven't got the costs. But, yeah, they don't have the legacy. And they start doing well, but they normally then get bought by one of the bigger banks. They they do, but in the case of revolute, it's an amazing story. I mean, they're now worth more than NatWest, RBS. There. I mean, it's just, is that, right? It's quite phenomenal. I think their last valuation was over 40 billion pounds sterling. Okay, interesting. No, that's good. I mean, look, we need, we need the banks, you know, we need competition. Well, you know, yeah, you need, and that's the thing that's sort of lacking, I think, in Australia, but which is why I wanted to start a challenger bank, but I couldn't get it funded in Australia. Everyone thought. They said, Nick, what's wrong with the with the current banking system? So I had to pivot that business and and the big problem that identified at the time, and this was actually identified to me by by HSBC, who I was working with at the time, was that anti money laundering fines that just hit 200 billion US dollars globally, and that was a big cause of payments being held up. When was the last time you sent money overseas? Can't remember. Well, I can tell you that I did it about six months ago through a normal bank, and it took three days for that money to arrive. I guess that's interesting. Michael McGrath  Actually, I do remember now I had to send some money to Hong Kong, and I had to put one of my guys on it for a week to get it done because I needed a banker's draft, and that everyone has stopped doing them in covid. Yeah. So we had to join the get this. Had to join the police bank. I couldn't join it because I wasn't Australian citizen at the time. I am now. But my wife had to join the police bank because they're the only guys who did it, and she joined it, just to get the draft so we could send it to Hong Kong. What a bloody so they took a week. Nick Armstrong  They call it. They still call it a telegraphic transfer. And you're probably old enough to remember, yeah, remember the telegraph Michael McGrath  Dear mom, run out of money, please send some. Nick Armstrong  That's right. So they, yeah, that's and it's a hangover from the time when banks would still, and I'm making a tapping signal, for those who can't actually see me, telegraph would be sent. A wire would be sent between two banks, and they would tap below Morse code. It was a Morse code instruction, that's right. And so they would have, and Mike, believe it or not, they'd have a wire room in a bank. Michael McGrath  So, what was our identity, and what was the genesis of that then? And how did that evolve? Because it very few people are able to start a business then they list on the stock exchange. That's pretty impressive story. So tell us a bit about that. Nick Armstrong  Yeah. I mean, I can't claim to have come up with the with the idea it was HSBC that turned around and said, Nick, if you can help us solve this money laundering challenge, then we'll become a customer. And I can't necessarily say that we solved it, but what I what I can say, is that, you know, we patented the idea, and the company is currently suing JP Morgan for patent infringement at the moment. Okay, right, okay, and there's a live case in Delaware at the moment, so it was worth summing that pattern. Then I presume, well, it's being cases live so and what's the date? Today's September 20. So, yeah, so it's currently live. So, so that could be a large settlement. Who knows? But, yeah, so, so HSBC turned around and said, If you can help us solve this challenge. So we were using Blockchain technology at the time. Blockchain is a new technology that is the technology that underpins Bitcoin. It is a shared Well, I mean, we're just having a conversation both before the podcast about, you know, technology and, I mean, it's a shared database, effectively, like a big Excel spreadsheet that can be viewed by multiple parties. So it's a great technology for sharing data between parties that don't necessarily trust each other, like banks. So we thought, well, great, let's use this technology to help banks share personal, personally identifiable information, right? Things like your passport, yeah, your date of birth, your other identifiable information, the sort of stuff that you had to give police bank, okay, yeah, because I guarantee that police bank are probably keeping that on a database somewhere within their bank. Yeah. And the reason it took seven days for that money to clear is because they've had to manually pick up a phone and call HSBC in Hong Kong and tell them that you're, you know the Michael McGrath that that you say they are, yeah, or they say you are, that's just now I own them as well. That's right. And they know, they probably know where you live now as well. Michael McGrath  Yeah, so, so you use blockchain, and that was pretty I mean, Blockchain is a real thing isn't, I mean, Blockchain is extremely widespread now Nick Armstrong  As a technology definitely is. I mean, the thing that I think the general public have sort of, I suppose, forgotten now, is because AI has really taken the media's attention. Is that the blockchain wave has sort of been forgotten about, and it was the technology that was going to change the world. And now I AI has now sort of is now changing the world. But is AI drawing on the on the data that the blockchain allows access to or what, oh, listen, I call them all frontier technologies. So I don't necessarily think they're, they're, they're, I mean, they're interdependent of each other. I don't necessarily think that they are dependent on each other, but, yeah, they they're all frontier technologies. So, you know, most of the big companies, the fangs, or the the mangs, as I think you call them, now, they are all, they all have large research and development budgets going into all of these frontier technologies. So blockchain is definitely not gone by the wayside. It's just that it's not talked about as much now because AI has taken the lead Michael McGrath  And so, so you solve that problem. So tell us about that business  then. So how did you, how did you get to list it? Nick Armstrong  Yeah, so we, I mean, we did the typical sort of seed. Well, you started pre seed generally. So, I mean, for those who aren't familiar, you know, the typical sort of fundraising path of a startup is sort of a pre seed round before you have revenue, a seed round once you've posted some revenue from customers, and then then a series, a round once you are ready. Sort of like the coin the slot machine. Once you're ready to scale up the business, you found product market fit, you know what your customer acquisition cost is, and you're ready to scale the business. So we did, I would say, up to a series a funding round. And. Yeah, we kind of got to a point where we we had some early investors who were looking for liquidity. So they were looking for the ability to sell their shares, and we wanted to, but we still the company was hungry for more money. So we had this sort of, we had this difficult situation whereby the board had to kind of manage, you know, how do we, how do we deal with with the need for more money, but the need to provide liquidity to existing shareholders? And, you know, at the time, there weren't many secondary options available in Australia that there are now. So there are, there are now funds in Australia that will provide that a secondary funds that will come in and buy out existing shareholders. So there weren't, this was 2018 so so there weren't a huge amount of those. And in any event, we were in quite a niche part of the market. If you were in the UK, yeah, there are reg tech specific, yeah. Investors, yeah. In Australia, there are generalists, okay, tech investors, so, so you decided to list, right, which is normally a kind of three year journey. What did you expedite that we did, but we didn't do it through a backdoor, okay? So a lot of people say, Oh, Nick, you just Yeah. Did you do that? No, we did a front door list. Is that? Right? So we did a clean, fully regulated listing Michael McGrath  Because that's not cheap. I mean, that, you know So, I mean it, I mean, typically it's three quarters of a million, maybe a million dollars to list. Oh, it was, at least, that was it. And then normally it's the compliance costs are normally, three quarters a million dollars every year. Nick Armstrong  It's not cheap, and it's not easy. So, so, you know, ASX has very stringent requirements. They have profit test, asset tests, yeah, you know, you have to provide three years fully ordered accounts. You have to provide, you have to have a board of directors that has qualified, full qualifications. You have to have directors that have previous experience running listed companies. You have to pass all the probity checks. Yeah. I mean, it's not something that I would recommend any small company does. And having been there and done that, you know, the costs, it's not even a cost is it's, it's the time and energy that it takes for management to jump through all the hoops, basically, and not just initially, but ongoing as well. I mean, completely. And you know, I had three and a half thousand shareholders, so okay, you know, prior to listing, I had 100. Yeah, you gotta take an account broker fees so you know, the lawyers, you'd be lucky to get away with a half a million dollars in what, in legal fees. Michael McGrath  So you listed it and and then you ran it as a listed business for a while. Nick Armstrong  Still listed. Ideate Michael McGrath  Ideate, okay, and it's a payment data, business, basically payment. Nick Armstrong  That is correct, exactly right. So they, you know, customers are, there's an announcement today on the market that customers, Bendigo Bank, Robo bank, Master. Michael McGrath  And are you still involved there? Nick Armstrong  No I'm not full disclosure. I'm not, okay, yeah, no, it's good. Michael McGrath  Okay, so you, you kind of moved on from that. I mean, you're piling up a lot of learning here, a lot of lessons, right? Nick Armstrong  A lot of sleepless nights. Michael McGrath  Yeah, I bet, I bet. So, so, so bring us to Chirp then. So this is your current venture, which How long have you been working on this? Nick Armstrong  Well, I took some time off between identity and I did some time in Singapore, okay, with a venture builder run by Temasek, which is a large sovereign wealth fund. So did you spend some time in Singapore? It's been about a year, because I earn it's really happening there. And there's a lot of Hong Kong money move there, and there's a lot of private equity and family office. Yeah, they, they, they relax the laws. Well, they, they incentivize the laws for family offices to set up in Singapore. So Right? I mean it, it isn't. It isn't. I think Singapore does a good job of of sort of marketing themselves as being open for business, and it definitely is open for business, don't get me wrong, yeah, but you know, in terms of early stage venture capital, Australia has a lot of incentives for early stage businesses. We have the research and development tax incentive which which is unmatched in most markets. It's pretty good, three and a half cents back in the dollar. Yeah, no. Helps a lot. I mean, Michael McGrath  I'm on the board of some manufacturing businesses that have really, you know, really been helped by that. Nick Armstrong  Yeah, usually. So, you know, there's not, I mean, Singapore has some tax grants, but, but there's nothing like that in Singapore, No, there's nothing like that in Hong Kong. Hong Kong has some science and development parks that. But you know, for me as a entrepreneur in the early stages, Australia is a pretty damn good place to set up a business. Having said that, you know, developers. I have a lot of software developers in there. When I say a lot, nothing like I used to have so but the costs that we pay our engineers in Australia is, is hasn't really changed much in the last five years. Maybe it's dropped slightly, but on maybe, maybe kept up with inflation. So, but, but to come back to your question, so I came back the end of last year, so I've been working on this now for about seven or eight months. Okay, but, but, Mike, this has been 20 years of hard knocks. Like in 20 years, I have struggled with founder led sales, and I've struggled with sales broadly. And I can put it down to two things really. One is that I haven't qualified deals properly, right? And what I mean by that? Well, you're probably familiar with these simple, you know, frameworks that we use, qualification frameworks. Band is the simplest one, budget, authority, need and timeline, yeah. And am I talking to somebody, you know, that's got authority? Yeah. Is there a burning need for my product, yeah, is there a timeline to buy? So this is as an entrepreneur, you, you know, you've continually, you know, seen the challenges of trying to secure consistent sales revenue. Because, you know, 90% of business problems are solved by more sales, normally, right? Well, nine, yeah, 90% save solves all problems. Sales solves all problems, and, but, but, but somewhere between 90% Yeah, that's right. But also 90% of the solution is to hire more sales reps, right? And that doesn't work. Michael McGrath  So, so, so what you're saying is, with all that pain and all that sort of angst over the last 20 years, you put that into this solution you're now calling Chirp, which is the AI sidekick. Sidekick to AI which? So tell us, you know, I'm a I'm running a midsize business. I've got 10 reps. Yeah, we're trying to get more sales. Give me the tell me what you're going to be able to do for us. Yeah, so, well, I can tell you what the benefits are. We're going to help you close deals quicker. Oh, I like the sound of that already, and we're going to help you improve your win rate. Okay, so if you're closing 50% of deals that come into your pipeline from marketing, will help you close 75. So we do it in a few different ways. The first one is we help you qualify deals better using a framework like band, okay, and but the way that we qualify better, yeah, using band, because we analyze the conversation and we so we pick out words and phrases in the conversation that express budget authority, need and timeframe. So if you say something like, you know, I I don't have any budget, or the converse of that, which is, yeah, I've got $20,000 to spend this year. We will pick that out using AI, and we'll fill out a little it's basically a spreadsheet, but it's, it's, it looks a lot prettier than that, but we'll fill that out for you, and that'll get updated in your CRM.  But shouldn't the a sales guy, listen for that. So what you're saying is that we do it for you. You'll monitor those conversations, synthesize all that and then represent it with the insights Nick Armstrong  And fill out the CRM for you, okay, and, and, because, all right, salespeople spend according to Salesforce, or just down the road, yeah, salespeople spend sales and build them, right? You did. You've contributed towards their retirement plans, but salespeople spend 72% of their time not selling.  So what's that time being spent on? So that that time is spent on researching who they're going to meet with, like finding out that you set up Gino's pizza, yeah, Matt, filling out a CRM, yeah? And taking notes during meetings and and basically typing up those notes, right? And then, basically, you know, booking follow up meetings, sending case studies, writing emails, okay, that sort of stuff. Michael McGrath  So, so effectively, if I want to engage, if we want to engage with, with, with your business, your new business, Chirp, we're buying a platform. Is it a platform? Nick Armstrong  It's software as a plugin. It's software as a service. Michael McGrath  Okay, yeah, so if you've got a CRM, this is a plugin. Nick Armstrong  It sits on top of your CRM. And again, it's a sidekick or a co pilot. And our view at the moment is that the CRM is only one part of the sales, what we call the sales stack, or the the tools that you have in the sales suite these days, there's often, there's a there's there's marketing software, there there's email, there's calendar booking tools, there's a call recording tool, And there's prospecting tools, etc. So, so we orchestrate all of that together and and then, as I mentioned, we overlay this qualification framework. And then the other, the other thing that we'll do is is automate the research on who you're meeting with for you. So we use chat GPT to call out to all of the different public data sources to find out exactly who you're meeting with, and so we can find out things like, you know, what school they went to, what they started at university, what sports they played, what, what, what they like doing in their spare time, whether they ran a marathon last weekend. Michael McGrath  So you synthesize all that public information effectively. Cutting down the time that a rep or a sales person has to spend pulling that together. That's right. If he pulls it together at all, Nick Armstrong  That's right. So typically, you know, most people go to LinkedIn before they go to a meeting, and you might do that 10 minutes before you go to a meeting. We can find you a lot more than you would in LinkedIn. I can tell you if a company has just raised a round of funding, if they're about to go bust, if they're, Michael McGrath  Yeah, okay, interesting. So, so, so, effectively, this is a, this is a bolt on, as you said. It goes over the top of your CRM and then pulls together the various tools, including the CRM, but not just the CRM to to help synthesize and cut down qualified deals. Yeah. Okay, yeah, exactly. Nick Armstrong  And then there's a third part, which happens after the meeting, and that's what we call next best action. And that really is just telling you what we think you should do next, or what what the AI thinks you should do next to help close the deal. Yeah. Now Mike, as someone that's been doing this for a long time, a very long time,you will know what to do next, naturally, but your juniors might not, no, so I'm not sure I do either. But yeah, okay, I've got the point. Yeah, I've got the point. So sobly. This is a, this is bringing AI to life, really. This is saying this is a good use case for AI. This is a real, tangible use case for AI. And I'm going to throw another buzzword in there, just for good measure. This is what we call agentic AI. So agentic AI is the next evolution of chatgpt. So chatgpt is a large language model, it gives you context, so you can use it to find context and to ask it a question. It can't book you a flight, but what Chirp can do is take an action for you, right? So it can write you an email, right, or it can book you a meeting with someone, right? Or it can actually take an action, okay, so the next evolution of what we call these AI agents is, is this agentic AI? And that's and that's the space we play in. Michael McGrath  Have you got productivity cases for that? Yeah. I mean, does that? Does that save? I mean, obviously saves time, but does that start saving money? Nick Armstrong  Well, our play is a revenue gain. So we, we say, we make you more money less staff. It's, it's effectively more revenue. It's more revenue per member. That's right. So keep Your 10 sales reps, yeah, you're gonna, you're gonna uplift your revenue by, I mean, I can't give you the exact numbers now, because we're only seven months in, but if you know, as I said before, if you, if you're doing a 50% win rate, if you can take that to 75% win rate, you know, do the numbers on that. Michael McGrath  So for anyone listening to this, right, what's the, you know, what in your view, what's, what's the best sort of company that can you know, which, where's your sweet spot, and where do you think this technology and these tools are most effective? Nick Armstrong  Yeah. I mean, I can tell you that we chirp are targeting B2B, SAS companies, software companies, and, and we just have to be quite specific on who we target, because we're very small and we've only just started out, but the and, and it's five to 20 sales reps, so that That's where we think we can help the most, but I think more broadly, the AI agentscan can help, can really help anyone that's that, that's, you just got a CRM in place, and that is looking at automation in their sales stack. So if you are using a call recording tool and you're using some sort of marketing automation software, so you're doing outbound emails, you're doing any type of outbound cold calling, that type of thing, then I think AI agents can help now. Chirp might not be, you know the software for you today, but you know, my hope is that, is that we'll grow over very quickly. I hope there will be an Aussie success story, because I'm not here to fuck around. Michael McGrath  So it's a SaaS model, right? So effectively, yeah, it's a simple SaaS Yeah. So, you know, the the technology gets loaded. Someone pays monthly, Nick Armstrong  Yeah, it's a monthly net now, just, is it for a user. It's a per user per month, but there's a consumption charge as well. That kicks in over a number of meetings. Now there's a The reason there's a consumption charge is because AI is one of these, as as, as your listeners would know, is one of these things where there's a large computing cost to this. So we have to pass on some of that. We can't consume all that because the more people use our software, the more we get charged. Software, typically has had a very high gross profit margin up upwards of 90% typically software as a service. That is now that's not the case with AI compute. Ai compute is very expensive. It will come down over time, but it's not there yet. Michael McGrath  No, okay, okay, so effectively, it's, it's a it's a monthly cost per user, cost per user, and the more you use it, the it kicks in over a certain level. That's right, interesting. And so where do you think all this is going? I mean, do you think that? I mean, there's a lot spoken about now, at the moment, a lot of people worried about it. A lot of people think it's getting it's going to get out of control. Well, what's your own view? Nick Armstrong  Well, I've just come back from San Francisco, literally, last week, where I was I had the fortune, or misfortune, to jump in a self driving car that was run by Waymo, which is a subsidiary of Google. And I was just saying to Simon, one of your colleagues, that's, you know, it's quite disconcerting, because they still have, they've left a steering wheel on, which baffles me why that would lead to steering wheel on a self driving car. And the only reason I could think of is that if a car happens to go haywire and starts veering off the road, you can so where did you see in the front of the back I sat as far away from the controls as possible, because I'm a very bad backseat driver, and I Yeah, yeah, yeah. I presume the brake on the in the passenger seat doesn't work the same as in my do say in the instructions when you sit in there, that if it does happen to start mowing people down on the road, that you can override the controls. Michael McGrath  So, wow. So no, I mean, that's pretty scary. You know that idea that the roads could be full of cars. Well, it's happening. It's not scary. Well, it is scary, but it's, I know it's happening on the mine sites because I'm involved in a company that's providing the aftermarket harnesses and technology, and that's been going for quite a while. Nick Armstrong  Yes, it's been going for more over 10, well, 10.Is, Michael McGrath  I think, because technology isn't new, it's more around what people will accept Nick Armstrong  That's right. And trucking, I think, is the sixth largest employer in the US or transport. I you'll have to fact check that on me. Do you fact check? I don't know. No, we do. I mean, we do, if there's money involved, there's no money. I mean, we try selling a trucking company. Michael McGrath  We try and get our actually, we don't. We're not keen on transport. The margins of quite tight. There's some nice niches, but generally we we stay away from from haulage. Really understand Nick Armstrong  It's a pretty, yeah, pretty heavily dominated Michael McGrath  Very important, and expanding, actually, yes. So we like some of the supply. We call it mobs and buckets. So we like the supply side to that the manufacturers, manufacturers, trailers, tippers, tankers, that, that world's, you know, growing, because there's more and more moving by road, especially in Australia. It's a big country. There's populations growing, so that's more movement. And we don't have much of a train infrastructure to speak of, really, so the roads are still the king here. Nick Armstrong  Well, that's, I think that's where we may start to see some of this happening, because I know that, I know that Google is definitely looking into self driving truck infrastructure and but I also tried on the Apple vision pro while I was in San Francisco, and I can tell you, as an early adopter of the Oculus Rift, well, what's that? Just the vegan goggles? Yeah, so Apple's vision Pro is their new 3d goggles. But I'm not doing it justice by saying that, but it's just incredible. I mean, the implications that this will have for retail and FMCG is huge. Is that right? I mean, like you can do, and training businesses, for example, like you could do. You could run a full training course through these goggles. If I was, you know, I think back to doing a course at McDonald's that, you know, I don't think I ever did, but you could run a full course, you know, through these goggles. And it's just phenomenal. Michael McGrath  So it's a sort of simulation, you know, being able to replicate, you know, real environments, environments, yeah, hazardous environments, confrontational environments, Nick Armstrong  Yes, it's just so, so I think, you know, they the sort of doom and gloom scenarios that are painted that, you know, AI is going to sort of the end is nice, yeah. I mean, I think where we may end up is sort of in this, you know, leisure generation, where, where we're all going to end up as drug addicts and sex addicts. And, you know, I don't think that's necessarily a reality. That's yeah, so maybe we, we just end up with, you know, we don't have to work four hours a day, yeah. And I'd be quite happy to go sailing on the harbor. Yeah. Well, most of my stuff had it will work four hours a day. Anyway, Michael McGrath  My dad used to, sort of, you say, how many people work here? About half of them. Nick Armstrong  Well, you're the chairman now, so, yeah, you probably play golf. Michael McGrath  You're joking. I'm the executive chairman. That's preserved for the non executive chairman, so I'm still hard at it. Okay, well, that's been fascinating. Well, we wish you all the best with Chirp, and it's been interesting to hear a little bit about your 20 year journey. I'm sure there's lots of other stories that we could have gone into, but we're out of time. But again, Nick, thanks for coming in and all the best to you and to Chirp. And for anyone who's listening, if you've got some sales reps and you want to start improving your productivity, why don't you give Nick Armstrong Nick Armstrong  The website is trychirp.com Michael McGrath  There you go. That's easy enough, even I can do that www.trychirp.com Nick Armstrong  Thanks for having me. Mike. Michael McGrath  Okay, thank you. Bye. Well, there you have it. There's no stopping. Nick Armstrong, if you want to know more about Chirp, the details will be in the show notes. Now, if you're enjoying this content, be sure to tell your friends and those who may also enjoy the content, thanks for listening. Until next time. Link to previous episodes: https://www.oasispartners.com.au/podcast/sheree-sullivan-turning-grit-into-gold/]]> https://www.oasispartners.com.au/wp-content/uploads/2024/10/Nick-Armstrong-tile.png clean no 44:45 No no https://www.oasispartners.com.au/podcast/sheree-sullivan-turning-grit-into-gold/?utm_source=rss&utm_medium=rss&utm_campaign=sheree-sullivan-turning-grit-into-gold Tue, 10 Sep 2024 02:04:38 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17519 https://www.linkedin.com/in/sheree-sullivan-23b24821 www.ebeer.co www.grunthal.com.au Points of Interest Sheree’s family and agricultural ambitions 3:19 Initial Agricultural endeavours 4:21 The transition to cheese making: 5:29 Sheree’s unexpected role 8:29 Business growth and challenges 12:49 Udder Delights acquisition 14:14 Burnout and recovery 21:32 Grunthal Brew and branding 24:05 Introduction to eBeer™ 27:15 Advice for aspiring entrepreneurs: 32:34 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, Sheree Sullivan has been an entrepreneur since the age of 19, when she put her hand up to become a cheese maker in the family business, she epitomises the have a go mindset so essential in starting and running your own business. Sheree eventually sold the business to a trade buyer, and has continued her journey, having now moved to hospitality and electro enhanced beer that's low carb beer with all the flavor. So sit back and listen to Sheree as she talks to us about what it took. Sheree Sullivan, welcome to the troubleshooters podcast. Sheree Sullivan  Thanks for having me. Michael McGrath  It's a pleasure. Now. I know one of my colleagues was very keen that we get you on. He thinks you've got a great story, and you are a genuine entrepreneur right from early on, aren't you? Yeah, Sheree Sullivan  That's right, and I realized that my parents were also so I think it was just in my blood. Michael McGrath  I think that's really interesting. In fact, I want to delve into that because one of the questions that I've tried to answer, and I do ask guests, is whether, whether you think entrepreneurs are born, or whether we can train them and make them What do you think on that one? Sheree Sullivan  I think both. But I think that if your nearest and dearest are very risk averse, it's going to be very hard, I think, to become an entrepreneur, because they'll, they'll probably try and talk you out of it. Yes, Michael McGrath  It's a very good point that. So I think we've all got an inherent risk tolerance, right? And I think that mine's quite high, as it happens, but, but I think some of that's inherent, but then I do think we can be encouraged and and, and perhaps learn some things that that can develop those skills, because I think they're very important in a free economy, we want as many entrepreneurs as we can. Sheree Sullivan  That's right, and I think that something I learned. And it's not that my parents failed, but and even my husband's father as well, would often start a business and eventually close it and then start another business. And so it meant that having a go was okay. And I think that when you've got that in your psyche, then it is easier to go, oh, well, if it doesn't work out, that's going to suck, but it's not the end of the world, you know. So I think that is sort of what you grew up with as well. Michael McGrath  And look, getting comfortable with so called failure, like, I mean, you know that not everything's going to work. So going back, so you were raised in South Australia, in the Adelaide Hills, I understand. Sheree Sullivan  No, I only moved to the Adelaide Hills when I was about 18, and I was actually born and bred in Elizabeth. And Elizabeth is quite a low socio economic area of Adelaide, and so I always joke that you can take the girl out of Elizabeth, but you can't take Elizabeth out of the girl. And so it's essentially meant that when I build business, I try and build it to be accessible and to the people I never what I'd call posh or highbrow. Michael McGrath  Okay, that's interesting. So that background so mom and dad were quite entrepreneurial, right? You mentioned that they kind of opened businesses, perhaps closed them, and they had a farm business, didn't they? Sheree Sullivan  That's the reason why we moved to the Adelaide Hills, but I think in all of this story, my parents occasionally were working for their own business full time, and then occasionally working full time, and then businesses on the side, or one parent was working the business, and one parent was working a job, So and so by the time we moved to the Adelaide Hills that they were working full time, but they were sort of low to mid 40s, and I remember them when they were telling me about their idea that it was actually about their retirement, and it was about We nearly paid off the house we have, but it's not really where we want to end up. So let's buy all this rundown property and start some sort of agricultural endeavor on that land, because my mum loved gardening, and one day that will pay our retirement. So I, you know, I look back, that was sort of low to mid 40s, and I go, Wow, pretty ballsy, like, I think their friends would have got, you're mad. Michael McGrath  So it was a goat and dairy startup, right? Sheree Sullivan  Back then it was raspberry farming. So, so they sold it to me as 33 acres of easterly facing slopes and good bore water. And I remember thinking, I have absolutely no idea what you're talking about, but they thought were going to be raspberry farmers, but there was a rundown dairy on the property. And in, I guess, in my parents journey of career, my dad did everything from tech studies teaching to corporate jet flying. He was very smart, but really good with his hands. My mom did everything, pretty much while, always in an office setting, but really good in the garden. And so what it meant is they could look at a project like this old, rundown dairy and say, Hey, why don't we start milking? We'll fix the dairy. We'll weld it, we'll engineer it, we'll wire it, we'll plummet because they just could so, meaning they could do it themselves, and that's how they often did business on the smell of an oily rag, because they were just very capable. But obviously, then had to put massive hours in. That's what happened. Got a little goat dairy. Michael McGrath  I mean, that generation were very practical. I mean, you know, I think there was, I mean, we're less practical now, because we're kind of, we do technology, and we're all in the city, but, but, you know, back then you had to be much more technical, like, you know, I remember guys that could fix cars, hired mates who could fix cars and, and now, you know, hardly anybody touches a car now. So, yeah, interesting. So, so you so they decided that they might do something with the dairy. How old were you at this point, Sheree Sheree Sullivan  I by now, was at uni, so I was like, maybe 18/19, and they I was staying with my grandparents in the in the week, during the week, and then coming home on weekends and and by then, they had probably 40 milking goats. And so it's a very big endeavor to milk morning and night, and then commute and work full time in the city, and then now we're raspberry farming, so it's massive hours. Michael McGrath  So 40 goats, right? They produce a lot of milk, don't they? Because I know my mom and dad had a couple of goats. Sheree Sullivan  They were selling the milk at this point when they could, and when I say when they could, sometimes it was literally being poured down the paddock. And then one day, dad dropped the goat milk off to, I guess, the best customer we had, and they just said, Oh, Trevor, that's his name, Trevor. Next week, we're dropping the price of goat milk by 10 cents a litre. And I've since learned that this is what happens to the primary producer. It happens forever and always and tomorrow, meaning that the market will often dictate the price, whether it's feast or famine, and you have no control. So my parents had a conversation, and I honestly don't know who said what bit, but the end result was, we need to value add. We need shelf life. We need control. We need a brand. Let's build a cheese factory. Like, let's do something with this milk. Wasn't because they particularly like cheese. It wasn't even because they knew how to make cheese, because they didn't. And I grew up on craft that lived in the blue box in the cupboard, like full blown plastic cheese. But because they could build they could build a factory. So in their mind, like, oh yeah, we can build a factory. So that was sort of, I'm gonna say, about 1998 by then. And I also think, and even when I got involved in the business, I sort of think, why did we keep going? Because I could only see, I remember thinking, I think it's going to be okay 10 years after I'd started that journey with them, and you sort of think, why did you keep going? Because stopping was bankruptcy. Stopping was nothing. Michael McGrath  So the story goes like this, that you, that you your parents hired a cheesemaker, right? And the cheese maker left after six months. And then you put your hand up and said, Okay, I'll be the cheese maker. So talk to me about that, because that's a very ballsy thing to do. Sheree Sullivan  I started in so basically, my degree at uni was jazz piano. I went there, loving music. I went there actually loving maths. I've got a maths music brain? Michael McGrath  They say that maths and music are very linked, don't they Sheree Sullivan  They are. Not on all my friends, but a lot of them Michael McGrath  Not necessarily great training to become a cheese maker Sheree Sullivan  Not at all, but I remember going to uni thinking, I don't want to be a music teacher. I don't even know if I want to work in music, but I want to finish this journey. I started when I was five, and I and I didn't. I was sort of generally good at lots of things, but not one thing stood out to me to do. So I thought I'm just going to go finish my my degree and always love food, always, and didn't even think ever about a career in food, and my theory on that is because MasterChef wasn't around, like this whole celebrity chef thing wasn't around, so I just didn't even think food was a thing. Finished uni, got out, I was performing, I was doing a bit of teaching, and then said to my parents, why don't you just put me on commission and I'm going to go sell this cheese. Because by then nothing was selling. And that's the whole marketing, sales function of a business. So that's how I first got involved. Went out to the shops in Adelaide, just trying to work out how it all worked, realized the success factor. As I said to them, take the cheese on consignment. If you don't sell it, you don't you don't pay for it. And I'm just going to do heaps of demos. And then six months in, cheesemaker resigned. And I remember the day. I remember we were sitting around the dinner table. You know how you can often remember an emotion more than what was said. I remember happiness. And I remember my dad saying, cheese factory is an absolute mess. There's a note in it that says, I resign. And I I don't know, but I remember saying this. I remember saying, I'll do it. And I remember that I'd had two weeks training with him once before, he'd been away on holidays, and he said, Do you want to keep the cheese going? And I'm like, Sure. So I sort of call it like, you know, youthful naivety. Um, loved cooking, so I just approached it like cooking. I said, I'll do it. And I don't know where I pulled this figure from. I pulled a few figures out, I said, I'm going to give you a five year commitment. When I'm making cheese, I'm going to charge you $15 an hour, severely underpaid, but whatever, when I'm selling product and when I'm working on the business that's going to be commissioned based on sales, and at the end of five years, let's either call it a day or let's recommit and they just went, okay. So that was literally my job interview. That's how I started. And I guess significantly at the end of that five years was when I married my husband and business partner, Saul, and we just, from then on, just flew. But there was lots and lots of painful lessons in that first five years and in the sub which Udder Delights, turns 25 this year. So that's how long it's been now. Yeah. So you can actually buy Udder Delights all around Australia, one of the leading manufacturers of Brie and Camembert, if not the leading one in Australia. Michael McGrath  Brie and Camembert, who doesn't like that, and so tell me that's that's fascinating, that idea that you right off the bat saying, Pay me commission. Sheree Sullivan  Yeah. Well, the thing is, I said it because they didn't have they didn't have enough money to pay me anything that commission, and I was able, like I look back now on financially, how we made this work. And I think we followed a migrant family journey, which means we lived on one property. I lived in a shed, but I was living on the property, we pulled resources. I would cook dinner. Mum would start the washing. Dad would go to the factory. My brother, at one point, was helping to milk, you know, and it was just they didn't charge me bored. I you know, I wasn't too much of a burden on them. So, you know what? I mean, you just had to made it work? Wow, they worked full time supplementing business loss. They you know. So would we do it again right now, at my age that I am now. No Michael McGrath  When did it get to a point where you said, Look, this is actually a business. We're going to be okay. You mentioned earlier that you were sort of 10 years in, and you thought you could see the light. Sheree Sullivan  We had within five years, probably four staff, you know. So it wasn't that it wasn't a business by year 10. I can't even, can't even remember how many staff we had by then. Maybe we had 20, or 30. But I think when you are starting in business and a business owner, particularly when you choose a very capital heavy business, and you want to own a cheese factory. So we're talking manufacturing plants, not, you know, not a service business where the overheads aren't too high. I just think it was year 10 that I went I think, I think we're going to be able to draw a decent wage now, because until then, you I think, as business owners, often you have, you don't get paid what you would out in the market. And so, yeah, so Saul and I guess, have since realized we will often charge our businesses less than we would on the market, but we get our pay days in that journey. Michael McGrath  Yeah interesting. I mean, that idea that it takes a while to build something good, you know, like, I mean, you were saying 10 years and and you were sort of 20 staff, and then that's, that's a long time, and then, and then, when did you, I mean, you eventually got some nice scale, and you were acquired, right? Sheree Sullivan  Yes correct. So in this whole journey, we were growing, and I remember there was one period in time and and the reason I remember is it forms part of an insurance claim and a business interruption claim. And so I remember having to prove 36 months of financials and growth. And honestly, the insurance company were horrified because it was between 35 and 40% year on year on year on month on month on month. So it so we were in fast growth. But when you're also in capex heavy business, it meant we're constantly physically sat in a factory. Um, rebusting all the time. So, um. So we had lots, I guess, lots of hiccups along the way, but Saul and I, we worked full time in the business. My mum was working full time elsewhere and doing book work on the side for utter delights. My dad was working full time and then doing all the maintenance and construction on the side for utter delights. And it was probably, I'm gonna say 15 years in that finally they stopped work full time and just worked for utter delights at that point in time. So instead of, let's say, doing 60 hour weeks, they probably went down to 35 hour weeks. Yeah, and in all of this journey, we had lots of ups, lots of downs, and I think it was because we were together, we were able to traverse that together. And there's lots of things we can talk about. We can talk about product recalls, cash flow, insurance, fights, whatever, but the biggest one in all of it is that my mum, who was our business partner, and also, like the nanny to my children and the bookkeeper to another business that Saul and I ran, ended up dying of brain cancer. We had four months of of you've got cancer. This is terminal to her dying. So it was incredibly tough. My dad was 59 by then, and at that point, or almost went into retirement, maybe he was doing 10 or 20 hours a week. And then within a couple of years, wanted to go into he went into silent partnership. We were at data succession. And then in all of that went away, actually, with his new wife at the time, and my husband fell through my dad's floor because ants had eaten  the home. And so I remember my dad going to the bank saying, Can I have a loan I'd like to rebuild? And even as part of the succession utter delights. Was going to pay dad until the day he died, but the bank didn't give him the line because, essentially, he was retired. So that is what triggered this. We need to get dad out. So, you know, Dad came to me and said, Can you buy me out? So we owned half of the business with my parents and I at that point in thinking what we is like, we're already so highly geared. And even at that point in time, we hadn't yet bought a house for ourselves. My husband and I, we had bought a few investment properties, but we were gearing up, you know, to finally buy a house and stop pouring money back in the business, because it was like my line in the sand at that point. And and also, my husband was saying to me, this business is getting really stressful, and it's a load that I don't know if I want to keep carrying, but it's also a load I don't know if I can mentally keep carrying without falling in a heap. And sometimes people get surprised when they hear that. But you make Brie, you know, like you, and I think it's because you associate Brie generally with relaxing times. You know, you're hanging out, having a glass of wine, whatever that we could literally make or break 20 grand a day in profit in terms of things that could go wrong or right. And you say, Well, what go wrong? A truck picks up pallets of cheese at the correct temperature at your factory, and for whatever reason on their behalf, delivers it at seven degrees, not five, and it gets rejected, you know, things like that. It was just this constant. So anyway, that that took us on a journey of at least trying to find a business partner to help my dad exit. That was, that was our first goal. And the second goal was, could, could solve an ID risk in any way. And so, you know, they say it takes a year to sell a business. So that journey took us about a year and and we ended up finding business partners who ended up buying 90% off the cheese factory, so all of my dad's share, and then Saul and I stayed on with 10% in the game. Michael McGrath  Ok interesting. And was that a corporate buyer? Sheree Sullivan  Well, it was a trade buyer in that they were cheese makers, head office, listed company in Japan, but cheese makers in Australia. And who would have thought? Like, I never would have thought Japanese cheese were a thing. They're not sort of something at the forefront of what we think Michael McGrath  You bet. And did they approach you? How did you come across them? Sheree Sullivan  We put ourself on the market, and we came up with a big list of potential acquirers. And interestingly, it was my husband who looked down the list and went, where's snow brand? And essentially they're called Snow brand Australia, and they ended up being our acquire acquirer, and we ended up working with them for four years as chief executive and managing director. So we really had to go from an entrepreneur to an executive or bridge that gap, because then it became, you know, reporting to head office. So, yeah. So, um. Uh, working, I guess, making that change between entrepreneurship to executiveship. I guess, if you want to call it, that was our journey. Michael McGrath  How did that feel? I mean, how did it feel, sort of reporting to them. Was it a couple of years? How long was it that you Sheree Sullivan  It was four years. Um, we had a we had a really good relationship with them. And I remember at the end of our due diligence period, which, to be honest, was excruciating, and especially because I now realize that Japanese generally are also quite risk averse, and so the level of due diligence was so high, and even the company we worked with said, we've done massive projectory, yours is up there on the level of due diligence compared to the relatively smallness of the deal. But what it meant, though, and they said this to us at the end, they said, You've got really good business partners, like we knew our values aligned. We knew and I would say the significant difference between Saul and I and our business partners were just the speed at which we delivered. And I don't think that's a surprise, entrepreneurs are quite fast and agile. Large firms just naturally slow down, so that was probably the main difference. But it went really well. We've still got a really good working relationship with them. And in all of it, we kept the license to trade as something called out of Delights cheese seller. So we still operate a tourism arm of that business through a licensing arrangement. Michael McGrath  Okay, so you successfully exited. That was four years to kind of work out do whatever you had to do. What did you do then? What was this? What was the story from then? Sheree Sullivan  We always had, we always had this tourism business on the side called Udder Delights cheese seller, while we were operating, I guess, Udder Delights cheese factory. And I, at this point, I'm now thinking, we're either going to close it or we're going to scale it. I must also say that I was completely and probably unsurprisingly, completely burnt out by the time we did our initial deal where we'd sold 90% and I often talk to people about when they are selling, don't just negotiate the sale price. If you're staying on, negotiate your hours. And so it was really important to me that Saul and I didn't just then go and work 60 hour weeks, or even 40 hour weeks, like I ended up negotiating 15 hours a week as chief executive, we had a great team. They knew what to do. So was managing director probably four days a week, you know, nine to four. So I just had to recover, I reckon, for the first two years. So who's really good at all these ideas were like, Why don't we do this? Why don't we do that? I'm like, No. I was I went back to the no because I was just so tired. And we still had, you know, a tourism business. We still had some investment properties. We still had a short a share portfolio. Young children are still managing all that so. So eventually an opportunity came, a property became available in the Adelaide Hills, which was very iconic, but burnt down and had sat there as an eyesore. And the opportunity came that we could open up a venue in this site. And so we ended up scaling instead of closing. And so that has now been open for about two years. And so going back into startup again, that was a interestingly. I said I'd never do it. It was a Greenfield. So it was a build from site. And when you're physically building a business to be a shell, to be a facility, to operate a business from, and then you're also trying to build the business with systems and people and branding, whatever, doing that in conjunction with each other is incredibly difficult. And it's the second time I've done it, and I remember saying the first time, I don't want to do this again. And anyway, I did it again. Michael McGrath  And that's called Grunthal right? Sheree Sullivan  Yeah. And at two years old now, and when we were offered the site, so we've yet we I made so watch Simon Sinek start with why that very, very old TED Talk. Because I thought, if we're going to do this, I want to start with why. Because, when you've already started your business and you watch that talk, it can be quite difficult to work out your why. So we we want and the why, my wife opening has got to be your wiser customer to use our business in whatever format. So anyway, we watched start with why. Couldn't work it out, couldn't. And then a couple of days later, I woke up and I said, Saul, let's do Grunthal because it's going to be fun. That's our why. Michael McGrath  Fun became your why at that point, right? So tell us how that's gone and how that's how that. So how has that kept you on track? And how has that driven Grunthal Sheree Sullivan  When we were in those final let's call it one month of opening, it wasn't fun. And so I think Saul kept saying to me, this is fun, remember? And I'm like, Oh man, like you just do the hours, particularly when I manage a building project while I'm, you know, managing that, Saul and I decided I was going to take the burden on this one, and he was pretty much, well, going to do all of the children and the parenting and whatever, while I ran the project the first year, honestly wasn't that fun for me, but it's fun now and and it's because you're in the startup. Startup is exciting and is also exhausting, but in terms of the fun, what? What that's kept us on track with so Grunthal has probably about 40 staff now. Um, is, if my chefs say to me, I'd really love to serve this dish and it's just way too fancy, I'm like, no, because it's not fun. So I'm really, really conscious of of making sure that what we offer and how we present it. So essentially, I call ourselves a party venue. You know when there. And if you want to come and have a wedding with us, don't come for a white wedding. You need to go to all the wineries that are around the Adelaide Hills for that, come to us for your engagement party, you know. So it's in a really nice place right now, even though I don't know what it's like around Australia, but certainly in South Australia, it's just hospitality and brewing. It's getting a bit of a doom and gloom news all the time. This one's shutting, this one's shutting. This one's shutting. I've just worked really hard with the team to try and cater to what the people want, so that that's not our story. And so far, it's going really well. Michael McGrath  That's great. And so I know that you moved into sort of a brew, the brewing area, and you've got some pretty exciting stuff going on there. So tell us, tell us a little bit about that. Sheree Sullivan  Yeah so the site, this hospitality site, had a while it was burnt down, and we needed to rebuild. What hadn't burned down was a small brewery that was on the land. And so when we were offered the site, I did say to Saul, because he was an excellent cheese maker. If we do this, if we say yes to this, you have to learn how to brew. And this, I guess this was a lesson of my parents opening a cheese factory and not knowing how to make cheese, and I didn't want to be held hostage. So it's like, we'll employ a brewer, but you have got to learn that side. So So we've agreed with this venue. Saul has to oversee all the brewing with that Brewer, um, and we've refurbished it and made a beautiful brewery. And Saul's brain is one that is always inventing and thinking and pushing and and so he came up with a whole brew concept, essentially, so Grunthal Brew. We don't sell our beer off site. We, we've got gin, we've got one, we've got all sorts of things. We decided that we weren't going to be the next beer brand. We're all about a venue. And if you want to try what we make, you've got to come to the venue. When soul started on this whole new tangent, it's it's almost the opposite of Grunthal is its home, but this is a brand we are rolling out, but it's essentially called E-beer. And e-beer stands for electro enhanced beer, and it's made where we call it. It's a supercharged lager, literally supercharged in that throughout the brewing process, we are introducing some electromagnetic frequency, and it has the most significant impact on the yeast and all this. So we've now got a doctor involved and all these things, but essentially, it's just in this massive journey of discovery where this won't only impact the beer making industry, it's going to impact any industry that uses yeast, in particular, I would even say pharmaceutical. So we haven't journey ahead on that, and I'm not sure where it's going to land, because there's lots it could land, but that's, that's where we are right now. So that's Saul's baby a fair bit, except my job is always to come in underpinning with legals and accounting and brand and all that side of things. Michael McGrath  So this is this electro enhanced beer. This is low carb, high flavor beer. And so where can people get hold of it? Do they buy it through your website Sheree Sullivan  You can buy it through our website. In fact, you can actually get two samples for free if you pay postage. But where we're rolling out in South Australia first, and it's really about proving the concept, and it's about showing the beer industry something new. And something we learnt when we're in Udder delights, is every year large retailers would say, What have you got for me this year? What have you got like this constant reinvention, and beer is getting pretty exhausted. So I think it was more about, how can Saul just get this incredible, amazing flavor? How can you lower carbs? Because normally you have to sacrifice flavor and mouth fill for lower carbs. How can you do that? So we went on that journey, but what it has found is all these other things are coming out of it. So we're about to lodge a patent with it. So I can't talk heaps yet about it until patent, and we can unpack it a bit more. Michael McGrath  Well, look, we'll put the we'll put your website in the show notes. So if people want to try some electro enhanced beer, low carb, high flavor, they'll know. They'll know what to do and where to come and they get a couple of samples free as well. That's correct, yeah. How good is that? So? So what does the future look like Sheree? Sheree Sullivan  What does it look like? So I'm not very good, really at looking too far ahead. Um, we've got we've got daughters who are sort of in year nine and 10. So I feel like we should probably just keep building the businesses we have. I also do business coaching on the side until they finish high school, because I don't want it, because the price you pay in your time to start a business is very high. So I feel like we've already got two and we've got a few more things in the part. Let's just keep growing and keep doing that, and keep discovering what E Beer is all about. And then maybe when they get to the end of year 12, you can ask me. Michael McGrath  So look for for aspiring entrepreneurs, people who are maybe we've got a corporate job, but they want to do something. What's your advice to people? I mean, clearly you had entrepreneurial parents who encouraged you, and they certainly demonstrated a very high work ethic, didn't they? And I mean, there's no getting around the work is there if you're going to be an entrepreneur, which is back to fun. If it's fun, it's not so bad, is it? So suppose that you know, getting that right, making sure you're in the right place. I think can help but you tell us about what you know. What would you tell you yourself 25 or 30 years ago? If you could go back and and whisper something to yourself, what would it be? Sheree Sullivan  I think it would be. I think I did it anyway, because I was living at home, but in that I was able to reduce my expenses, and I had a side hustle. So I think that whenever you start a business, you have there is going to be a period of time where you're not going to be earning money, or, even worse, which is usually my story, the business needs a lot of money for you to even start it before you are going to draw a wage. So my my question is, normally, you've either got to, do you have anything of worth that you can sell and live off. Because Saul and I did that with our first real estate to fund our second business we did that. Or have you got enough savings? Or is, can you go back home and live with your parents? Or are you living with a partner who can financially support you? So that would be, you know, getting your ducks in a row about, how are you going to financially sustain it while you start it. I think sometimes businesses maybe, if you're in a service industry, you can, and if you've got enough clients and you're a consultant, there may be those occasions where you can instantly generate income. The challenge, though, with consultancy is you can only earn as many hours as you have in a day, whereas the product takes longer to earn the money. But then it almost becomes you earn money when you sleep because of the product selling. So, you know, there's two days, but that's that would be my starting point. How earn money while you're building. Michael McGrath  That's interesting, that distinction you just made between selling your time and then being able to leverage that by selling some products which are not time governed. Think that's a key distinction, isn't it, when you're kind of weighing up a business or an opportunity. But look, that's been fascinating. It's so interesting to hear your story from music and maths through to deciding to become a cheese maker. That's not an easy thing to do, by the way, if anyone I know a little bit about cheese, because I started out in the pizza business, which requires a lot of cheese. And the first company that I think we were about 7% of our revenue was cheese and Well, I think we peaked. To maybe 20 million Sterling. So we were buying a lot of cheese, and I remember running out of cheese. I had the first shop, and I ran out of cheese, and I rang the cheese guy, Robert seguesa, at Dairy born foods. This is in the UK, back in the 80s, and he was in Luton, and he sent me up a taxi full of cheese from Luton, which was about 150 quid taxi ride. And I stuck with him for about a decade by this cheese, because he he kind of, you know, he was one of those guys that knew Addison, but I would often go down and have a look at his cheese factory, which was fairly substantial and not didn't look like an easy business to run to me. Sheree Sullivan  Yeah, the minute you add refrigeration, short shelf life, you know, animals. Michael McGrath  Yeah, as you said earlier, you got to deliver it plus five degrees. No more you go over that it gets, you know, big problem. So, not easy to do that. Okay, excellent. Such a great chat. Wow. Thank you, Sheree for joining us today, and good luck to you, and good luck to your project and your husband's project in E Beer. Sheree Sullivan  Thank you. Michael McGrath  Very interesting. Who doesn't need a few less carbs without losing the flavor? So thank you. Sheree Sullivan  Thank you, Michael. Michael McGrath  Take care. Bye.  Well, there you have it. Hard work and persistence combined with a supportive partner and family can get you a long way. If you want to try out electro enhanced beer, pop onto the E beer website, https://ebeer.co/  Shout out to our sponsors, Oasis partners. If you want some practical import on how best to exit your business speak to the guys at Oasis. Now if you like this content, be sure to share it with your friends and leave a like and even a comment. Only good ones, please. As you know, we're very sensitive, so until next time. Link to previous episodes: https://www.oasispartners.com.au/podcast/tom-hardwick-from-suits-to-start-ups  ]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 25 2 https://www.linkedin.com/in/sheree-sullivan-23b24821 www.ebeer.co www.grunthal.com.au Points of Interest Sheree’s family and agricultural ambitions 3:19 Initial Agricultural endeavours 4:21 The transition to cheese making: 5:29 Sheree’s unexpected role 8:29 Business growth and challenges 12:49 Udder Delights acquisition 14:14 Burnout and recovery 21:32 Grunthal Brew and branding 24:05 Introduction to eBeer™ 27:15 Advice for aspiring entrepreneurs: 32:34 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Michael McGrath  Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, Sheree Sullivan has been an entrepreneur since the age of 19, when she put her hand up to become a cheese maker in the family business, she epitomises the have a go mindset so essential in starting and running your own business. Sheree eventually sold the business to a trade buyer, and has continued her journey, having now moved to hospitality and electro enhanced beer that's low carb beer with all the flavor. So sit back and listen to Sheree as she talks to us about what it took. Sheree Sullivan, welcome to the troubleshooters podcast. Sheree Sullivan  Thanks for having me. Michael McGrath  It's a pleasure. Now. I know one of my colleagues was very keen that we get you on. He thinks you've got a great story, and you are a genuine entrepreneur right from early on, aren't you? Yeah, Sheree Sullivan  That's right, and I realized that my parents were also so I think it was just in my blood. Michael McGrath  I think that's really interesting. In fact, I want to delve into that because one of the questions that I've tried to answer, and I do ask guests, is whether, whether you think entrepreneurs are born, or whether we can train them and make them What do you think on that one? Sheree Sullivan  I think both. But I think that if your nearest and dearest are very risk averse, it's going to be very hard, I think, to become an entrepreneur, because they'll, they'll probably try and talk you out of it. Yes, Michael McGrath  It's a very good point that. So I think we've all got an inherent risk tolerance, right? And I think that mine's quite high, as it happens, but, but I think some of that's inherent, but then I do think we can be encouraged and and, and perhaps learn some things that that can develop those skills, because I think they're very important in a free economy, we want as many entrepreneurs as we can. Sheree Sullivan  That's right, and I think that something I learned. And it's not that my parents failed, but and even my husband's father as well, would often start a business and eventually close it and then start another business. And so it meant that having a go was okay. And I think that when you've got that in your psyche, then it is easier to go, oh, well, if it doesn't work out, that's going to suck, but it's not the end of the world, you know. So I think that is sort of what you grew up with as well. Michael McGrath  And look, getting comfortable with so called failure, like, I mean, you know that not everything's going to work. So going back, so you were raised in South Australia, in the Adelaide Hills, I understand. Sheree Sullivan  No, I only moved to the Adelaide Hills when I was about 18, and I was actually born and bred in Elizabeth. And Elizabeth is quite a low socio economic area of Adelaide, and so I always joke that you can take the girl out of Elizabeth, but you can't take Elizabeth out of the girl. And so it's essentially meant that when I build business, I try and build it to be accessible and to the people I never what I'd call posh or highbrow. Michael McGrath  Okay, that's interesting. So that background so mom and dad were quite entrepreneurial, right? You mentioned that they kind of opened businesses, perhaps closed them, and they had a farm business, didn't they? Sheree Sullivan  That's the reason why we moved to the Adelaide Hills, but I think in all of this story, my parents occasionally were working for their own business full time, and then occasionally working full time, and then businesses on the side, or one parent was working the business, and one parent was working a job, So and so by the time we moved to the Adelaide Hills that they were working full time, but they were sort of low to mid 40s, and I remember them when they were telling me about their idea that it was actually about their retirement, and it was about We nearly paid off the house we have, but it's not really where we want to end up. So let's buy all this rundown property and start some sort of agricultural endeavor on that land, because my mum loved gardening, and one day that will pay our retirement. So I, you know, I look back, that was sort of low to mid 40s, and I go, Wow, pretty ballsy, like, I think their friends would have got, you're mad. Michael McGrath  So it was a goat and dairy startup, right? Sheree Sullivan  Back then it was raspberry farming. So, so they sold it to me as 33 acres of easterly facing slopes and good bore water. And I remember thinking, I have absolutely no idea what you're talking about, but they thought were going to be raspberry farmers, but there was a rundown dairy on the property. And in, I guess, in my parents journey of career, my dad did everything from tech studies teaching to corporate jet flying. He was very smart, but really good with his hands. My mom did everything, pretty much while, always in an office setting, but really good in the garden. And so what it meant is they could look at a project like this old, rundown dairy and say, Hey, why don't we start milking? We'll fix the dairy. We'll weld it, we'll engineer it, we'll wire it, we'll plummet because they just could so, meaning they could do it themselves, and that's how they often did business on the smell of an oily rag, because they were just very capable. But obviously, then had to put massive hours in. That's what happened. Got a little goat dairy. Michael McGrath  I mean, that generation were very practical. I mean, you know, I think there was, I mean, we're less practical now, because we're kind of, we do technology, and we're all in the city, but, but, you know, back then you had to be much more technical, like, you know, I remember guys that could fix cars, hired mates who could fix cars and, and now, you know, hardly anybody touches a car now. So, yeah, interesting. So, so you so they decided that they might do something with the dairy. How old were you at this point, Sheree Sheree Sullivan  I by now, was at uni, so I was like, maybe 18/19, and they I was staying with my grandparents in the in the week, during the week, and then coming home on weekends and and by then, they had probably 40 milking goats. And so it's a very big endeavor to milk morning and night, and then commute and work full time in the city, and then now we're raspberry farming, so it's massive hours. Michael McGrath  So 40 goats, right? They produce a lot of milk, don't they? Because I know my mom and dad had a couple of goats. Sheree Sullivan  They were selling the milk at this point when they could, and when I say when they could, sometimes it was literally being poured down the paddock. And then one day, dad dropped the goat milk off to, I guess, the best customer we had, and they just said, Oh, Trevor, that's his name, Trevor. Next week, we're dropping the price of goat milk by 10 cents a litre. And I've since learned that this is what happens to the primary producer. It happens forever and always and tomorrow, meaning that the market will often dictate the price, whether it's feast or famine, and you have no control. So my parents had a conversation, and I honestly don't know who said what bit, but the end result was, we need to value add. We need shelf life. We need control. We need a brand. Let's build a cheese factory. Like, let's do something with this milk. Wasn't because they particularly like cheese. It wasn't even because they knew how to make cheese, because they didn't. And I grew up on craft that lived in the blue box in the cupboard, like full blown plastic cheese. But because they could build they could build a factory. So in their mind, like, oh yeah, we can build a factory. So that was sort of, I'm gonna say, about 1998 by then. And I also think, and even when I got involved in the business, I sort of think, why did we keep going? Because I could only see, I remember thinking, I think it's going to be okay 10 years after I'd started that journey with them, and you sort of think, why did you keep going? Because stopping was bankruptcy. Stopping was nothing. Michael McGrath  So the story goes like this, that you, that you your parents hired a cheesemaker, right? And the cheese maker left after six months. And then you put your hand up and said, Okay, I'll be the cheese maker. So talk to me about that, because that's a very ballsy thing to do. Sheree Sullivan  I started in so basically, my degree at uni was jazz piano. I went there, loving music. I went there actually loving maths. I've got a maths music brain? Michael McGrath  They say that maths and music are very linked, don't they Sheree Sullivan  They are. Not on all my friends, but a lot of them Michael McGrath  Not necessarily great training to become a cheese maker Sheree Sullivan  Not at all, but I remember going to uni thinking, I don't want to be a music teacher. I don't even know if I want to work in music, but I want to finish this journey. I started when I was five, and I and I didn't. I was sort of generally good at lots of things, but not one thing stood out to me to do. So I thought I'm just going to go finish my my degree and always love food, always, and didn't even think ever about a career in food, and my theory on that is because MasterChef wasn't around, like this whole celebrity chef thing wasn't around, so I just didn't even think food was a thing. Finished uni, got out, I was performing, I was doing a bit of teaching, and then said to my parents, why don't you just put me on commission and I'm going to go sell this cheese. Because by then nothing was selling. And that's the whole marketing, sales function of a business. So that's how I first got involved. Went out to the shops in Adelaide, just trying to work out how it all worked, realized the success factor. As I said to them, take the cheese on consignment. If you don't sell it, you don't you don't pay for it. And I'm just going to do heaps of demos. And then six months in, cheesemaker resigned. And I remember the day. I remember we were sitting around the dinner table. You know how you can often remember an emotion more than what was said. I remember happiness. And I remember my dad saying, cheese factory is an absolute mess. There's a note in it that says, I resign. And I I don't know, but I remember saying this. I remember saying, I'll do it. And I remember that I'd had two weeks training with him once before, he'd been away on holidays, and he said, Do you want to keep the cheese going? And I'm like, Sure. So I sort of call it like, you know, youthful naivety. Um, loved cooking, so I just approached it like cooking. I said, I'll do it. And I don't know where I pulled this figure from. I pulled a few figures out, I said, I'm going to give you a five year commitment. When I'm making cheese, I'm going to charge you $15 an hour, severely underpaid, but whatever, when I'm selling product and when I'm working on the business that's going to be commissioned based on sales, and at the end of five years, let's either call it a day or let's recommit and they just went, okay. So that was literally my job interview. That's how I started. And I guess significantly at the end of that five years was when I married my husband and business partner, Saul, and we just, from then on, just flew. But there was lots and lots of painful lessons in that first five years and in the sub which Udder Delights, turns 25 this year. So that's how long it's been now. Yeah. So you can actually buy Udder Delights all around Australia, one of the leading manufacturers of Brie and Camembert, if not the leading one in Australia. Michael McGrath  Brie and Camembert, who doesn't like that, and so tell me that's that's fascinating, that idea that you right off the bat saying, Pay me commission. Sheree Sullivan  Yeah. Well, the thing is, I said it because they didn't have they didn't have enough money to pay me anything that commission, and I was able, like I look back now on financially, how we made this work. And I think we followed a migrant family journey, which means we lived on one property. I lived in a shed, but I was living on the property, we pulled resources. I would cook dinner. Mum would start the washing. Dad would go to the factory. My brother, at one point, was helping to milk, you know, and it was just they didn't charge me bored. I you know, I wasn't too much of a burden on them. So, you know what? I mean, you just had to made it work? Wow, they worked full time supplementing business loss. They you know. So would we do it again right now, at my age that I am now. No Michael McGrath  When did it get to a point where you said, Look, this is actually a business. We're going to be okay. You mentioned earlier that you were sort of 10 years in, and you thought you could see the light. Sheree Sullivan  We had within five years, probably four staff, you know. So it wasn't that it wasn't a business by year 10. I can't even, can't even remember how many staff we had by then. Maybe we had 20, or 30. But I think when you are starting in business and a business owner, particularly when you choose a very capital heavy business, and you want to own a cheese factory. So we're talking manufacturing plants, not, you know, not a service business where the overheads aren't too high. I just think it was year 10 that I went I think, I think we're going to be able to draw a decent wage now, because until then, you I think, as business owners, often you have, you don't get paid what you would out in the market. And so, yeah, so Saul and I guess, have since realized we will often charge our businesses less than we would on the market, but we get our pay days in that journey. Michael McGrath  Yeah interesting. I mean, that idea that it takes a while to build something good, you know, like, I mean, you were saying 10 years and and you were sort of 20 staff, and then that's, that's a long time, and then, and then, when did you, I mean, you eventually got some nice scale, and you were acquired, right? Sheree Sullivan  Yes correct. So in this whole journey, we were growing, and I remember there was one period in time and and the reason I remember is it forms part of an insurance claim and a business interruption claim. And so I remember having to prove 36 months of financials and growth. And honestly, the insurance company were horrified because it was between 35 and 40% year on year on year on month on month on month. So it so we were in fast growth. But when you're also in capex heavy business, it meant we're constantly physically sat in a factory. Um, rebusting all the time. So, um. So we had lots, I guess, lots of hiccups along the way, but Saul and I, we worked full time in the business. My mum was working full time elsewhere and doing book work on the side for utter delights. My dad was working full time and then doing all the maintenance and construction on the side for utter delights. And it was probably, I'm gonna say 15 years in that finally they stopped work full time and just worked for utter delights at that point in time. So instead of, let's say, doing 60 hour weeks, they probably went down to 35 hour weeks. Yeah, and in all of this journey, we had lots of ups, lots of downs, and I think it was because we were together, we were able to traverse that together. And there's lots of things we can talk about. We can talk about product recalls, cash flow, insurance, fights, whatever, but the biggest one in all of it is that my mum, who was our business partner, and also, like the nanny to my children and the bookkeeper to another business that Saul and I ran, ended up dying of brain cancer. We had four months of of you've got cancer. This is terminal to her dying. So it was incredibly tough. My dad was 59 by then, and at that point, or almost went into retirement, maybe he was doing 10 or 20 hours a week. And then within a couple of years, wanted to go into he went into silent partnership. We were at data succession. And then in all of that went away, actually, with his new wife at the time, and my husband fell through my dad's floor because ants had eaten  the home. And so I remember my dad going to the bank saying, Can I have a loan I'd like to rebuild? And even as part of the succession utter delights. Was going to pay dad until the day he died, but the bank didn't give him the line because, essentially, he was retired. So that is what triggered this. We need to get dad out. So, you know, Dad came to me and said, Can you buy me out? So we owned half of the business with my parents and I at that point in thinking what we is like, we're already so highly geared. And even at that point in time, we hadn't yet bought a house for ourselves. My husband and I, we had bought a few investment properties, but we were gearing up, you know, to finally buy a house and stop pouring money back in the business, because it was like my line in the sand at that point. And and also, my husband was saying to me, this business is getting really stressful, and it's a load that I don't know if I want to keep carrying, but it's also a load I don't know if I can mentally keep carrying without falling in a heap. And sometimes people get surprised when they hear that. But you make Brie, you know, like you, and I think it's because you associate Brie generally with relaxing times. You know, you're hanging out, having a glass of wine, whatever that we could literally make or break 20 grand a day in profit in terms of things that could go wrong or right. And you say, Well, what go wrong? A truck picks up pallets of cheese at the correct temperature at your factory, and for whatever reason on their behalf, delivers it at seven degrees, not five, and it gets rejected, you know, things like that. It was just this constant. So anyway, that that took us on a journey of at least trying to find a business partner to help my dad exit. That was, that was our first goal. And the second goal was, could, could solve an ID risk in any way. And so, you know, they say it takes a year to sell a business. So that journey took us about a year and and we ended up finding business partners who ended up buying 90% off the cheese factory, so all of my dad's share, and then Saul and I stayed on with 10% in the game. Michael McGrath  Ok interesting. And was that a corporate buyer? Sheree Sullivan  Well, it was a trade buyer in that they were cheese makers, head office, listed company in Japan, but cheese makers in Australia. And who would have thought? Like, I never would have thought Japanese cheese were a thing. They're not sort of something at the forefront of what we think Michael McGrath  You bet. And did they approach you? How did you come across them? Sheree Sullivan  We put ourself on the market, and we came up with a big list of potential acquirers. And interestingly, it was my husband who looked down the list and went, where's snow brand? And essentially they're called Snow brand Australia, and they ended up being our acquire acquirer, and we ended up working with them for four years as chief executive and managing director. So we really had to go from an entrepreneur to an executive or bridge that gap, because then it became, you know, reporting to head office. So, yeah. So, um. Uh, working, I guess, making that change between entrepreneurship to executiveship. I guess, if you want to call it, that was our journey. Michael McGrath  How did that feel? I mean, how did it feel, sort of reporting to them. Was it a couple of years? How long was it that you Sheree Sullivan  It was four years. Um, we had a we had a really good relationship with them. And I remember at the end of our due diligence period, which, to be honest, was excruciating, and especially because I now realize that Japanese generally are also quite risk averse, and so the level of due diligence was so high, and even the company we worked with said, we've done massive projectory, yours is up there on the level of due diligence compared to the relatively smallness of the deal. But what it meant, though, and they said this to us at the end, they said, You've got really good business partners, like we knew our values aligned. We knew and I would say the significant difference between Saul and I and our business partners were just the speed at which we delivered. And I don't think that's a surprise, entrepreneurs are quite fast and agile. Large firms just naturally slow down, so that was probably the main difference. But it went really well. We've still got a really good working relationship with them. And in all of it, we kept the license to trade as something called out of Delights cheese seller. So we still operate a tourism arm of that business through a licensing arrangement. Michael McGrath  Okay, so you successfully exited. That was four years to kind of work out do whatever you had to do. What did you do then? What was this? What was the story from then? Sheree Sullivan  We always had, we always had this tourism business on the side called Udder Delights cheese seller, while we were operating, I guess, Udder Delights cheese factory. And I, at this point, I'm now thinking, we're either going to close it or we're going to scale it. I must also say that I was completely and probably unsurprisingly, completely burnt out by the time we did our initial deal where we'd sold 90% and I often talk to people about when they are selling, don't just negotiate the sale price. If you're staying on, negotiate your hours. And so it was really important to me that Saul and I didn't just then go and work 60 hour weeks, or even 40 hour weeks, like I ended up negotiating 15 hours a week as chief executive, we had a great team. They knew what to do. So was managing director probably four days a week, you know, nine to four. So I just had to recover, I reckon, for the first two years. So who's really good at all these ideas were like, Why don't we do this? Why don't we do that? I'm like, No. I was I went back to the no because I was just so tired. And we still had, you know, a tourism business. We still had some investment properties. We still had a short a share portfolio. Young children are still managing all that so. So eventually an opportunity came, a property became available in the Adelaide Hills, which was very iconic, but burnt down and had sat there as an eyesore. And the opportunity came that we could open up a venue in this site. And so we ended up scaling instead of closing. And so that has now been open for about two years. And so going back into startup again, that was a interestingly. I said I'd never do it. It was a Greenfield. So it was a build from site. And when you're physically building a business to be a shell, to be a facility, to operate a business from, and then you're also trying to build the business with systems and people and branding, whatever, doing that in conjunction with each other is incredibly difficult. And it's the second time I've done it, and I remember saying the first time, I don't want to do this again. And anyway, I did it again. Michael McGrath  And that's called Grunthal right? Sheree Sullivan  Yeah. And at two years old now, and when we were offered the site, so we've yet we I made so watch Simon Sinek start with why that very, very old TED Talk. Because I thought, if we're going to do this, I want to start with why. Because, when you've already started your business and you watch that talk, it can be quite difficult to work out your why. So we we want and the why, my wife opening has got to be your wiser customer to use our business in whatever format. So anyway, we watched start with why. Couldn't work it out, couldn't. And then a couple of days later, I woke up and I said, Saul, let's do Grunthal because it's going to be fun. That's our why. Michael McGrath  Fun became your why at that point, right? So tell us how that's gone and how that's how that. So how has that kept you on track? And how has that driven Grunthal Sheree Sullivan  When we were in those final let's call it one month of opening, it wasn't fun. And so I think Saul kept saying to me, this is fun, remember? And I'm like, Oh man, like you just do the hours, particularly when I manage a building project while I'm, you know, managing that, Saul and I decided I was going to take the burden on this one, and he was pretty much, well, going to do all of the children and the parenting and whatever, while I ran the project the first year, honestly wasn't that fun for me, but it's fun now and and it's because you're in the startup. Startup is exciting and is also exhausting, but in terms of the fun, what? What that's kept us on track with so Grunthal has probably about 40 staff now. Um, is, if my chefs say to me, I'd really love to serve this dish and it's just way too fancy, I'm like, no, because it's not fun. So I'm really, really conscious of of making sure that what we offer and how we present it. So essentially, I call ourselves a party venue. You know when there. And if you want to come and have a wedding with us, don't come for a white wedding. You need to go to all the wineries that are around the Adelaide Hills for that, come to us for your engagement party, you know. So it's in a really nice place right now, even though I don't know what it's like around Australia, but certainly in South Australia, it's just hospitality and brewing. It's getting a bit of a doom and gloom news all the time. This one's shutting, this one's shutting. This one's shutting. I've just worked really hard with the team to try and cater to what the people want, so that that's not our story. And so far, it's going really well. Michael McGrath  That's great. And so I know that you moved into sort of a brew, the brewing area, and you've got some pretty exciting stuff going on there. So tell us, tell us a little bit about that. Sheree Sullivan  Yeah so the site, this hospitality site, had a while it was burnt down, and we needed to rebuild. What hadn't burned down was a small brewery that was on the land. And so when we were offered the site, I did say to Saul, because he was an excellent cheese maker. If we do this, if we say yes to this, you have to learn how to brew. And this, I guess this was a lesson of my parents opening a cheese factory and not knowing how to make cheese, and I didn't want to be held hostage. So it's like, we'll employ a brewer, but you have got to learn that side. So So we've agreed with this venue. Saul has to oversee all the brewing with that Brewer, um, and we've refurbished it and made a beautiful brewery. And Saul's brain is one that is always inventing and thinking and pushing and and so he came up with a whole brew concept, essentially, so Grunthal Brew. We don't sell our beer off site. We, we've got gin, we've got one, we've got all sorts of things. We decided that we weren't going to be the next beer brand. We're all about a venue. And if you want to try what we make, you've got to come to the venue. When soul started on this whole new tangent, it's it's almost the opposite of Grunthal is its home, but this is a brand we are rolling out, but it's essentially called E-beer. And e-beer stands for electro enhanced beer, and it's made where we call it. It's a supercharged lager, literally supercharged in that throughout the brewing process, we are introducing some electromagnetic frequency, and it has the most significant impact on the yeast and all this. So we've now got a doctor involved and all these things, but essentially, it's just in this massive journey of discovery where this won't only impact the beer making industry, it's going to impact any industry that uses yeast, in particular, I would even say pharmaceutical. So we haven't journey ahead on that, and I'm not sure where it's going to land, because there's lots it could land, but that's, that's where we are right now. So that's Saul's baby a fair bit, except my job is always to come in underpinning with legals and accounting and brand and all that side of things. Michael McGrath  So this is this electro enhanced beer. This is low carb, high flavor beer. And so where can people get hold of it? Do they buy it through your website Sheree Sullivan  You can buy it through our website. In fact, you can actually get two samples for free if you pay postage. But where we're rolling out in South Australia first, and it's really about proving the concept, and it's about showing the beer industry something new. And something we learnt when we're in Udder delights, is every year large retailers would say, What have you got for me this year? What have you got like this constant reinvention, and beer is getting pretty exhausted. So I think it was more about, how can Saul just get this incredible, amazing flavor? How can you lower carbs? Because normally you have to sacrifice flavor and mouth fill for lower carbs. How can you do that? So we went on that journey, but what it has found is all these other things are coming out of it. So we're about to lodge a patent with it. So I can't talk heaps yet about it until patent, and we can unpack it a bit more. Michael McGrath  Well, look, we'll put the we'll put your website in the show notes. So if people want to try some electro enhanced beer, low carb, high flavor, they'll know. They'll know what to do and where to come and they get a couple of samples free as well. That's correct, yeah. How good is that? So? So what does the future look like Sheree? Sheree Sullivan  What does it look like? So I'm not very good, really at looking too far ahead. Um, we've got we've got daughters who are sort of in year nine and 10. So I feel like we should probably just keep building the businesses we have. I also do business coaching on the side until they finish high school, because I don't want it, because the price you pay in your time to start a business is very high. So I feel like we've already got two and we've got a few more things in the part. Let's just keep growing and keep doing that, and keep discovering what E Beer is all about. And then maybe when they get to the end of year 12, you can ask me. Michael McGrath  So look for for aspiring entrepreneurs, people who are maybe we've got a corporate job, but they want to do something. What's your advice to people? I mean, clearly you had entrepreneurial parents who encouraged you, and they certainly demonstrated a very high work ethic, didn't they? And I mean, there's no getting around the work is there if you're going to be an entrepreneur, which is back to fun. If it's fun, it's not so bad, is it? So suppose that you know, getting that right, making sure you're in the right place. I think can help but you tell us about what you know. What would you tell you yourself 25 or 30 years ago? If you could go back and and whisper something to yourself, what would it be? Sheree Sullivan  I think it would be. I think I did it anyway, because I was living at home, but in that I was able to reduce my expenses, and I had a side hustle. So I think that whenever you start a business, you have there is going to be a period of time where you're not going to be earning money, or, even worse, which is usually my story, the business needs a lot of money for you to even start it before you are going to draw a wage. So my my question is, normally, you've either got to, do you have anything of worth that you can sell and live off. Because Saul and I did that with our first real estate to fund our second business we did that. Or have you got enough savings? Or is, can you go back home and live with your parents? Or are you living with a partner who can financially support you? So that would be, you know, getting your ducks in a row about, how are you going to financially sustain it while you start it. I think sometimes businesses maybe, if you're in a service industry, you can, and if you've got enough clients and you're a consultant, there may be those occasions where you can instantly generate income. The challenge, though, with consultancy is you can only earn as many hours as you have in a day, whereas the product takes longer to earn the money. But then it almost becomes you earn money when you sleep because of the product selling. So, you know, there's two days, but that's that would be my starting point. How earn money while you're building. Michael McGrath  That's interesting, that distinction you just made between selling your time and then being able to leverage that by selling some products which are not time governed. Think that's a key distinction, isn't it, when you're kind of weighing up a business or an opportunity. But look, that's been fascinating. It's so interesting to hear your story from music and maths through to deciding to become a cheese maker. That's not an easy thing to do, by the way, if anyone I know a little bit about cheese, because I started out in the pizza business, which requires a lot of cheese. And the first company that I think we were about 7% of our revenue was cheese and Well, I think we peaked. To maybe 20 million Sterling. So we were buying a lot of cheese, and I remember running out of cheese. I had the first shop, and I ran out of cheese, and I rang the cheese guy, Robert seguesa, at Dairy born foods. This is in the UK, back in the 80s, and he was in Luton, and he sent me up a taxi full of cheese from Luton, which was about 150 quid taxi ride. And I stuck with him for about a decade by this cheese, because he he kind of, you know, he was one of those guys that knew Addison, but I would often go down and have a look at his cheese factory, which was fairly substantial and not didn't look like an easy business to run to me. Sheree Sullivan  Yeah, the minute you add refrigeration, short shelf life, you know, animals. Michael McGrath  Yeah, as you said earlier, you got to deliver it plus five degrees. No more you go over that it gets, you know, big problem. So, not easy to do that. Okay, excellent. Such a great chat. Wow. Thank you, Sheree for joining us today, and good luck to you, and good luck to your project and your husband's project in E Beer. Sheree Sullivan  Thank you. Michael McGrath  Very interesting. Who doesn't need a few less carbs without losing the flavor? So thank you. Sheree Sullivan  Thank you, Michael. Michael McGrath  Take care. Bye.  Well, there you have it. Hard work and persistence combined with a supportive partner and family can get you a long way. If you want to try out electro enhanced beer, pop onto the E beer website, https://ebeer.co/  Shout out to our sponsors, Oasis partners. If you want some practical import on how best to exit your business speak to the guys at Oasis. Now if you like this content, be sure to share it with your friends and leave a like and even a comment. Only good ones, please. As you know, we're very sensitive, so until next time. Link to previous episodes: https://www.oasispartners.com.au/podcast/tom-hardwick-from-suits-to-start-ups  ]]> https://www.oasispartners.com.au/wp-content/uploads/2024/09/Picture1-4.png clean no 37:08 No no https://www.oasispartners.com.au/podcast/tom-hardwick-from-suits-to-start-ups/?utm_source=rss&utm_medium=rss&utm_campaign=tom-hardwick-from-suits-to-start-ups Mon, 19 Aug 2024 23:37:31 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17498 Tom https://www.linkedin.com/in/tom-hardwick-2aa81943/?originalSubdomain=au Tom started his professional life as a lawyer with Corrs Chambers Westgarth, before moving into investment banking in Sydney with Burdett Buckeridge Young and Paterson Ord Minnett. Tom then joined Abacus Property Group as Director of Funds Management, before leaving to become CEO of Guardian Early Learning Group, a childcare business he co-founded in 2004. During his eight years with Guardian, Tom grew it into a $500m+ business with more than 100 locations across Australia, employing 3000 staff to care for and educate more than 15,000 children each week. The business sourced its initial capital from a public company investor and then moved through three rounds of private equity, partnered by a number of banking syndicates. Tom serves on the Board of Directors of RediMed, TA Fields & Sons and Aplant Hire & Lite Industries. Points of Interest Investment banking challenges 15:10 Transition to Guardian Early Learning Group 16:35 Strategy and Private Equity 19:23 Career Psychologist 45:11 Tom’s Wine Bar Venture 46:36 Transition from Guardian 48:43 Starting Coogee Capital 49:15 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike:  00:00 Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now Today's guest has a fascinating story. Tom Hardwick, initially practiced law before moving into investment banking. Eventually, his entrepreneurial itch needed scratching. He jumped from the corporate ship to start his own childcare business, eventually building it to 500 million in revenue through three rounds of private equity employing 3000 staff. Tom epitomizes the have a go spirit needed to succeed in business. So sit back as I drill into Tom’s story. Tom Hardwick, welcome to the troubleshooters podcast. Tom Hardwick  00:47 Thanks Great to be here. Mike:  00:49 Our CEO, Don Hunton at Oasis, connected us, so I'm very glad he did. You're the founder of Coogee capital, and you're effectively running your own sort of equity fund with a partner of yours at the moment, right? But let's get to that, but, but let's go back a bit. So Yahoo from Victoria, yes, yeah. And I understand mom was a teacher and dad was a suburban accountant, yes. So tell us a bit about your upbringing. Tom Hardwick  01:19 Oh, look, I grew up in a nice family environment in suburban Melbourne, a place called Essendon, and later in life, I did some career sort of counseling when I was contemplating whether to stay in the law firm or not. And one of the things I learned from that is I actually grew up in a reasonably entrepreneurial family in terms of uncles and grandfathers, etc. And you know, you don't really think about what shapes your life too much, but that was quite a pivotal moment in my life that counseling around Do you stay in professional services, or do you back yourself into something that eventually will lead to this entrepreneurial endeavor? And so looking back on our life and sort of how we grew up, you know, it was a reasonably entrepreneurial family, you know, some accountants, some butchers and funeral directors, etc. And so, you know, went to local Catholic boys school, and then, lucky enough, got into Melbourne Uni, did law commerce there, and I sort of quite liked the business and accounting side more than the legal side, but I thought if I've done a law degree, I should at least go and practice it. So I was lucky enough to get a job at cause chambers Westgarth did did a few years there. Then I won this Fulbright scholarship to go to the US, and it was really to study workplace relations and how restructuring was taking place, as in unionized workplaces, as opposed to non unionized and so I spent as part of a year in the US. Mike:  02:48 So when was that? What year was that? It was probably 2006 Tom Hardwick  02:53 Sorry 96 and 97 was then, and which was, yeah, I was a great experience. I worked for a consulting firm for a few months. I traveled around the country for three months and visited, you know, the nabiscos and sat and motor companies, all those things, and then came back to Australia to stay in the US. Oh, it was, yeah, it was, it was pretty tempting. But the group we were working with in the US wanted to set up in Australia in partnership with cause, and so we basically took what we learned in the US and came back and set it up in Australia. And I did that for a few years. So it was good because I was getting a bit tired of the legal side, and so I did this consulting work, and that was good fun, but it was very much in the weeds of implementing organizational change, which you need to be that actually get stuff done. McKinsey's provide a nice report, but someone's actually got to make it happen. But I got a bit sick of that after a while, and then so went back to the law and then it was like, Oh, gee, I don't know if I want to be a partner in a law firm for the rest of my days. And that was this sort of moment of getting a bit of help to think about where to, where to with my career. Mike:  04:02 Yeah, I understand that you consulted a career psychologist. So before we get into that, because I'm very interested in that, I think, I think that's an area that's so underdone career advice. Yeah, like, I just can't even believe it. I most of people I speak to, they're just stumbling through, you know, trying to make it up as they go along. And I think that sounded like a very useful intervention for you at that point, quite enlightened. I think to think like that. Who suggested it to you? Tom Hardwick  04:29 I had a mate who was doing, you know, recruitment, and what's the word when they do outplacement, okay? And I was just talking to him one night. He said, Look, there's this, there's this woman who who specializes in this work. Once you think about having a chat to her, and it was, you know, she interviewed, interviewed me for a few hours, did the whole family history, then did a whole batter of tests around, what do you like? What are your strengths, etc. And at the time it was, look, you're very good technically. As a lawyer, you sort of quite clear on your communication. Mission. But if you want to be an entrepreneur, you know, in when your 40s or 50s be investing in companies or running something, etc, you probably need to work on your persuasion skills. You need to maybe show a bit more emotion and passion. And you know, there's one or two other things, but just a couple of things. And then out of that, I got the opportunity to come to Sydney and working invest investment banking with BBY, and that's where you learn the art of persuasion, when, you know, basically, you you eat what you kill, and you've got to go and convince people to invest in companies, etc. And so that for me, that sort of couple of years in investment banking was a great opportunity to, you know, broaden the skill set. Mike:  05:41 I mean that, let's come on to investment banking, because she did that for quite, quite a while, didn't you? Tom Hardwick  05:47 Yeah, you had a couple of stints at BBY and then Patterson, yeah Mike:  05:52 When you when you finished it, you know, when you finished at uni. So that was, what was that? Tom Hardwick  05:57 91 I think I started work in 1992 okay, because an article Clark Mike:  06:04 That's interesting. So that was, I mean, I was in business at that stage. I'm quite a bit older than you, but that 1990 that was a huge I mean, in the UK, I'm sure it was not dissimilar here, but we had a massive credit squeeze on, yeah, so we kind of ran headlong it. I didn't know what a recession was. I started my first company in 1987 and I've been at it for three years, and the banks are, all, you know, throwing money at us, and we were expanding and and then, and then I got schooled in those two years 1992 where I started to understand what recession was and what credit Squeeze was. And I really learned more in that too. In fact, everything I've done since then has really been grounded out of those two years of utter pain. Yeah, Tom Hardwick  06:47 I was probably, you know, like the year before I started. And, you know, the law firms make these commitments. A year or two out there was probably, like 25 people who started our year. There was eight. And that was a consequence of that, consequence of that. Yeah, and, and I was probably a bit green at the time to really appreciate what was going on. I think there were two of those moments in my life where, when I left the law firm, I went and joined a client who was building a supply chain business, yes. And the day I started, the accountant resigned. And then that lesson in life, you ever joined a business and the accountant resigns? Be wary anyway, that business went broke within 12 months, and that, in some ways, was my MBA, working in a business that you had to lay 350 people off. It went into administration. Seeing all the problems across security create like seeing a business at the messy end of it really teaches a lot about how to set it up. Yeah. So that, for me was one of those, you know, moments where you learn a lot in life. And then probably the other was when I was at abacus, when the GFC hit, and, you know, the Property Groups, yeah, we were pretty levered, and that were pretty hairy times. Mike:  07:57 It's interesting. I left school in 1980 right? And there was a, you know, a recession on unemployment was 10% this, this is in the UK now, and, but unemployment 18 to 24 was, like, 20% that was so corrosive, yeah, like, you know, people just didn't think they were going to get jobs. And, and that was not good. We don't want unemployment at those levels, that's not good for society. But so I left school in that environment where, okay, you know, what am I going to do? How do you get a job? And jobs are very difficult to come by. And then, and then the economy began to pick up. Thatcher got in, and the UK started to fix some of its kind of Industrial Relations problems, and and, and then, and then the banks. We had Reaganomics at the time. So you had the whole trickle down effect. Reagan was had bought into the whole, you know, economic paradigm, you know, less government, less regulation, the markets going to fix it. And so you had this kind of, you know, rapid, you know, money became easy to get and stuff and and then we ran into 1990 Yeah, so that's, that's a decade later. And then, to your point, a decade after that, we've got the tech bubble. Yes, that's right. And then a decade after that, we got the GFC, and then we had and then we had covid, yeah? So every decade we've got some kind of, some something, something's gonna, somebody's gonna come along. We don't know what it is, but that's true. But typically, yeah, you wouldn't have thought Tom Hardwick  09:32 No one really saw the GFC coming, but for a few smart hedge fund managers, exactly. And no one saw covid Coming, like, Who would have thought the world would be shut down and locked down, right? Mike:  09:40 So, so tell us. So you did that 12 months without business, and you got, you got a school there, really, in terms of what? And then you went back to law right after that, yep, Tom Hardwick  09:52 No, sorry. When I came back from the States, I did the consulting, okay, then went back into law when I got bought. But a year later, I was like, you know. Up. I don't think this is for me. Okay, jumped out with the client that failed. Came to Sydney and joined BBY Okay, once again in the aftermath of the tech wreck, okay? And the institutional desks used to laugh, because you'd have the trophy cabinet with all of the, you know, the plaques for the capital raising, yes. And the insto desk, whose clients had obviously lost money on all these corporate transactions. Call it the wall of shame. And here I was some industrial relations lawyer starting investment banking, you know, trying to get some sort of support for some corporate deals. Yeah. So here we are. It was a tough time in those, you know, 2001 2002 investment banking, the third, first company I raised money for was a Toronto listed uranium miner that had a uranium mine in South Australia, the honeymoon uranium mine. And I raised two and a half million dollars, and I earned a bit of kudos in the investment bank for that and Oasis history. Mike:  10:52 So you began to kind of develop those hustle skills, I presume, at that point, how to get a deal done, how to, you know, persuade people, yeah, that this was a good idea, yeah? Tom Hardwick  11:03 Also the financial skills, right? Because lawyers, yeah, okay, yeah, I was good at numbers and good at maths and good at Commerce, but I hadn't really practiced, okay, but yeah, you need to know about numbers and how to, you know, value a company, yeah, model it and all that stuff. Mike:  11:15 But your Dad was an accountant, so was some of that, did some of that rub off Tom Hardwick  11:21 I liked numbers. And, you know, when I was at uni, I used to go up, I used to catch the tram up Sydney road to go and work in his office. My my dad was, you know, Dennis donuto was my dad, but he was an accountant, not the lawyer of Dennis donuto. So brown suits slamming photocopies worked up above a pharmacy on Sydney road. So the similarities are scary. Mike:  11:41 It's interesting you refer to him as a suburban accountant, and it's interesting that, because that was the I had to learn that the hard way, I thought an accountant was a counselor. Yeah, it's like saying a soldier is a soldier, right? So I hired accountant back in the day, did a terrible job, but I thought an accountant was a counselor. Yeah, exactly. That's right, you know, little did I know. So, so, so you, you had, we had a little bit of an aptitude for numbers that was in eight, but that needed developing a bit, yeah, yeah. And so you, the banking career helped with that Tom Hardwick  12:14 it was great. So, yeah, we did two years at BBY, and we just, we just weren't, sort of loving the environment there. So the team moved across to Patterson ordinette, and that had its own challenges working for a Perth based group, yes, in Sydney, okay, but yeah. But what I did is I built the foundations of BBY, and then when I went to Paterson, I just had this sweet spot of and I'd sort of focused on income style products, primarily listed property trusts, the smaller property trusts that the big banks didn't really pay a lot of attention to. And so probably raised four or $500 million over three years at Patterson's, whether from IPOs or placements, etc. And so I built a bit of a franchise in the small property trust space. And then a couple of the big banks noticed it, and said, Hey, why don't you come and join us? And it was sort of tempting to go into the big investment bank space, but I just, I'm not someone for, like, corporate politics and, you know, the big and I had it at cause, yeah. And so I went and, you know, spoke to one of my mentors at the time, Frank Wolf, who was running abacus, where he founded abacus, and said, Frank, look, I'm at this crossroads. Here's where I am. He says, Tom, why don't you come and work for us? You'd be great, sort of, looking after our funds management, business and investor relations. And you know, it's one of those things. You know, the great jobs you get in your life you don't normally apply to or to an ad or a recruiter. You sort of, it's through your networks and, you know, discussions and, and so out of that, you know, I went and joined abacus and, yeah, it was a great two years pre GFC, you know, building their funds platform and buying some assets, and syndicating is Mike:  13:55 again, that there was a movement. Was a bubble. Yeah, it was a bubble. But, yeah, but there was, you know, I remember the guys in London that at Oasis were saying selling a business like shooting fish in a barrel. Yeah, yeah. Boy, did it change, yeah. He never gone back, actually, no. Tom Hardwick  14:11 It was interesting. We were so we went to Macquarie had this Global Road Show. So he went to London for a few days in the New York, and they got all these investors to hear the stories of these Australian property trusts. Yeah. And when we're there, a few people in London were saying, Oh, are you in the US? They're saying, Are you having trouble accessing debt yet? And say, no, what are you talking about? It's all fine in Australia. And they were just seeing the start of the crash. And then, you know, a couple of months later, Centro couldn't get its debt refinanced in the US and bang, it just, well, changed That was probably one of the scary times, being in a business that big, with you only had 2 billion of assets, and going, geez, where's the cash gone? And, you know, the banks want us to deliver. And, you know, I was, that was pretty hairy. Mike:  14:59 Who were the guys who. Investment Banking that were helping you. Like, was it? Was it sink or swim you or, in fact, you know, were you taken under anybody's wing? Tom Hardwick  15:10 It was so tough the investment banks were, you know, they were really focusing on the big guys. Frank, basically got an introduction to a very wealthy man in South Africa, left Australia on Christmas Eve, went and spent Christmas day with him in South Africa, and within 24 hours, basically negotiated an underwritten rights issue to, you know, restore abacus balance sheet. And, you know, basically Frank and Nate. He did it themselves, and then they bought him one of the investment banks to wrap it up a little bit, right? But no, it was Frank. Frank had to go and save his his company. And yeah, it was a public company with a board. And yeah, so the little guys were the least, the last to get any love. But you know, he got off his backside and he sold. And yes, Mike:  15:56 yeah, no, look, that was a, that was a unique time in finance, wasn't I mean, what was emerging of private equity, which wasn't a lot in Australia at that point, it was very small. That just disappeared, yeah, overnight. They kind of ran for the hills. Yeah, banks started get out of the investments had made. Yeah, it was. And, funnily enough, we just started in Australia at that point, yeah. Okay, so, you know, we had two years in nothing, yeah. And so we had to get fairly creative, trust me, so that's interesting. You you enjoyed that that time in investment banking, you were with abacus, and so you'd been in there for best part of a decade Tom Hardwick  16:35 sort of five or six years investment banking, four years at abacus, yeah. Mike:  16:39 you'd had maybe the best part of eight or nine years in law, yep, so, so at that stage, we've got, we've got to, you know, some skills emerging, haven't we? Yeah, it was, Tom Hardwick  16:51 I think, when I look back at the success of guardian, it was this sort of breadth of experiences over 20 years that I felt gave me a very good platform to be a CEO, yes. And, but it did take a bit of courage, right? Because every three or four years I'd get a bit bored, and I tended to jump into things that were quite new, yeah. And, you know, so there's, I had a I remember talking to Greg Paramore, who was one of the great property right? You know CEOs. And he said, Listen, son, just back yourself. You know, if you think it's a good thing, jump off the deep end and have a crack at it. And what's the worst thing can happen? It doesn't work. And like with the logistics business, right? Jumped out of a partnership in a law firm. It failed, but, yeah, it was a good experience, and without that, I wouldn't have got the next opportunity Mike:  17:42 so on that point then, so you kind of, when did you decide that you'd had enough at abacus? Tom Hardwick  17:50 What had happened was we had started building Guardian as a bit of a side project. My wife was in childcare her whole life. Right when we came back from America, we bought our first center in nariwaring. Mike:  18:03 So for those who don't know, and we've got a few international listeners that might not know who who Guardian is. So for those two listeners, tell us what Guardian is Tom Hardwick  18:16 So Guardian early learning group was a childcare business that we built basically started from scratch in about 2004 that, you know, I eventually joined full time in 2010 abacus into that and I'll tell that story. And then over those years, from 2010 we essentially up until 2010 we managed other people's assets for a fee. In 2010 we raised private equity to buy some assets that abacus had put together. Mike:  18:49 So these are business assets, not property assets, business assets, yeah, and so they're the Early Learning Centers themselves. They were going concerns, going concern Early Learning Centers, and you were paying a multiple of whatever they were producing. Tom Hardwick  19:00 So in essence, over the eight years I was there, we bought 8080, centers and opened, call it, 30 Greenfield sites, okay? And you know, typically would buy a business for four to six times earnings, okay? And through that journey, raised three rounds of private equity as we got bigger and needed more capital. So that's, that's Guardian, Mike:  19:23 so that they so that move you got into the hot seat effectively, so they asked you to lead at the beginning. So how did you get that gig? Tom Hardwick  19:35 So what happened was, five of five mates said, Hey, why don't we do something in childcare? We faffed around for a few years figuring it out we had one or two centers, you know, crappy little centers. We thought about doing a Greenfield. We decided to get into the management of childcare centers. And so over time, we sort of got to about 40 centers under management. Yeah. Well. One of the five of us was in the childcare space, and so he was running that business, and the other four of us had jobs in Sydney, and we'd meet once a month, etc. Then when I was at abacus, we built this very successful Self Storage portfolio where we owned the Self Storage property as well as the business. And Frank and David said, Hey, Tom, why don't we do something in childcare? So we started off with this view that we could go and buy the property and the operating business, and we would scale that as a property fund. We bought 17 centers, and I sort of led that charge at abacus and raised the money, et cetera. And then what we found is we only had six freeholds and with the business. And then another 11 were just pure leasehold. So it was proving to be a challenge to do proper Yeah, together. And then the GFC hit, okay? And it was like, hang on, we got to tidy up our balance sheet. We're in commercial property. Let's get out of pubs, childcare, student, or any of that ancillary stuff. Just get rid of it. The problem was, in 2009 you couldn't sell assets and get your money back and so, but the largest childcare group in the country, called ABC early learning, which had gone to the US and UK, had gone bust. So quite a lot of private equity firms had looked at it, but said, Oh, look, it's too distressed. But they sort of saw the merit in the space. And so when we were trying to get abacus it's money out of self, out of childcare, we came across a couple of PE firms who were quite interested. And ultimately, Wolseley private equity, a local Sydney group, yes, invested. And what the transaction was, we will buy abacus as centers, not the properties. Abacus can keep the properties and sell them, but we'll buy the businesses and Tom you come and run it and leave abacus and help us grow this business. And so having had two great years at abacus, and then two years post GFC, where life wasn't so much fun. It was like, You know what? This is pretty interesting. Here's an opportunity to be a CEO. Here's an opportunity to build something. And, you know, we were a bit passionate about childcare because of the wife's experience, and we had three of our own senses privately as well. Okay? And so I said, look, let's give it a crack. And so at that point, I it was probably one of the best working moments for a couple of years, because I set up an office in Bronte just next to Iggy's and three blue darks. I'd rock up in my board shorts and thongs, and I could go and have a swim at Bronte during the day. And we worked on the strategy, on the acquisitions, and my partner, Anthony, he was in Queens and running the operations. And, you know, childcare is a very noisy business to run, and so that's sort of how the Guardian Mike:  22:47 so you and I mean, in a way, was a dream ticket for the PE guys, because, you know, their biggest problem is, who's going to run something? Because they generally can't, yeah, and so you, you had the hands on experience, and you got the smarts, you got a legal and financial background by that stage. So, so that kind of makes sense. I mean, just for context, the the child care sector in Australia is worth about 15 billion at least it was in 23 and making about 5% interesting. So not, not hugely profitable on a net profit before tax basis. But you know, your average net profit in Australia, on the million operating comes is about 9.7% Yeah, so reasonable, but not stellar. I see there was a Commission recently looking into it, yeah, because they thought it was a rule, but it's definitely not a rules. Is it? Tom Hardwick  23:35 Look if you're a good private operator, you'll be making 15 to 25% okay, yeah, there's a lot of the Mike:  23:48 The good operators at the top, yeah, it's probably 80/20 isn't it? Tom Hardwick  23:52 Yeah? Like everything, right? It depends on the locations that you are, etc. So it's Yeah, but it's not. It's a very labor intensive industry. Labor's probably 60% Mike:  24:04 60% wages, according to ibis, yeah, and so. Tom Hardwick  24:07 You know, in the last few years, it's really been, where can I find that labor Okay, and the government has quite a high quality agenda for the sector in return for the government funding, because the government funding underpins about 66 65% of the revenue, which is incredibly generous model, yeah. And so when I do, when I see people complain about the cost of childcare, and you know how outrageous it is, like Australia is one of the most generous environments for childcare support, yeah. So it's, it's, it's attractive in that it's underwritten by the federal support, but in return, you need to sign up for a quality program that says, We need these staff ratios. We need to invest in education rather than just babysitting, and that agenda is not easy to implement when it's hard to get the staff and the qualified staff. You. There's a lot of new migrant labor that comes into the country, and childcare is quite a safe environment for those women to work in when their language isn't particularly strong, etc. But finding the right mix of people to deliver on the agenda, it is a challenge. But, yeah, it's a challenge in a lot of sectors right healthcare, Mike:  25:20 So at that point, you, like the sector private equity, have had a look at it, even though it's probably a bit smelly with the old ABC thing. I mean, that was a phenomenon, was it didn't they peak at about 1000 centers, 12,000 centers in Australia. So they ended up with Tom Hardwick  25:38 At the time, there would have been less. So at the time, there was probably five or 6000 centers, okay? The some of those statistics about center numbers include before and after school programs which are not the same as, say, a long daycare, okay, but at the time, and Eddie, Eddie probably had 800 centers in Australia, because he had some in the UK and some in the US, right? And it's the classic example of and I think, and this is why I was never interested in listing guardian. You know, when you're in that listed space, you do a deal, you raise some money, the price goes up, then everyone comes back to you and says, Hey, Eddie, where's your next deal. We've got people want to get into the stock, but, you know, they want a big raising because they're institutional investors and only want to put 10 million to work by million dollars to work, blah, blah, blah, so then he's got pressure to do another deal, and then pressure to do another deal. And you know, there's this whole world of, you know, the public markets, and you know, it does blow a lot of businesses up, because it's all about growth. And Eddie chased the growth and delivered for a while. But you can only buy, you can't buy that many childcare centers. And when the music stops and you see what's really happening. And since Eddie, there's been, you know, GA there's been affinity, there's been numerous listed childcare groups. And it's a lot of same with a lot of these roll ups, right? You go, and anyone can buy a business, like, Oh yeah, it's easy to buy a business much harder to buy that business and then turn it around and make it a better business. And if you're buying 100 a year in a very people intensive business, you can't do Mike:  27:10 Quality is a huge quality issues. Yeah, he just Tom Hardwick  27:14 so he was buying centers that were going backwards by 20 or 30% because they were so focused on the next center they were buying in the next year. No one was really focusing on Mike:  27:24 The kind of retail food Group had a similar problem as well. They just kind of grow, grow, grow, grow, and no one's looking at the fundamentals. Tom Hardwick  27:33 And at Guardian I real. What I really tried to do was say, Mike:  27:38 Had you taken that lesson, you've done that study of that and gone we can't do that. Tom Hardwick  27:45 what, what shapes the strategy that you end up doing. But for, for whatever reason, I felt that you you couldn't buy a lot of centers. And we found we bought 17 centers in that first period of time for our because, and they did go backwards, and they were our first centers. So that was our kind of it was a good lesson. That was our lesson. That was our lesson. It was a university. And after that, I said, we can improve these centers, but it does take careful management. So what, what I used to say to people is I like to buy 10 so for tell hotel hotels every year, not 50 country comfort motors. And we really focused on buying good centers and then making them great centers. And that was, you know, something, maybe 90% occupancy. Let's try and get it to 100% or even 103% occupancy. Once we get it to that point, we can probably push the fees a little bit. We never really focus on cutting costs, because you take costs out of a childcare center, everyone, you know, freaks out because it's about the children, so you're not going to cut food or whatever. And you know, even if it had too much labor, we didn't get rid of those people. But over time, there's always natural turnover. And you know, you might not replace one or two. So we really focused on on the organic growth of what we bought. And I can tell you, when we have you had three rounds of private equity that that ability to prove that you can buy a business and improve its earnings is so valuable, right? Because a lot of business people buy businesses and their earnings flatline, and then they go, Well, I'm going to buy some more, but I need capital, right? And so you just using capital to buy more earnings, whereas if you can grow the earnings. One, that proves your management teams know what they're doing. But two, you can use that accretion in earnings, which grows the value of the business, to help fund, you know, the ongoing expansion of the portfolio, not requiring new capital all the time. And I just think that you know now, when we look by buying businesses, want to help some of the larger PE firms look at buying businesses. They're really looking at, can this business grow organically? And can this management team grow this business organically, without a lot of capital? Mike:  29:50 So you, I mean, that was your opportunity to really express yourself, wasn't it? Yes, and so that. But to give it some context of people who are listening, you grew. That business to 500 million. Yeah, yeah. And What? What? We'll come back to some of the drivers there for you, which you've already said, Really, which was a quality driver. And let's buy 10. Let's make them better. And, and let's not get out of control. And you, you know, you're back to fundamentals, aren't you? You know, what problem are we solving? How we helping people and that that focus on quality? I mean, three rounds of PE isn't easy to do because, you know, they're, they're, they're demanding, so it you've got to produce a return as well. Yeah, and, I mean, I presume your scale helped. As you began to scale, you got some economies, did you? I mean, there isn't great economies in labor, is there? Tom Hardwick  30:45 No I call it. I call it diseconomies of scale, okay? Because yeah, let's say you go and buy a childcare center from a Mar and par operator, yeah. Now the first thing we learned was, if Mar and par are working in the center actively, that's not a good business to buy, because the center manager is not empowered to make any decisions. And when she came into our model without Mar and PA, they're all over it, she couldn't survive, right? So we learned that lesson. So therefore, let's say we buy a center. Well, all of a sudden we had to add payroll tax to the P and L. So that's, you know, when you got 60% of your revenue, there's another 2% of revenue. Mike:  31:26 So payroll tax kicks in above 800,000 when Tom Hardwick  31:30 you're a big group, you know, kicks in then, you know, we needed an area manager to keep an eye on that center. You know, you sort of pay them about 120 100 and probably 150 grand, and they probably capable looking after eight centers plus on cost. So 200 grand divided by there's another 20 or 30 grand that comes out of the P and L, and then everyone would just get a little bit toy when a corporate group bought a Mar and par business. So often they would go backwards five or 10% before you then bought them back out. And so, yeah, when you bought a business, you typically went backwards before you went forward. So you you really had to get on the job and try to bring this, this team, into your vision and your passion, and bring them on a journey. Yeah, and you know, we were, we were generally pretty good at doing that? Mike:  32:22 so that the private equity guys were, were providing the capital. They in return for some equity, yeah, and they so ostensibly that that each time you went for another round, there was a dilution. But the so you guys, as founders, had a had a diminishing percentage, but overall your equity was growing in terms of value. Tom Hardwick  32:48 We had a smaller piece of a bigger part. Okay, okay, now I'd say we had the first private equity group I thought were fantastic, very supportive, yeah, helped sort of shape us a little bit and but we basically spent all their money within the first two and a half years, and they kind of needed an exit, because they were looking at another fund, so they sold out of us. And, yeah, it's not nothing when you know you lose nine to 12 months of your life when you do these transactions. So they are quite distracting. Now they made three times their money, and we got a nice on the uplift on our equity promote, etc. Then the second private equity firm that was a bit more of a difficult working relationship. They wanted to be a lot more involved and a bit more hands on, and a bit more influential on strategy, etc. And I sort of knew what I was doing, and so I sort of pushed back on that, and I probably pushed pretty hard there, and I think that relationship was reasonably fractured by the end. And I think they were Australian based. They've got an office in Australia, but primarily an Asian based P firm, and but, you know, I think they probably thought, Look, this is has gone very well. Tom's a bit difficult to work with. Why don't we take our money and run while we can? And, you know, they they did three times their money in two and a half years or three years. So it was a good outcome for them. And then we went with a global group as we got bigger. And, you know, that was, that was more of a challenge, I think, working with them so, so I think one, I mean, Mike:  34:24 I'm just interested in this, because I'm sure some of our listeners will be interested in this, business owners. So that as you because you kind of move at the food chain with, yes, private equity, don't you? So as you move at the food chain, I presume the risk, the risk appetite reduces, and they become a little bit more compliance driven, I suppose, in terms of what they want to see governance wise, is that the case? Tom Hardwick  34:54 Yes, but I Not, not necessarily in a bad way like I think. I think having a local group is much easier than having an offshore group, okay? And I think, you know, there's things like, they launch you to report a certain way, and they like to collate it all up. So at global, I see they can compare everything, etc, but that didn't affect us too much. Probably, you know, at some point the business needs to become a bit more institutionalized. Like I went and met with the largest childcare company in the world. And I used to go meet with them every year in the US. And the CEO said to me, because, you know, I'm sort of pre dating, hoping that one day they might sort of invest in it. He says, Tom, you know, the best thing about Guardians, you you right across it, you're doing great job. The worst thing about Guardians, you because if we buy into guardian, we want to sort of have an institutional management team that's not relying on the founder. And yeah. And so as a founder, you know, quite an entrepreneurial founder. As you get bigger, the need for some of these, you know, systems, infrastructure, governance. And, you know, I sort of gets in the way of an entrepreneur a bit. So it is, I would say. And as part the reason we set up Coogee capital is it's a dangerous game to play. As a founder private equity, particularly if you don't have control, like if you've, you know, and Guardian was a business that required a lot of capital to buy all these businesses, so we never had control of it. And you are nothing more than a glorified employee and disposable at will with then quite a lot of equity tied up in a liquid business that you know, potentially you don't have control of anymore. So, you know it is, it's a tightrope to walk. And I would, you know, say to most founders, if I think, if you can avoid it, I would avoid it, but if you need it, it is a good source of capital, and some provided get the right group good smarts to help you grow. Like, there's a group like 5v here, you know, I've done a bit with rock partners here, like they're good guys that sort of have got a bit of experience in the in the pot that, you know, I think would be good to work with. I I call them the propeller heads, and it used to drive me crazy. But, you know, the young kids that have all spent their whole life on a spreadsheet. Maybe they've got an MBA, and they come in and they want to talk to everyone, want to analyze your business and come with all these hair brain ideas based off a spreadsheet analysis. And that sort of really got to me a bit. But, you know, that's, that's, but that's the Yeah, the dance hall you go to, yeah, yeah, dance with private equity. Mike:  37:39 That's that's interesting, I suppose. And you know, if you need capital, if you're in one of those situations where you need capital, was a lot of that capital was you were buying businesses more than the properties that they were more interested in the businesses, yeah. But even that, you know, you, if you're paying four or five or six times you, you know, you're five or six years before you get your money back, and, yeah, you're earning even 15% or 20% they're still not gonna know. Tom Hardwick  38:03 we had to, we had to grow. We were growing our earnings by 20% organically, and then adding to that with acquisition, okay? And then the greenfields eventually came in, because the problem with greenfields is a smash your p&l in that ramp up phase. Yeah. So it was really, when we got big enough we could do a few greenfields here and there, and it wouldn't, didn't hurt us too much. But, yeah, it took a while to get to that size. Mike:  38:30 You mentioned the Self Storage market. How good is that self storage market? Tom Hardwick  38:35 Yeah, it's been Mike:  38:35 a great what a business model. Great Tom Hardwick  38:37 Great business. It's a, not the easiest business to start up, because you got to put a lot of money down. And it and it does take those things about four years to sort of get to full occupancy, yeah, but once you get the big pieces of dirt, so great land appreciation. You know, if you can get, I said they trade on five or 6% these days, but back then, we were getting nine 10% return out of them, and was great, Mike:  39:00 yeah. And I suppose what you were saying with the child care centers is they, you weren't able to do that business property in the same way. Tom Hardwick  39:08 No, no. And obviously, you know, you get a much better return on equity from just having the business side, yeah, but yeah, there's, there's been a lot of money left on the table by not being in the property side of childcare, yeah, and I spoke at a development conference recently. Some of the smartest people I saw in childcare were people who were building the centers, operating the businesses, and then when those businesses were at 90% occupancy, they'd sell the businesses to me, and then they take the proceeds from the sale of business, pay the debt off the property, and the next minute, they had four properties throwing out, you know, 678, 100,000 a year each in passive rental income, yeah, well, yeah, two or $3 million a year, a bit of tax benefited income. Yeah, it's not a bad cash flow. Mike:  39:58 So you you build that business. And clearly it was, I mean that. I mean, it's easy to say 500 mil. It's very difficult to pull that off. Tom Hardwick  40:08 Bids just went in last week for the to buy Partners Group out on Guardian, and it's, you know, it's going to be around a billion dollars to Mike:  40:16 Okay. And so what caused you to decide to accept, or was it the private equity guy? I mean, what was the the Genesis around? Okay, it's time, it's time Tom Hardwick  40:28 it we were looking for a COO to come in to sort of be my successor, yeah. And so we'd been on this process for quality, you know, best part of a year. And I thought it would be easy to find someone with some multi side experience, with a bit of passion to lead an organization. And yeah, he wasn't like it was, you know, I was surprised at the lack of talent. Now, maybe as a founder, you have a high bar. And so, in essence, the relationship with Partners Group break down a bit over that process, right? And then I think they felt that maybe I was a bit of a roadblock to solving this problem. And so, you know, basically they said, and time's up. Okay. Now the idea was to stay on the board, and so I went to a few board meetings. But it's pretty hard as a founder to sit on a board with a couple of, you know, non exec directors, and so it's sort of paid it out, okay, yeah, and yeah, which is, you know,it wasn't an easy pill to swallow. You founded a company, yeah, sort of kicked out of it by some people. Mike:  41:40 You're in good company, though, aren't you with? Yeah, and that's, that's the jehos. Tom Hardwick  41:44 That's the dangerous line you walk in private equity without control. And, you know, I push Navis to the limit. It would have been them or me eventually, I suspect. But Mike:  41:56 so what did they buy you out? Tom Hardwick  41:58 So in essence, I got half of my money out at the time, okay? And I've still got equity in there. Okay, great. So there might be a good second, hopefully nice check coming at the end of this year. Yeah. Okay, great. And, yeah, so they were reasonable about it, okay, good, but it was time for you, yeah. And you do get to that point, and you don't necessarily know it, where you're working 70 or 80 hours a week, you start to get a bit sick, the stress builds up, yeah. And so it was, you know, nice, you know, it was good to get a bit of that step back, a bit of respect, a bit more time with the family. Because, you know, you just hardly hire stuff. Mike:  42:36 And so how did you handle that post? You know, you you go from 100 miles an hour down to Okay, well, I'm not doing that anymore. Yeah. So that and that, that takes some adjustment, I imagine. So just chat to us a bit about that. Tom Hardwick  42:52 I think the first thing I did was, um, I packed my bike in a box. I flew to Geneva airport and unpacked it out the front of the airport and road to selenia across the Italian selenium across the Italian Alps. Mike:  43:04 And just sort of, you're a big cycling fan. Tom Hardwick  43:07 do a lot of riding cycle in Europe. Mike:  43:11 did you do much of it when you were running guardian? Tom Hardwick  43:15 It was my release. Was your release? Yeah, you need something, dang it. Yeah. And I was into it big time and, and, yeah, I was a shit husband to my wife, because, you know, I'd work all week now i i was generally home for dinner. You know, as we always got traveling, I was home for dinner.  the kids remember, like, our kids are going to be entrepreneurs, and it's because of the osmosis of the dinner table and the conversation, but yeah, come weekends, you know, the kids were doing sport and they're doing nippers, and my poor wife was driving all over the place while I'm off on the four and five hour bike rides. But for me, it was an important release, because it enabled me to switch off. And, you know, you got to concentrate on staying alive on the bike. So you do sort of get a bit of think time, but a bit of shutdown time. Mike:  44:03 were you conscious of that, or were you just doing it Tom Hardwick  44:07 Look what I needed. I needed a love outside it, because I was really into guardian, right? It was everything for us. Your wife, included. She was working in there and stuff. So I did need that release. And I sort of put it down to you've got to have time for your partner, time with the kids, and time for yourself. And I think time with your mates suffers when you're building a business or, you know, in that prime of your career, you do lose a bit of contact with your mates, and you have to make a bit of an effort to organize a few boys dinners and stuff like that. But for me, bike riding was more of a solitary escape and bit of downtown Mike:  44:47 I got the same from running, which I believe, so I just jog and distance stuff, yeah, and I didn't really know it at the time, I just kept coming back and doing it, yeah, yeah. And ostensibly, looking back, I realized now it was a kind of therapy route, yeah. It is. It just got out of my head into my body, and, yeah, so that that's been good, yeah. I mean, I think you need something and that kind of physical physicality, it's easy because you, you know what, running businesses, you you're in your head, it's all Tom Hardwick  45:20 and it's easy with the stress. Yeah, I was, I've never drunk coffee, but, you know, I when I was in America, I sort of got onto the Diet Cokes. And, you know, I used to have one a day at lunchtime, and, you know, I was all of a sudden having three a day. And you know, when you have a Diet Coke, you don't feel like a banana or a peach, you have a muffin or a bit of banana, but it was just, you could just see the stress starting to, you know, permeate your life. And while, you know, I was pretty fit from the bike riding, Yep, yeah. So it was, it was a good opportunity to have a bit of a reset and a bit of a rethink. Mike:  45:51 so, how did you go about? How did you tackle me? We mentioned earlier about the career psychologist. You didn't think about going back and seeing them? Tom Hardwick  45:59 No, no, I have sent numerous people to see her over the years. Yeah, people have come to me because there's one thing to get a bit of mentoring from someone. It's another to go and have it professionally, a professional really analyze you and what are your strengths weaknesses? What do you want to do? And try to, you know, do that. So, so, no, I didn't do that. I sort of had a bit of time, and I decided, you know, I'm a big wine person. I love my wine Okay, and when I go traveling in Europe, we spend a lot of time in visiting wine bars and wineries. So I opened a wine bar in Quincy. So completely new endeavor, yeah, that was, you know, gave me something to focus on. Mike:  46:36 And how's it gone? Tom Hardwick  46:38 I opened at September 19. We had a couple of good months before the bush fire smoke settled in at the end of the drought there, and then, just as a smoke listed straight into covid. So, yeah, what I've learned is I'm glad my wife and I aren't running a restaurant for our livelihood, to put our kids through school, to pay the mortgage, because, by golly, it's a hard game. But yeah, I think, I think this financial year we might go close to breaking even. Next year we might make a profit. Okay, now I look at it if I can make 10% return on my capital without it being too much trouble. Yeah, I have a lot of fun out of I have dinners and organizing. You know, I've got a farming business. So we do meat things there, do wine things there, do all sorts of things. And so be I'm an entrepreneur. I love starting things up and learning Mike:  47:28 Important point, isn't it that that that idea, and in some ways that's a lifestyle. I mean, you it's a lifestyle choice. And you know, I'll do that, but you make a great point. I mean, if you were having to live out of it back in the day, when they're putting the kids through school and god knows what else, that's another ball game, isn't it? Yeah, yeah. And certainly that that pandemic. I mean, there was a few things that took a wallet. I mean, the airlines can't even believe I mean, Virgin had a billion dollars in cash on their balance sheet in that February or March, because we had a look at them, yeah, we were going to buy some stock, and then they were broke within four months, yeah? And the restaurants, bless them, yeah? Tom Hardwick  48:11 Well, yeah, I was the government bailed out a lot of sectors Mike:  48:14 Without a doubt, like, I mean, that was the, you know, that that was extremely helpful entirely, wasn't it? Tom Hardwick  48:22 but I was lucky enough that I could just shut the doors. We had a small farm in the kangaroo Valley. We just went down there and sort of went to hibernation for a couple of months. And, you know, wasn't great for the staff, but we couldn't. We weren't set up to do takeaway or whatever. And luckily, the staff got the job keeper, and, yeah, yeah. We all sort of battled through and came out the other side. Mike:  48:43 So when did you step down from Guardian? Then what? Tom Hardwick  48:47 Yeah, I can't even probably remember. It was 2017 I think the end of 2017 so I think 2018 was my first year of being okay, completely free. Mike:  48:57 so you then started coogie capital in 2021 so what was the genesis of that? Well, what were you thinking about that? What got that? It was, that's a reasonable undertaking, that isn't it? Yeah, it was, obviously, it's not like a wine bar, is Tom Hardwick  49:15 No, no, no, it's, it's, it's a different kettle of fish, right? So you know a good mate of mine, Dave baxby, who had just finished up working at Wesfarmers, yeah, who's the CEO of their industrial business. And it was just before covid, and we were just sort of starting to mull around what it is we might do. And we were just sort of thinking what and in essence, it was, as a company founder, is there a better way of growing your business than relying on a private equity fund? And that sort of was the genesis of what led to, what could you and so, what could you capital is today, what we eventually. Set up was a business that says, We think in the space of businesses worth 50 million to $200 million there's not a lot of capital in there. And private equity firms start there, but as they get successful and grow their fund size becomes bigger, and they need to write bigger checks. And so they leave that space, you know, 5v being a perfect example. Great PE fund that started there, but it as it's got bigger, it's grown out of it. So we, we thought in that space, or an ideal world, would be someone who's, you know, maybe late 40s, 50s, grown a great business, thinking about maybe an exit down the track, maybe get a little bit of money off the table. But also, hey, I need a bit of help to grow my business. And you know, if it was a business that Dave and I thought, hey, this would be something interesting to lean into, maybe put a bit of our own money in. Well, why don't we put the hat out and raise a bit of money, and, and, and sort of have this concept of private equity, yeah, and so, so that was sort of what we were thinking. And then Harris farm came on the market here, and we sort of had some connections with the Harris family through YPO and and then we sort of had an just through a little network, we put in a bid, and we we took that through pretty close to completion, and we just missed out there, which but it proved that we had something. And then the next year, we bought a medical business where this, this was a founder in his late 50s, build a successful business. Wanted to bring it to the East Coast. It was a West Australian business, so he was looking for a bit of help with connections, relationships, etc. He also was a plastic surgeon rather than a professional manager of a business. So as the business got bigger, the management of it got more complex. And so he was looking for, really a partner to help him scale his business and any I was keen to maybe take a bit of money off the table, to de risk, and so we partnered with with Han, and it was a 5050, transaction, which I think, I think it's been good because, you know, like in any relationship, there are a few moments when it gets tricky. And if you've got control, the easiest thing to do is pull the trigger. But when you're 5050 you can't do that. You got to work through the issues. And as you know, if you work through to try to get to that consensus, you tend to get a better answer anyway, yeah. So it's a 5050 deal, and, you know, and now we've got two clinics in Brisbane. We've just bought a business in Melbourne, and, you know, we couldn't have done that without, you know, being together with each other. So that was, I think that's a very good example of what we're trying to do at Christian capital. And then last year, we bought a business that was a bit different. It had a senior partner and a junior partner. The senior partner was 76 and wanted to, you know, retire. I don't think he really wanted to retire, but his brother had a heart attack the year before, and his wife said to him, it's time to retire. So and so we bought out. We bought that business. The junior partner stayed in, and we have then invested the capital to grow it. Because, you know, when you're 76 you don't want to put a lot more money back into being. You want to take it out. Whereas that was frustrating the management team, who saw a lot of growth opportunity. So we bought that business and really backed the junior partners vision by putting a bit more capital in and creating, it's a higher business. So it needed more product to lease out and so, and that's been, you know, a great success, really, like, huge growth in profit very quickly. You know, growing in Queensland just opened in New South Wales last month. So, so that there was sort of backing someone's growth plan Mike:  53:54 So what's the end game for the typically private sounds to me like it's sort of flexible private equity, almost like private capital Tom Hardwick  54:01 yeah. Both of those deals, we raised about $30 million of equity to plus the other debt refinancing. Now, in a perfect world, it'd be lovely to have a $200 million fund, right? That makes you effectively have a balance sheet. You're very competitive in processes, etc. However, when you have a fund, it sort of burns a bit of burns a bit of a hole in your pocket. And to what extent are you forced to do transactions  Yep, something that we like. But, you know, you spoke before about, why the hell would you do private equity as a business? Because, you know, you find something, you spend a few months getting to know each other, you know, putting a term sheet together, and then. So okay, well, we've got to raise the money, but we need to do formal due diligence. And so yeah, you're out putting, you know, half a million bucks of your own money on the line to, you know, get all the boxes ticked, etc, hoping that you can raise the capital at the at the end of that process. So yeah, it's a bit of a chicken and an egg. But. But I think, I think it's, it's a good model, because it's a transit it's one business, you can tell, you know, certain people like industrial businesses, certain people like this. So, you know, they get to invest in what they like. And look, I think we'll do this for a while, and if, you know, we have a get a few runs on the board, and build the team up a bit, etc. Well, yeah, maybe we might be in a position a few years to raise a fund, but Mike:  55:23 so the kind of growth plays, really, you're looking for growth, organic growth, largely. I mean, you'll do a bit of acquisition, like you do with the medical, yeah, Tom Hardwick  55:31 yeah, we'll do acquisition, but yeah, so it's just finding good businesses that we like, yeah. We got to, you know, we don't really do sort of early stage technology, your property, mining, lots of stuff. It's more just, you know, good businesses that seem to make sense, good founders who are still passionate about what they want to do, and yeah, who are looking, yeah, looking for some people with a bit of gray hair and a bit of experience to help them. I found when I was running guardian, it's, you know, it's lonely at the top right. You have a lot of issues you have to deal with, and that's where I found Mike:  56:06 It's interesting, because, I mean, private equity aren't necessarily that helpful at that stuff, no? And they're great at finance. They're financial engineers, really Tom Hardwick  56:14 Now there is certain within that broader context, yes, there are some people who've probably grown some, you know, properly grown a business rather than just engineer Mike:  56:24 But they're fairly unique there. Yeah, you know, more typically, you're dealing with, I mean, the bright guys and stuff. We deal with them all the time, but, yeah, but we, we generally, they're not, they're not that helpful to a founder who's wrestling with operational and organizational stuff, yeah, yeah, but, but, but, you know, as you said, you know, in terms of what they are, I mean, they're good at what they do, yeah, yeah, no. And what they do is provide capital, yeah? Tom Hardwick  56:56 sort of turbocharged businesses, in a sense, right? They, know how to grow a business and think about how to create real value. Yeah? And yeah, I, I've made more money than I than any other stage in my life working with private equity. So So parts of it are frustrated. It's the discipline. Mike:  57:14 They're very disciplined, and they're quite rigorous. Yeah, absolutely. Whereas as an owner, you own all the stock, you can kind of do what you want, really, you can get you can lack focus. I mean, you know, no doubt, Tom Hardwick  57:29 I think it's important for a founder that you need a network of people around you that that are outside of the business, that's a safe space for you to go and, you know, unload your deepest thoughts and troubles and and just get that help, etc. And, you know, yeah, I think boards and in private equity firms aren't the place to do Mike:  57:51 No, it's interesting. I got most of my schooling from non execs really that, so they weren't private equity people. I mean, the first guy was sort of private capital. Put some money in years ago in England, into my first but the what I got out of it was just the coach, and every month I had to turn up and tell him what, what happened, yeah, yeah. Whereas, you know, without that, I just kind of just carried on, Tom Hardwick  58:14 That, that accountability of it is, yeah, that process of, you know, a board report and a meeting. Yeah, it is, it is important to get that, yeah, institutionalized. The other thing I did, well, I didn't, I didn't do career counseling. I did, I did a bit of, sort of, it was sort of like CEO counseling with a friend of mine who was a, you know, organizational psychologist. And, okay, it was just as a CEO, you know, you're the smartest guy in the room, but you're trying to build a leadership team, and you need to learn to empower them. And you know, you need to think about, sort of your EQ and sort of how you present yourself. And you know, you can get a bit frustrated at times. Yeah. So I started to do a little bit of work there in the last sort of two years of guardian, just to, you know, try to, you know, there's a point you can run a business, and you can force it through the funnel with sheer force of will, yeah. But at some point it gets big enough with an out, enough outside people that you need to sort of make that transition of, yeah, inspiring them to get it there, rather than you forcing at the end. Mike:  59:22 And it's not easy to do that, is it? We're kind of, I'm on that journey. I've been on that journey for the last 10 years, really, which is, you know, how do you, how do you bring people through and and not express your frustration? But You've almost got to slow down to speed up, really, because you don't get the buy in, yes, unless you slow down and you get everybody, everybody feels I've been heard. And you you're actually clear about what it you know, I'll leave, leave a meeting. You know, I used to leave a meeting. Think everything was so a week later, no one's done a bloody thing. Tom Hardwick  59:57 So it was clear we're going to do this. For that, or they go out of the meeting and one says, Oh, this is what He wants us to do. And then the other says, This isn't what it I mean, it's Mike:  1:00:06 It's an interesting area. I mean, I'm sure that, you know, I'm sure that you'll do fine, no doubt about that. But first, for context, there's a million businesses in Australia that employ people, yeah, 0.4 million, according to abs, but most of them are trusts and non operating. And of those million, about 75 depending who you listen to. But 75 a minimum of 75% of them employ up to four people. So they're kind of micro businesses. There's probably a couple 100,000 the mid market that employ between sort of five and 200 Yep. And that's the kind of place where we kind of play. And there's only 3400 that employ above 200 and we think there's probably only 1000 of those that are serial acquirers, yeah, so you've so you've actually only got 1000 now, there's a bunch of guys overseas, but there's definitely, that's what's going you've got 20% of that market. Yeah, it'll baby boomers. They're age 60, right? That's right, yep. So in the next 15 years you've got, they're all gonna have to retire, and it's gonna need some creativity, and the free market is gonna have to start to fill the gap. Yeah? And I think we are seeing private equity get more flexible, yeah, we call it a splintering. We're seeing a splintering. They're starting to do, buy, hold. They never used to do that. Yeah, they're starting to do, you know, 1 million. You know, it used to be 3 million to have a conversation now, well, 1 million, EBITDA, you know, yeah. And I think that because there's lots of good assets there. Oh, yeah, you know, you know, businesses that have taken owners have taken 4050, years building the damn things? Tom Hardwick  1:01:43 Some of them are a bit, sort of tucked away in factories and warehouses the back of Dan new places, right? So they're not sexy business Mike:  1:01:52 and some of them are doing world class so far, I visited a few years ago. I mean, we're big in manufacturing, but I visited a guy up in Newcastle who was making submersible compression chambers for the US Navy. He'd made 150 of them, yeah. And he's got this kind of shedding. And on his desk, he's got a letter from the head of the US Navy saying, what an important strategic he couldn't even get a meeting with the Aussie Defense Force. Yeah, yeah. But so, you know, it's like, is this a shed in Newcastle supplying, and we're seeing a lot of that niche, you know, world class stuff going on, yeah, the whole mass manufacturing that's gone, yeah. But that niche manufacturer, Tom Hardwick  1:02:35 There's a book, was it? Is it called Small Giants? Or, you know about these companies that just focus on one thing, yeah, and they just become experts at it around the world. And, you know, it's so I wish I had brought it, but I saw a slide out of a JP Morgan investing event investment deck recently, and it said that the best returns out of private equity were sort of coming out of the sub $200 million you know, growth, early stage growth companies, right? Because my experience at guarding was the same. It's much easier to make three times your money, going from 10 million of earnings to 20 million of earnings, even up to 40 or 50 million C then when you start to get bigger, then all of a sudden there's a lot more overhead, a lot more in all the governance, and it gets harder to move the dial because you're further away from the coalface. And so, you know, there is, I think it's a really interesting space, and there's a lot of great businesses there. As you say, they are going to come out as as we go through. And you know, not all families, not the kids, don't always want to take over the parents business. Mike:  1:03:38 Well, I mean, rarely do they, that's the problem, yeah? I mean, they're all, they've all become, you know, I mean, the baby boomers, kids are all got degrees, and then they're working from home, or working at their farms or holiday houses, their lawyers, you know, they're like, What do I want to do that for? You know, widgets, yeah. So look, that's been a great discussion. I'm very grateful Tom Look, just a few questions, right? Sure. So who were you, who were the kind of mentors, and what would your advice be around getting hold of a mentor for someone who's thinking of following you on that kind of journey? Tom Hardwick  1:04:10 I had two mentors that were just natural mentors, because I work for them, and I really learned to respect them. One was a guy called John Denton, who was like a senior associate when I first started at cause, he ultimately became part he was the managing partner of cause for probably 10 years. So John was a really great part of my early career. Then I think Frank Wolf at abacus. I when I was investment banking, we floated abacus, so I banked him for two years, and then worked with him for four years, one of the most astute property investors going around. And what I loved about Frank was he always looked at an asset to say, What's in this asset? That means I'm going to preserve my capital. He wouldn't go and buy the tax office building in Parramatta on a 20 year lease at 5% yield because he knew if interest rates were. Up cap rates up, he'd lose capital. He was looking for something had a bit of vacancy or a bit of underappreciated land value there. And so he was a hard taskmaster, but a really great mentor. So they, I think, were the two great, what I'd call career mentors, and then the other two were, I've got an uncle who is started big meat business in Victoria, very entrepreneurial, and so he was sort of a great influence on my early life, and to this day, we're still good mates, and I'm great mates with his five boys, crazy entrepreneurs. And yeah, and then it's Mike:  1:05:32 It's amazing how much we get in our upbringing from watching, isn't it, yeah? Tom Hardwick  1:05:36 Just, I just say, with my kids, it's sort of through this osmosis of Yeah, around it. Mike:  1:05:42 My granddad was went into business, and I was kind of working class from the Midlands, and no one I knew. You know, they all had jobs. But my granddad was sold cars, very successful. This was in the 50s and 60s where there was a lot of cars to sell. And I always remember thinking, What a great way to, you know, what a great what a great way to seem so much better to me than clocking on and clocking off. And, yeah, and he always seemed exciting, yeah, and, and I've loved sales really right from that, yeah, but, but no one told me about it. No one said he's an entrepreneur, yeah, the word entrepreneur, but we couldn't even spell it in our story Tom Hardwick  1:06:26 was, you know, you attracted to that way of working, or the lifestyle or the your personality suits yourself, so you do sort of, that's why you say, you know, I employed a lot of people at Guardian that didn't work out. You know, one of the, yeah, one key to being a great CEO is how many bad hires you make and often you had to let them go, and they thought it was a, you know, some big problem or slight and I was like, I'm actually doing you a favor, because you're coming to work, you're in a routine, you're not happy. You need to go and find the thing that, you know Mike:  1:07:02 I've done that a lot. I mean, I had my first mentor, you know, we had to make a load of people redundant in 1990 right around that recession. And the guy that was helping me was like, I'm thinking, You know what, what are they going to do? He's like, Get over yourself. They're going to be fine. And they were, yeah, you know, variably, they went on, found something better, you know, he said, he said, You're not God mate. It's just a job. Tom Hardwick  1:07:27 And they could take, you know, some kids come out of uni and they kind of know what they're doing, and bang, off they go. Others, you know, float around for 10 or 15 years time Mike:  1:07:37 what about a book? Can you recommend a book does anything you've read strike you that made a difference. Tom Hardwick  1:07:43 I really like,  there's a guy in the US called Vern Harnish, and he has a methodology called habits. And I thought that was, I like his work. I've spent time at one of his boot camps, you know, I like his books. And, you know, we bought him the one page strategic, Yeah, isn't that great? I just, and we've now, with our businesses, say this is the methodology we want the businesses to use. So while I've read, you know, a lot of great books, and, you know, I love the Steve Jobs book was a fantastic book. The Elon Musk books recently is pretty interesting. But I think for an entrepreneur, sort of grappling with this concept of, how do I systemize my business as it gets a bit bigger? And yeah, I think that Fern harness methodology is fantastic. Mike:  1:08:23 We love that strategy on a page. I mean, we get all our clients, you know, getting involved in that, because there's just nothing. It's that ability to simplify something that's essentially quite complex, yeah, so that everyone can kind of get hold of it. Tom Hardwick  1:08:36 Yeah, that's right. No, I think you've got your business is complicated. You need to be able to strip it back to the key, you know, tenants, Mike:  1:08:43 yeah. And then, what about your favorite place in the world? Is it Coogee or somewhere else? Tom Hardwick  1:08:50 Look, I do love riding around Provence, right? I think Provence is fantastic for a place to go for holiday with your bike and cruise around. Yeah, there's lots of great places in Italy and the wine as well. Good wine, yeah, but Provence is our sort of Mike:  1:09:05 Okay, that's you kind of go to you and your wife, yeah, you've been married a long time, right? Yeah, I heard you, you, you got you got together when you were 16 or 17. Tom Hardwick  1:09:15 We met at a guy we met at a rock on a school bus trip. I was in year 12, and Michelle was in year 11. Is that right? Then? In year 11 together ever since, three kids. And, you know, we've had, we've had a great run of it, you know, we've had, you know, Michelle's parents passed away the last couple of years. Michelle's had breast cancer this year. But, yeah, thankfully that it was a minor version of and the science and medicine. So we sort of just getting, you know, had a few more bumps in the road, that's, you know, but when you've got that strong Mike:  1:09:46 I've been married the six, seven years now, and five kids and yeah, I mean, it was best days work in my life, to be honest with you. So what about, What about entrepreneurs? Are they born, or are they or can we make them? Tom Hardwick  1:10:08 I think, I think you can make them okay, yeah, I I think anyone can be an entrepreneur. I think, you know, yes, you have to work hard, etc. I think the biggest thing is having the courage to believe in yourself, to give up the security of a job while you've still got a mortgage and kids at school. And, you know, I think there are some people who love corporate life. Yeah, I suspect most people probably at some point in their lives would like to do their own thing, to have the freedom of doing your own thing, to have, you know, something they're really passionate about, to drive, you know, what they do each day. And, you know, read some books, go and do some courses. You know, go and join YPO and meet some other entrepreneurs and and through that process, you know, you build a community around you and you're into it. Mike:  1:11:08 amazing, I mean it. You know that idea that you know, if we can coach and train and encourage entrepreneurs, how can we perhaps do more of it? Because I think the world's going to need more more of that creativity, to be honest. I think that, you know, we've seen now the biggest five companies in the world at the moment, all tech companies that weren't around four years ago. Yeah. So, you know, we're seeing a kind of paradigm shift in the way things can happen. Tom Hardwick  1:11:37 But I look at my kids and their mates, etc, like I think this generation is different to ours, Mike:  1:11:44 less willing to go the corporate route. Tom Hardwick  1:11:46 When we finished school, it was okay, you should go to uni and then you should get a good job at a big company, yeah, and I still think that is a very good path for anyone. I look back at those first three or four years of my career at cause I still miss that environment and what I learned about life, not just law, but about life. I just think it was such a valuable part of my life. I said to all my kids, I think you should try and go and work in a big company your first job. Easy to go from big company to small company. Hard to go from a small company to a big company, and give it a go. If you last, said, two years, if you last there five years, you last year, 10 years, fantastic. But, and, and so I think, if you can, I think it's a good way to go, but, but a lot of these kids, man, they just come out. They're working on business plans for startups. They're, you know, freelancing and different things. They're working from home. They're working from home. They're working for their company. They're doing other stuff on the side Mike:  1:12:44 I think there's more freedom there, where they got access to information. Yeah, I left school and you want to, you're they went to they the universities were the gatekeepers of knowledge. Yes, only 80% kids in my year went to uni. Yeah, right. So the the issue in I had to go to the library. Tom Hardwick  1:12:59 Yeah it's right, no, it's you had to do the micro fish to find anything and like it was, yeah, we say, like dinosaurs Mike:  1:13:07 A lot happened in the last four years. Yeah. I mean, when I started in business, even there was no omputers. I remember the first time we got a computer. We bought it from ultra and football club because they didn't know what to do with it. And we stuck it on a desk. And then Tony, in account seemed to know more than anyone else. So we made him, we made him in charge of the computer. Tom Hardwick  1:13:25 Well, I I think when we first started commerce at uni, we were doing lotus, 123, and then I think by about second or third year, they'd migrated to excel, amazing. And then when I started a cause, we had the Wang computer system and dinosaurs. Yeah, what's happening? Mike:  1:13:45 Tom fantastic discussion. Thanks for coming in today and sharing your your story, which I'm sure many people get a lot from. So thanks again. Thanks for coming in. Tom Hardwick  1:13:55 Nice to meet you, and thanks for having me. Mike:  1:13:57 Okay, thanks. Thanks, Michael. Well, there you have it. What a journey. How encouraging to learn what can happen if you back yourself. Tom is clearly a troubleshooter, able to navigate change and risk. If you want to learn more about Tom's company, Coogee Capital, the details will be in the show notes. Now. A quick shout out to our sponsors, Oasis partners, if you are thinking about how best to exit your business, contact Don Hunton at Oasis, with 500 successful deals done since 1984 Don and the team know a thing or two about unlocking value. If you like this podcast, be sure to share it. Or if you're feeling very generous, leave a like or a comment. Only good ones, please. As you know, we're very sensitive, so until next time, stay safe. Link to previous episodes: https://www.oasispartners.com.au/podcast/  ]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo #startup full 24 2 Tom https://www.linkedin.com/in/tom-hardwick-2aa81943/?originalSubdomain=au Tom started his professional life as a lawyer with Corrs Chambers Westgarth, before moving into investment banking in Sydney with Burdett Buckeridge Young and Paterson Ord Minnett. Tom then joined Abacus Property Group as Director of Funds Management, before leaving to become CEO of Guardian Early Learning Group, a childcare business he co-founded in 2004. During his eight years with Guardian, Tom grew it into a $500m+ business with more than 100 locations across Australia, employing 3000 staff to care for and educate more than 15,000 children each week. The business sourced its initial capital from a public company investor and then moved through three rounds of private equity, partnered by a number of banking syndicates. Tom serves on the Board of Directors of RediMed, TA Fields & Sons and Aplant Hire & Lite Industries. Points of Interest Investment banking challenges 15:10 Transition to Guardian Early Learning Group 16:35 Strategy and Private Equity 19:23 Career Psychologist 45:11 Tom’s Wine Bar Venture 46:36 Transition from Guardian 48:43 Starting Coogee Capital 49:15 Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike:  00:00 Mike, welcome to the troubleshooters podcast with me. Your host, Mike McGrath, now Today's guest has a fascinating story. Tom Hardwick, initially practiced law before moving into investment banking. Eventually, his entrepreneurial itch needed scratching. He jumped from the corporate ship to start his own childcare business, eventually building it to 500 million in revenue through three rounds of private equity employing 3000 staff. Tom epitomizes the have a go spirit needed to succeed in business. So sit back as I drill into Tom’s story. Tom Hardwick, welcome to the troubleshooters podcast. Tom Hardwick  00:47 Thanks Great to be here. Mike:  00:49 Our CEO, Don Hunton at Oasis, connected us, so I'm very glad he did. You're the founder of Coogee capital, and you're effectively running your own sort of equity fund with a partner of yours at the moment, right? But let's get to that, but, but let's go back a bit. So Yahoo from Victoria, yes, yeah. And I understand mom was a teacher and dad was a suburban accountant, yes. So tell us a bit about your upbringing. Tom Hardwick  01:19 Oh, look, I grew up in a nice family environment in suburban Melbourne, a place called Essendon, and later in life, I did some career sort of counseling when I was contemplating whether to stay in the law firm or not. And one of the things I learned from that is I actually grew up in a reasonably entrepreneurial family in terms of uncles and grandfathers, etc. And you know, you don't really think about what shapes your life too much, but that was quite a pivotal moment in my life that counseling around Do you stay in professional services, or do you back yourself into something that eventually will lead to this entrepreneurial endeavor? And so looking back on our life and sort of how we grew up, you know, it was a reasonably entrepreneurial family, you know, some accountants, some butchers and funeral directors, etc. And so, you know, went to local Catholic boys school, and then, lucky enough, got into Melbourne Uni, did law commerce there, and I sort of quite liked the business and accounting side more than the legal side, but I thought if I've done a law degree, I should at least go and practice it. So I was lucky enough to get a job at cause chambers Westgarth did did a few years there. Then I won this Fulbright scholarship to go to the US, and it was really to study workplace relations and how restructuring was taking place, as in unionized workplaces, as opposed to non unionized and so I spent as part of a year in the US. Mike:  02:48 So when was that? What year was that? It was probably 2006 Tom Hardwick  02:53 Sorry 96 and 97 was then, and which was, yeah, I was a great experience. I worked for a consulting firm for a few months. I traveled around the country for three months and visited, you know, the nabiscos and sat and motor companies, all those things, and then came back to Australia to stay in the US. Oh, it was, yeah, it was, it was pretty tempting. But the group we were working with in the US wanted to set up in Australia in partnership with cause, and so we basically took what we learned in the US and came back and set it up in Australia. And I did that for a few years. So it was good because I was getting a bit tired of the legal side, and so I did this consulting work, and that was good fun, but it was very much in the weeds of implementing organizational change, which you need to be that actually get stuff done. McKinsey's provide a nice report, but someone's actually got to make it happen. But I got a bit sick of that after a while, and then so went back to the law and then it was like, Oh, gee, I don't know if I want to be a partner in a law firm for the rest of my days. And that was this sort of moment of getting a bit of help to think about where to, where to with my career. Mike:  04:02 Yeah, I understand that you consulted a career psychologist. So before we get into that, because I'm very interested in that, I think, I think that's an area that's so underdone career advice. Yeah, like, I just can't even believe it. I most of people I speak to, they're just stumbling through, you know, trying to make it up as they go along. And I think that sounded like a very useful intervention for you at that point, quite enlightened. I think to think like that. Who suggested it to you? Tom Hardwick  04:29 I had a mate who was doing, you know, recruitment, and what's the word when they do outplacement, okay? And I was just talking to him one night. He said, Look, there's this, there's this woman who who specializes in this work. Once you think about having a chat to her, and it was, you know, she interviewed, interviewed me for a few hours, did the whole family history, then did a whole batter of tests around, what do you like? What are your strengths, etc. And at the time it was, look, you're very good technically. As a lawyer, you sort of quite clear on your communication. Mission. But if you want to be an entrepreneur, you know, in when your 40s or 50s be investing in companies or running something, etc, you probably need to work on your persuasion skills. You need to maybe show a bit more emotion and passion. And you know, there's one or two other things, but just a couple of things. And then out of that, I got the opportunity to come to Sydney and working invest investment banking with BBY, and that's where you learn the art of persuasion, when, you know, basically, you you eat what you kill, and you've got to go and convince people to invest in companies, etc. And so that for me, that sort of couple of years in investment banking was a great opportunity to, you know, broaden the skill set. Mike:  05:41 I mean that, let's come on to investment banking, because she did that for quite, quite a while, didn't you? Tom Hardwick  05:47 Yeah, you had a couple of stints at BBY and then Patterson, yeah Mike:  05:52 When you when you finished it, you know, when you finished at uni. So that was, what was that? Tom Hardwick  05:57 91 I think I started work in 1992 okay, because an article Clark Mike:  06:04 That's interesting. So that was, I mean, I was in business at that stage. I'm quite a bit older than you, but that 1990 that was a huge I mean, in the UK, I'm sure it was not dissimilar here, but we had a massive credit squeeze on, yeah, so we kind of ran headlong it. I didn't know what a recession was. I started my first company in 1987 and I've been at it for three years, and the banks are, all, you know, throwing money at us, and we were expanding and and then, and then I got schooled in those two years 1992 where I started to understand what recession was and what credit Squeeze was. And I really learned more in that too. In fact, everything I've done since then has really been grounded out of those two years of utter pain. Yeah, Tom Hardwick  06:47 I was probably, you know, like the year before I started. And, you know, the law firms make these commitments. A year or two out there was probably, like 25 people who started our year. There was eight. And that was a consequence of that, consequence of that. Yeah, and, and I was probably a bit green at the time to really appreciate what was going on. I think there were two of those moments in my life where, when I left the law firm, I went and joined a client who was building a supply chain business, yes. And the day I started, the accountant resigned. And then that lesson in life, you ever joined a business and the accountant resigns? Be wary anyway, that business went broke within 12 months, and that, in some ways, was my MBA, working in a business that you had to lay 350 people off. It went into administration. Seeing all the problems across security create like seeing a business at the messy end of it really teaches a lot about how to set it up. Yeah. So that, for me was one of those, you know, moments where you learn a lot in life. And then probably the other was when I was at abacus, when the GFC hit, and, you know, the Property Groups, yeah, we were pretty levered, and that were pretty hairy times. Mike:  07:57 It's interesting. I left school in 1980 right? And there was a, you know, a recession on unemployment was 10% this, this is in the UK now, and, but unemployment 18 to 24 was, like, 20% that was so corrosive, yeah, like, you know, people just didn't think they were going to get jobs. And, and that was not good. We don't want unemployment at those levels, that's not good for society. But so I left school in that environment where, okay, you know, what am I going to do? How do you get a job? And jobs are very difficult to come by. And then, and then the economy began to pick up. Thatcher got in, and the UK started to fix some of its kind of Industrial Relations problems, and and, and then, and then the banks. We had Reaganomics at the time. So you had the whole trickle down effect. Reagan was had bought into the whole, you know, economic paradigm, you know, less government, less regulation, the markets going to fix it. And so you had this kind of, you know, rapid, you know, money became easy to get and stuff and and then we ran into 1990 Yeah, so that's, that's a decade later. And then, to your point, a decade after that, we've got the tech bubble. Yes, that's right. And then a decade after that, we got the GFC, and then we had and then we had covid, yeah? So every decade we've got some kind of, some something, something's gonna, somebody's gonna come along. We don't know what it is, but that's true. But typically, yeah, you wouldn't have thought Tom Hardwick  09:32 No one really saw the GFC coming, but for a few smart hedge fund managers, exactly. And no one saw covid Coming, like, Who would have thought the world would be shut down and locked down, right? Mike:  09:40 So, so tell us. So you did that 12 months without business, and you got, you got a school there, really, in terms of what? And then you went back to law right after that, yep, Tom Hardwick  09:52 No, sorry. When I came back from the States, I did the consulting, okay, then went back into law when I got bought. But a year later, I was like, you know. Up. I don't think this is for me. Okay, jumped out with the client that failed. Came to Sydney and joined BBY Okay, once again in the aftermath of the tech wreck, okay? And the institutional desks used to laugh, because you'd have the trophy cabinet with all of the, you know, the plaques for the capital raising, yes. And the insto desk, whose clients had obviously lost money on all these corporate transactions. Call it the wall of shame. And here I was some industrial relations lawyer starting investment banking, you know, trying to get some sort of support for some corporate deals. Yeah. So here we are. It was a tough time in those, you know, 2001 2002 investment banking, the third, first company I raised money for was a Toronto listed uranium miner that had a uranium mine in South Australia, the honeymoon uranium mine. And I raised two and a half million dollars, and I earned a bit of kudos in the investment bank for that and Oasis history. Mike:  10:52 So you began to kind of develop those hustle skills, I presume, at that point, how to get a deal done, how to, you know, persuade people, yeah, that this was a good idea, yeah? Tom Hardwick  11:03 Also the financial skills, right? Because lawyers, yeah, okay, yeah, I was good at numbers and good at maths and good at Commerce, but I hadn't really practiced, okay, but yeah, you need to know about numbers and how to, you know, value a company, yeah, model it and all that stuff. Mike:  11:15 But your Dad was an accountant, so was some of that, did some of that rub off Tom Hardwick  11:21 I liked numbers. And, you know, when I was at uni, I used to go up, I used to catch the tram up Sydney road to go and work in his office. My my dad was, you know, Dennis donuto was my dad, but he was an accountant, not the lawyer of Dennis donuto. So brown suits slamming photocopies worked up above a pharmacy on Sydney road. So the similarities are scary. Mike:  11:41 It's interesting you refer to him as a suburban accountant, and it's interesting that, because that was the I had to learn that the hard way, I thought an accountant was a counselor. Yeah, it's like saying a soldier is a soldier, right? So I hired accountant back in the day, did a terrible job, but I thought an accountant was a counselor. Yeah, exactly. That's right, you know, little did I know. So, so, so you, you had, we had a little bit of an aptitude for numbers that was in eight, but that needed developing a bit, yeah, yeah. And so you, the banking career helped with that Tom Hardwick  12:14 it was great. So, yeah, we did two years at BBY, and we just, we just weren't, sort of loving the environment there. So the team moved across to Patterson ordinette, and that had its own challenges working for a Perth based group, yes, in Sydney, okay, but yeah. But what I did is I built the foundations of BBY, and then when I went to Paterson, I just had this sweet spot of and I'd sort of focused on income style products, primarily listed property trusts, the smaller property trusts that the big banks didn't really pay a lot of attention to. And so probably raised four or $500 million over three years at Patterson's, whether from IPOs or placements, etc. And so I built a bit of a franchise in the small property trust space. And then a couple of the big banks noticed it, and said, Hey, why don't you come and join us? And it was sort of tempting to go into the big investment bank space, but I just, I'm not someone for, like, corporate politics and, you know, the big and I had it at cause, yeah. And so I went and, you know, spoke to one of my mentors at the time, Frank Wolf, who was running abacus, where he founded abacus, and said, Frank, look, I'm at this crossroads. Here's where I am. He says, Tom, why don't you come and work for us? You'd be great, sort of, looking after our funds management, business and investor relations. And you know, it's one of those things. You know, the great jobs you get in your life you don't normally apply to or to an ad or a recruiter. You sort of, it's through your networks and, you know, discussions and, and so out of that, you know, I went and joined abacus and, yeah, it was a great two years pre GFC, you know, building their funds platform and buying some assets, and syndicating is Mike:  13:55 again, that there was a movement. Was a bubble. Yeah, it was a bubble. But, yeah, but there was, you know, I remember the guys in London that at Oasis were saying selling a business like shooting fish in a barrel. Yeah, yeah. Boy, did it change, yeah. He never gone back, actually, no. Tom Hardwick  14:11 It was interesting. We were so we went to Macquarie had this Global Road Show. So he went to London for a few days in the New York, and they got all these investors to hear the stories of these Australian property trusts. Yeah. And when we're there, a few people in London were saying, Oh, are you in the US? They're saying, Are you having trouble accessing debt yet? And say, no, what are you talking about? It's all fine in Australia. And they were just seeing the start of the crash. And then, you know, a couple of months later, Centro couldn't get its debt refinanced in the US and bang, it just, well, changed That was probably one of the scary times, being in a business that big, with you only had 2 billion of assets, and going, geez, where's the cash gone? And, you know, the banks want us to deliver. And, you know, I was, that was pretty hairy. Mike:  14:59 Who were the guys who. Investment Banking that were helping you. Like, was it? Was it sink or swim you or, in fact, you know, were you taken under anybody's wing? Tom Hardwick  15:10 It was so tough the investment banks were, you know, they were really focusing on the big guys. Frank, basically got an introduction to a very wealthy man in South Africa, left Australia on Christmas Eve, went and spent Christmas day with him in South Africa, and within 24 hours, basically negotiated an underwritten rights issue to, you know, restore abacus balance sheet. And, you know, basically Frank and Nate. He did it themselves, and then they bought him one of the investment banks to wrap it up a little bit, right? But no, it was Frank. Frank had to go and save his his company. And yeah, it was a public company with a board. And yeah, so the little guys were the least, the last to get any love. But you know, he got off his backside and he sold. And yes, Mike:  15:56 yeah, no, look, that was a, that was a unique time in finance, wasn't I mean, what was emerging of private equity, which wasn't a lot in Australia at that point, it was very small. That just disappeared, yeah, overnight. They kind of ran for the hills. Yeah, banks started get out of the investments had made. Yeah, it was. And, funnily enough, we just started in Australia at that point, yeah. Okay, so, you know, we had two years in nothing, yeah. And so we had to get fairly creative, trust me, so that's interesting. You you enjoyed that that time in investment banking, you were with abacus, and so you'd been in there for best part of a decade Tom Hardwick  16:35 sort of five or six years investment banking, four years at abacus, yeah. Mike:  16:39 you'd had maybe the best part of eight or nine years in law, yep, so, so at that stage, we've got, we've got to, you know, some skills emerging, haven't we? Yeah, it was, Tom Hardwick  16:51 I think, when I look back at the success of guardian, it was this sort of breadth of experiences over 20 years that I felt gave me a very good platform to be a CEO, yes. And, but it did take a bit of courage, right? Because every three or four years I'd get a bit bored, and I tended to jump into things that were quite new, yeah. And, you know, so there's, I had a I remember talking to Greg Paramore, who was one of the great property right? You know CEOs. And he said, Listen, son, just back yourself. You know, if you think it's a good thing, jump off the deep end and have a crack at it. And what's the worst thing can happen? It doesn't work. And like with the logistics business, right? Jumped out of a partnership in a law firm. It failed, but, yeah, it was a good experience, and without that, I wouldn't have got the next opportunity Mike:  17:42 so on that point then, so you kind of, when did you decide that you'd had enough at abacus? Tom Hardwick  17:50 What had happened was we had started building Guardian as a bit of a side project. My wife was in childcare her whole life. Right when we came back from America, we bought our first center in nariwaring. Mike:  18:03 So for those who don't know, and we've got a few international listeners that might not know who who Guardian is. So for those two listeners, tell us what Guardian is Tom Hardwick  18:16 So Guardian early learning group was a childcare business that we built basically started from scratch in about 2004 that, you know, I eventually joined full time in 2010 abacus into that and I'll tell that story. And then over those years, from 2010 we essentially up until 2010 we managed other people's assets for a fee. In 2010 we raised private equity to buy some assets that abacus had put together. Mike:  18:49 So these are business assets, not property assets, business assets, yeah, and so they're the Early Learning Centers themselves. They were going concerns, going concern Early Learning Centers, and you were paying a multiple of whatever they were producing. Tom Hardwick  19:00 So in essence, over the eight years I was there, we bought 8080, centers and opened, call it, 30 Greenfield sites, okay? And you know, typically would buy a business for four to six times earnings, okay? And through that journey, raised three rounds of private equity as we got bigger and needed more capital. So that's, that's Guardian, Mike:  19:23 so that they so that move you got into the hot seat effectively, so they asked you to lead at the beginning. So how did you get that gig? Tom Hardwick  19:35 So what happened was, five of five mates said, Hey, why don't we do something in childcare? We faffed around for a few years figuring it out we had one or two centers, you know, crappy little centers. We thought about doing a Greenfield. We decided to get into the management of childcare centers. And so over time, we sort of got to about 40 centers under management. Yeah. Well. One of the five of us was in the childcare space, and so he was running that business, and the other four of us had jobs in Sydney, and we'd meet once a month, etc. Then when I was at abacus, we built this very successful Self Storage portfolio where we owned the Self Storage property as well as the business. And Frank and David said, Hey, Tom, why don't we do something in childcare? So we started off with this view that we could go and buy the property and the operating business, and we would scale that as a property fund. We bought 17 centers, and I sort of led that charge at abacus and raised the money, et cetera. And then what we found is we only had six freeholds and with the business. And then another 11 were just pure leasehold. So it was proving to be a challenge to do proper Yeah, together. And then the GFC hit, okay? And it was like, hang on, we got to tidy up our balance sheet. We're in commercial property. Let's get out of pubs, childcare, student, or any of that ancillary stuff. Just get rid of it. The problem was, in 2009 you couldn't sell assets and get your money back and so, but the largest childcare group in the country, called ABC early learning, which had gone to the US and UK, had gone bust. So quite a lot of private equity firms had looked at it, but said, Oh, look, it's too distressed. But they sort of saw the merit in the space. And so when we were trying to get abacus it's money out of self, out of childcare, we came across a couple of PE firms who were quite interested. And ultimately, Wolseley private equity, a local Sydney group, yes, invested. And what the transaction was, we will buy abacus as centers, not the properties. Abacus can keep the properties and sell them, but we'll buy the businesses and Tom you come and run it and leave abacus and help us grow this business. And so having had two great years at abacus, and then two years post GFC, where life wasn't so much fun. It was like, You know what? This is pretty interesting. Here's an opportunity to be a CEO. Here's an opportunity to build something. And, you know, we were a bit passionate about childcare because of the wife's experience, and we had three of our own senses privately as well. Okay? And so I said, look, let's give it a crack. And so at that point, I it was probably one of the best working moments for a couple of years, because I set up an office in Bronte just next to Iggy's and three blue darks. I'd rock up in my board shorts and thongs, and I could go and have a swim at Bronte during the day. And we worked on the strategy, on the acquisitions, and my partner, Anthony, he was in Queens and running the operations. And, you know, childcare is a very noisy business to run, and so that's sort of how the Guardian Mike:  22:47 so you and I mean, in a way, was a dream ticket for the PE guys, because, you know, their biggest problem is, who's going to run something? Because they generally can't, yeah, and so you, you had the hands on experience, and you got the smarts, you got a legal and financial background by that stage. So, so that kind of makes sense. I mean, just for context, the the child care sector in Australia is worth about 15 billion at least it was in 23 and making about 5% interesting. So not, not hugely profitable on a net profit before tax basis. But you know, your average net profit in Australia, on the million operating comes is about 9.7% Yeah, so reasonable, but not stellar. I see there was a Commission recently looking into it, yeah, because they thought it was a rule, but it's definitely not a rules. Is it? Tom Hardwick  23:35 Look if you're a good private operator, you'll be making 15 to 25% okay, yeah, there's a lot of the Mike:  23:48 The good operators at the top, yeah, it's probably 80/20 isn't it? Tom Hardwick  23:52 Yeah? Like everything, right? It depends on the locations that you are, etc. So it's Yeah, but it's not. It's a very labor intensive industry. Labor's probably 60% Mike:  24:04 60% wages, according to ibis, yeah, and so. Tom Hardwick  24:07 You know, in the last few years, it's really been, where can I find that labor Okay, and the government has quite a high quality agenda for the sector in return for the government funding, because the government funding underpins about 66 65% of the revenue, which is incredibly generous model, yeah. And so when I do, when I see people complain about the cost of childcare, and you know how outrageous it is, like Australia is one of the most generous environments for childcare support, yeah. So it's, it's, it's attractive in that it's underwritten by the federal support, but in return, you need to sign up for a quality program that says, We need these staff ratios. We need to invest in education rather than just babysitting, and that agenda is not easy to implement when it's hard to get the staff and the qualified staff. You. There's a lot of new migrant labor that comes into the country, and childcare is quite a safe environment for those women to work in when their language isn't particularly strong, etc. But finding the right mix of people to deliver on the agenda, it is a challenge. But, yeah, it's a challenge in a lot of sectors right healthcare, Mike:  25:20 So at that point, you, like the sector private equity, have had a look at it, even though it's probably a bit smelly with the old ABC thing. I mean, that was a phenomenon, was it didn't they peak at about 1000 centers, 12,000 centers in Australia. So they ended up with Tom Hardwick  25:38 At the time, there would have been less. So at the time, there was probably five or 6000 centers, okay? The some of those statistics about center numbers include before and after school programs which are not the same as, say, a long daycare, okay, but at the time, and Eddie, Eddie probably had 800 centers in Australia, because he had some in the UK and some in the US, right? And it's the classic example of and I think, and this is why I was never interested in listing guardian. You know, when you're in that listed space, you do a deal, you raise some money, the price goes up, then everyone comes back to you and says, Hey, Eddie, where's your next deal. We've got people want to get into the stock, but, you know, they want a big raising because they're institutional investors and only want to put 10 million to work by million dollars to work, blah, blah, blah, so then he's got pressure to do another deal, and then pressure to do another deal. And you know, there's this whole world of, you know, the public markets, and you know, it does blow a lot of businesses up, because it's all about growth. And Eddie chased the growth and delivered for a while. But you can only buy, you can't buy that many childcare centers. And when the music stops and you see what's really happening. And since Eddie, there's been, you know, GA there's been affinity, there's been numerous listed childcare groups. And it's a lot of same with a lot of these roll ups, right? You go, and anyone can buy a business, like, Oh yeah, it's easy to buy a business much harder to buy that business and then turn it around and make it a better business. And if you're buying 100 a year in a very people intensive business, you can't do Mike:  27:10 Quality is a huge quality issues. Yeah, he just Tom Hardwick  27:14 so he was buying centers that were going backwards by 20 or 30% because they were so focused on the next center they were buying in the next year. No one was really focusing on Mike:  27:24 The kind of retail food Group had a similar problem as well. They just kind of grow, grow, grow, grow, and no one's looking at the fundamentals. Tom Hardwick  27:33 And at Guardian I real. What I really tried to do was say, Mike:  27:38 Had you taken that lesson, you've done that study of that and gone we can't do that. Tom Hardwick  27:45 what, what shapes the strategy that you end up doing. But for, for whatever reason, I felt that you you couldn't buy a lot of centers. And we found we bought 17 centers in that first period of time for our because, and they did go backwards, and they were our first centers. So that was our kind of it was a good lesson. That was our lesson. That was our lesson. It was a university. And after that, I said, we can improve these centers, but it does take careful management. So what, what I used to say to people is I like to buy 10 so for tell hotel hotels every year, not 50 country comfort motors. And we really focused on buying good centers and then making them great centers. And that was, you know, something, maybe 90% occupancy. Let's try and get it to 100% or even 103% occupancy. Once we get it to that point, we can probably push the fees a little bit. We never really focus on cutting costs, because you take costs out of a childcare center, everyone, you know, freaks out because it's about the children, so you're not going to cut food or whatever. And you know, even if it had too much labor, we didn't get rid of those people. But over time, there's always natural turnover. And you know, you might not replace one or two. So we really focused on on the organic growth of what we bought. And I can tell you, when we have you had three rounds of private equity that that ability to prove that you can buy a business and improve its earnings is so valuable, right? Because a lot of business people buy businesses and their earnings flatline, and then they go, Well, I'm going to buy some more, but I need capital, right? And so you just using capital to buy more earnings, whereas if you can grow the earnings. One, that proves your management teams know what they're doing. But two, you can use that accretion in earnings, which grows the value of the business, to help fund, you know, the ongoing expansion of the portfolio, not requiring new capital all the time. And I just think that you know now, when we look by buying businesses, want to help some of the larger PE firms look at buying businesses. They're really looking at, can this business grow organically? And can this management team grow this business organically, without a lot of capital? Mike:  29:50 So you, I mean, that was your opportunity to really express yourself, wasn't it? Yes, and so that. But to give it some context of people who are listening, you grew. That business to 500 million. Yeah, yeah. And What? What? We'll come back to some of the drivers there for you, which you've already said, Really, which was a quality driver. And let's buy 10. Let's make them better. And, and let's not get out of control. And you, you know, you're back to fundamentals, aren't you? You know, what problem are we solving? How we helping people and that that focus on quality? I mean, three rounds of PE isn't easy to do because, you know, they're, they're, they're demanding, so it you've got to produce a return as well. Yeah, and, I mean, I presume your scale helped. As you began to scale, you got some economies, did you? I mean, there isn't great economies in labor, is there? Tom Hardwick  30:45 No I call it. I call it diseconomies of scale, okay? Because yeah, let's say you go and buy a childcare center from a Mar and par operator, yeah. Now the first thing we learned was, if Mar and par are working in the center actively, that's not a good business to buy, because the center manager is not empowered to make any decisions. And when she came into our model without Mar and PA, they're all over it, she couldn't survive, right? So we learned that lesson. So therefore, let's say we buy a center. Well, all of a sudden we had to add payroll tax to the P and L. So that's, you know, when you got 60% of your revenue, there's another 2% of revenue. Mike:  31:26 So payroll tax kicks in above 800,000 when Tom Hardwick  31:30 you're a big group, you know, kicks in then, you know, we needed an area manager to keep an eye on that center. You know, you sort of pay them about 120 100 and probably 150 grand, and they probably capable looking after eight centers plus on cost. So 200 grand divided by there's another 20 or 30 grand that comes out of the P and L, and then everyone would just get a little bit toy when a corporate group bought a Mar and par business. So often they would go backwards five or 10% before you then bought them back out. And so, yeah, when you bought a business, you typically went backwards before you went forward. So you you really had to get on the job and try to bring this, this team, into your vision and your passion, and bring them on a journey. Yeah, and you know, we were, we were generally pretty good at doing that? Mike:  32:22 so that the private equity guys were, were providing the capital. They in return for some equity, yeah, and they so ostensibly that that each time you went for another round, there was a dilution. But the so you guys, as founders, had a had a diminishing percentage, but overall your equity was growing in terms of value. Tom Hardwick  32:48 We had a smaller piece of a bigger part. Okay, okay, now I'd say we had the first private equity group I thought were fantastic, very supportive, yeah, helped sort of shape us a little bit and but we basically spent all their money within the first two and a half years, and they kind of needed an exit, because they were looking at another fund, so they sold out of us. And, yeah, it's not nothing when you know you lose nine to 12 months of your life when you do these transactions. So they are quite distracting. Now they made three times their money, and we got a nice on the uplift on our equity promote, etc. Then the second private equity firm that was a bit more of a difficult working relationship. They wanted to be a lot more involved and a bit more hands on, and a bit more influential on strategy, etc. And I sort of knew what I was doing, and so I sort of pushed back on that, and I probably pushed pretty hard there, and I think that relationship was reasonably fractured by the end. And I think they were Australian based. They've got an office in Australia, but primarily an Asian based P firm, and but, you know, I think they probably thought, Look, this is has gone very well. Tom's a bit difficult to work with. Why don't we take our money and run while we can? And, you know, they they did three times their money in two and a half years or three years. So it was a good outcome for them. And then we went with a global group as we got bigger. And, you know, that was, that was more of a challenge, I think, working with them so, so I think one, I mean, Mike:  34:24 I'm just interested in this, because I'm sure some of our listeners will be interested in this, business owners. So that as you because you kind of move at the food chain with, yes, private equity, don't you? So as you move at the food chain, I presume the risk, the risk appetite reduces, and they become a little bit more compliance driven, I suppose, in terms of what they want to see governance wise, is that the case? Tom Hardwick  34:54 Yes, but I Not, not necessarily in a bad way like I think. I think having a local group is much easier than having an offshore group, okay? And I think, you know, there's things like, they launch you to report a certain way, and they like to collate it all up. So at global, I see they can compare everything, etc, but that didn't affect us too much. Probably, you know, at some point the business needs to become a bit more institutionalized. Like I went and met with the largest childcare company in the world. And I used to go meet with them every year in the US. And the CEO said to me, because, you know, I'm sort of pre dating, hoping that one day they might sort of invest in it. He says, Tom, you know, the best thing about Guardians, you you right across it, you're doing great job. The worst thing about Guardians, you because if we buy into guardian, we want to sort of have an institutional management team that's not relying on the founder. And yeah. And so as a founder, you know, quite an entrepreneurial founder. As you get bigger, the need for some of these, you know, systems, infrastructure, governance. And, you know, I sort of gets in the way of an entrepreneur a bit. So it is, I would say. And as part the reason we set up Coogee capital is it's a dangerous game to play. As a founder private equity, particularly if you don't have control, like if you've, you know, and Guardian was a business that required a lot of capital to buy all these businesses, so we never had control of it. And you are nothing more than a glorified employee and disposable at will with then quite a lot of equity tied up in a liquid business that you know, potentially you don't have control of anymore. So, you know it is, it's a tightrope to walk. And I would, you know, say to most founders, if I think, if you can avoid it, I would avoid it, but if you need it, it is a good source of capital, and some provided get the right group good smarts to help you grow. Like, there's a group like 5v here, you know, I've done a bit with rock partners here, like they're good guys that sort of have got a bit of experience in the in the pot that, you know, I think would be good to work with. I I call them the propeller heads, and it used to drive me crazy. But, you know, the young kids that have all spent their whole life on a spreadsheet. Maybe they've got an MBA, and they come in and they want to talk to everyone, want to analyze your business and come with all these hair brain ideas based off a spreadsheet analysis. And that sort of really got to me a bit. But, you know, that's, that's, but that's the Yeah, the dance hall you go to, yeah, yeah, dance with private equity. Mike:  37:39 That's that's interesting, I suppose. And you know, if you need capital, if you're in one of those situations where you need capital, was a lot of that capital was you were buying businesses more than the properties that they were more interested in the businesses, yeah. But even that, you know, you, if you're paying four or five or six times you, you know, you're five or six years before you get your money back, and, yeah, you're earning even 15% or 20% they're still not gonna know. Tom Hardwick  38:03 we had to, we had to grow. We were growing our earnings by 20% organically, and then adding to that with acquisition, okay? And then the greenfields eventually came in, because the problem with greenfields is a smash your p&l in that ramp up phase. Yeah. So it was really, when we got big enough we could do a few greenfields here and there, and it wouldn't, didn't hurt us too much. But, yeah, it took a while to get to that size. Mike:  38:30 You mentioned the Self Storage market. How good is that self storage market? Tom Hardwick  38:35 Yeah, it's been Mike:  38:35 a great what a business model. Great Tom Hardwick  38:37 Great business. It's a, not the easiest business to start up, because you got to put a lot of money down. And it and it does take those things about four years to sort of get to full occupancy, yeah, but once you get the big pieces of dirt, so great land appreciation. You know, if you can get, I said they trade on five or 6% these days, but back then, we were getting nine 10% return out of them, and was great, Mike:  39:00 yeah. And I suppose what you were saying with the child care centers is they, you weren't able to do that business property in the same way. Tom Hardwick  39:08 No, no. And obviously, you know, you get a much better return on equity from just having the business side, yeah, but yeah, there's, there's been a lot of money left on the table by not being in the property side of childcare, yeah, and I spoke at a development conference recently. Some of the smartest people I saw in childcare were people who were building the centers, operating the businesses, and then when those businesses were at 90% occupancy, they'd sell the businesses to me, and then they take the proceeds from the sale of business, pay the debt off the property, and the next minute, they had four properties throwing out, you know, 678, 100,000 a year each in passive rental income, yeah, well, yeah, two or $3 million a year, a bit of tax benefited income. Yeah, it's not a bad cash flow. Mike:  39:58 So you you build that business. And clearly it was, I mean that. I mean, it's easy to say 500 mil. It's very difficult to pull that off. Tom Hardwick  40:08 Bids just went in last week for the to buy Partners Group out on Guardian, and it's, you know, it's going to be around a billion dollars to Mike:  40:16 Okay. And so what caused you to decide to accept, or was it the private equity guy? I mean, what was the the Genesis around? Okay, it's time, it's time Tom Hardwick  40:28 it we were looking for a COO to come in to sort of be my successor, yeah. And so we'd been on this process for quality, you know, best part of a year. And I thought it would be easy to find someone with some multi side experience, with a bit of passion to lead an organization. And yeah, he wasn't like it was, you know, I was surprised at the lack of talent. Now, maybe as a founder, you have a high bar. And so, in essence, the relationship with Partners Group break down a bit over that process, right? And then I think they felt that maybe I was a bit of a roadblock to solving this problem. And so, you know, basically they said, and time's up. Okay. Now the idea was to stay on the board, and so I went to a few board meetings. But it's pretty hard as a founder to sit on a board with a couple of, you know, non exec directors, and so it's sort of paid it out, okay, yeah, and yeah, which is, you know,it wasn't an easy pill to swallow. You founded a company, yeah, sort of kicked out of it by some people. Mike:  41:40 You're in good company, though, aren't you with? Yeah, and that's, that's the jehos. Tom Hardwick  41:44 That's the dangerous line you walk in private equity without control. And, you know, I push Navis to the limit. It would have been them or me eventually, I suspect. But Mike:  41:56 so what did they buy you out? Tom Hardwick  41:58 So in essence, I got half of my money out at the time, okay? And I've still got equity in there. Okay, great. So there might be a good second, hopefully nice check coming at the end of this year. Yeah. Okay, great. And, yeah, so they were reasonable about it, okay, good, but it was time for you, yeah. And you do get to that point, and you don't necessarily know it, where you're working 70 or 80 hours a week, you start to get a bit sick, the stress builds up, yeah. And so it was, you know, nice, you know, it was good to get a bit of that step back, a bit of respect, a bit more time with the family. Because, you know, you just hardly hire stuff. Mike:  42:36 And so how did you handle that post? You know, you you go from 100 miles an hour down to Okay, well, I'm not doing that anymore. Yeah. So that and that, that takes some adjustment, I imagine. So just chat to us a bit about that. Tom Hardwick  42:52 I think the first thing I did was, um, I packed my bike in a box. I flew to Geneva airport and unpacked it out the front of the airport and road to selenia across the Italian selenium across the Italian Alps. Mike:  43:04 And just sort of, you're a big cycling fan. Tom Hardwick  43:07 do a lot of riding cycle in Europe. Mike:  43:11 did you do much of it when you were running guardian? Tom Hardwick  43:15 It was my release. Was your release? Yeah, you need something, dang it. Yeah. And I was into it big time and, and, yeah, I was a shit husband to my wife, because, you know, I'd work all week now i i was generally home for dinner. You know, as we always got traveling, I was home for dinner.  the kids remember, like, our kids are going to be entrepreneurs, and it's because of the osmosis of the dinner table and the conversation, but yeah, come weekends, you know, the kids were doing sport and they're doing nippers, and my poor wife was driving all over the place while I'm off on the four and five hour bike rides. But for me, it was an important release, because it enabled me to switch off. And, you know, you got to concentrate on staying alive on the bike. So you do sort of get a bit of think time, but a bit of shutdown time. Mike:  44:03 were you conscious of that, or were you just doing it Tom Hardwick  44:07 Look what I needed. I needed a love outside it, because I was really into guardian, right? It was everything for us. Your wife, included. She was working in there and stuff. So I did need that release. And I sort of put it down to you've got to have time for your partner, time with the kids, and time for yourself. And I think time with your mates suffers when you're building a business or, you know, in that prime of your career, you do lose a bit of contact with your mates, and you have to make a bit of an effort to organize a few boys dinners and stuff like that. But for me, bike riding was more of a solitary escape and bit of downtown Mike:  44:47 I got the same from running, which I believe, so I just jog and distance stuff, yeah, and I didn't really know it at the time, I just kept coming back and doing it, yeah, yeah. And ostensibly, looking back, I realized now it was a kind of therapy route, yeah. It is. It just got out of my head into my body, and, yeah, so that that's been good, yeah. I mean, I think you need something and that kind of physical physicality, it's easy because you, you know what, running businesses, you you're in your head, it's all Tom Hardwick  45:20 and it's easy with the stress. Yeah, I was, I've never drunk coffee, but, you know, I when I was in America, I sort of got onto the Diet Cokes. And, you know, I used to have one a day at lunchtime, and, you know, I was all of a sudden having three a day. And you know, when you have a Diet Coke, you don't feel like a banana or a peach, you have a muffin or a bit of banana, but it was just, you could just see the stress starting to, you know, permeate your life. And while, you know, I was pretty fit from the bike riding, Yep, yeah. So it was, it was a good opportunity to have a bit of a reset and a bit of a rethink. Mike:  45:51 so, how did you go about? How did you tackle me? We mentioned earlier about the career psychologist. You didn't think about going back and seeing them? Tom Hardwick  45:59 No, no, I have sent numerous people to see her over the years. Yeah, people have come to me because there's one thing to get a bit of mentoring from someone. It's another to go and have it professionally, a professional really analyze you and what are your strengths weaknesses? What do you want to do? And try to, you know, do that. So, so, no, I didn't do that. I sort of had a bit of time, and I decided, you know, I'm a big wine person. I love my wine Okay, and when I go traveling in Europe, we spend a lot of time in visiting wine bars and wineries. So I opened a wine bar in Quincy. So completely new endeavor, yeah, that was, you know, gave me something to focus on. Mike:  46:36 And how's it gone? Tom Hardwick  46:38 I opened at September 19. We had a couple of good months before the bush fire smoke settled in at the end of the drought there, and then, just as a smoke listed straight into covid. So, yeah, what I've learned is I'm glad my wife and I aren't running a restaurant for our livelihood, to put our kids through school, to pay the mortgage, because, by golly, it's a hard game. But yeah, I think, I think this financial year we might go close to breaking even. Next year we might make a profit. Okay, now I look at it if I can make 10% return on my capital without it being too much trouble. Yeah, I have a lot of fun out of I have dinners and organizing. You know, I've got a farming business. So we do meat things there, do wine things there, do all sorts of things. And so be I'm an entrepreneur. I love starting things up and learning Mike:  47:28 Important point, isn't it that that that idea, and in some ways that's a lifestyle. I mean, you it's a lifestyle choice. And you know, I'll do that, but you make a great point. I mean, if you were having to live out of it back in the day, when they're putting the kids through school and god knows what else, that's another ball game, isn't it? Yeah, yeah. And certainly that that pandemic. I mean, there was a few things that took a wallet. I mean, the airlines can't even believe I mean, Virgin had a billion dollars in cash on their balance sheet in that February or March, because we had a look at them, yeah, we were going to buy some stock, and then they were broke within four months, yeah? And the restaurants, bless them, yeah? Tom Hardwick  48:11 Well, yeah, I was the government bailed out a lot of sectors Mike:  48:14 Without a doubt, like, I mean, that was the, you know, that that was extremely helpful entirely, wasn't it? Tom Hardwick  48:22 but I was lucky enough that I could just shut the doors. We had a small farm in the kangaroo Valley. We just went down there and sort of went to hibernation for a couple of months. And, you know, wasn't great for the staff, but we couldn't. We weren't set up to do takeaway or whatever. And luckily, the staff got the job keeper, and, yeah, yeah. We all sort of battled through and came out the other side. Mike:  48:43 So when did you step down from Guardian? Then what? Tom Hardwick  48:47 Yeah, I can't even probably remember. It was 2017 I think the end of 2017 so I think 2018 was my first year of being okay, completely free. Mike:  48:57 so you then started coogie capital in 2021 so what was the genesis of that? Well, what were you thinking about that? What got that? It was, that's a reasonable undertaking, that isn't it? Yeah, it was, obviously, it's not like a wine bar, is Tom Hardwick  49:15 No, no, no, it's, it's, it's a different kettle of fish, right? So you know a good mate of mine, Dave baxby, who had just finished up working at Wesfarmers, yeah, who's the CEO of their industrial business. And it was just before covid, and we were just sort of starting to mull around what it is we might do. And we were just sort of thinking what and in essence, it was, as a company founder, is there a better way of growing your business than relying on a private equity fund? And that sort of was the genesis of what led to, what could you and so, what could you capital is today, what we eventually. Set up was a business that says, We think in the space of businesses worth 50 million to $200 million there's not a lot of capital in there. And private equity firms start there, but as they get successful and grow their fund size becomes bigger, and they need to write bigger checks. And so they leave that space, you know, 5v being a perfect example. Great PE fund that started there, but it as it's got bigger, it's grown out of it. So we, we thought in that space, or an ideal world, would be someone who's, you know, maybe late 40s, 50s, grown a great business, thinking about maybe an exit down the track, maybe get a little bit of money off the table. But also, hey, I need a bit of help to grow my business. And you know, if it was a business that Dave and I thought, hey, this would be something interesting to lean into, maybe put a bit of our own money in. Well, why don't we put the hat out and raise a bit of money, and, and, and sort of have this concept of private equity, yeah, and so, so that was sort of what we were thinking. And then Harris farm came on the market here, and we sort of had some connections with the Harris family through YPO and and then we sort of had an just through a little network, we put in a bid, and we we took that through pretty close to completion, and we just missed out there, which but it proved that we had something. And then the next year, we bought a medical business where this, this was a founder in his late 50s, build a successful business. Wanted to bring it to the East Coast. It was a West Australian business, so he was looking for a bit of help with connections, relationships, etc. He also was a plastic surgeon rather than a professional manager of a business. So as the business got bigger, the management of it got more complex. And so he was looking for, really a partner to help him scale his business and any I was keen to maybe take a bit of money off the table, to de risk, and so we partnered with with Han, and it was a 5050, transaction, which I think, I think it's been good because, you know, like in any relationship, there are a few moments when it gets tricky. And if you've got control, the easiest thing to do is pull the trigger. But when you're 5050 you can't do that. You got to work through the issues. And as you know, if you work through to try to get to that consensus, you tend to get a better answer anyway, yeah. So it's a 5050 deal, and, you know, and now we've got two clinics in Brisbane. We've just bought a business in Melbourne, and, you know, we couldn't have done that without, you know, being together with each other. So that was, I think that's a very good example of what we're trying to do at Christian capital. And then last year, we bought a business that was a bit different. It had a senior partner and a junior partner. The senior partner was 76 and wanted to, you know, retire. I don't think he really wanted to retire, but his brother had a heart attack the year before, and his wife said to him, it's time to retire. So and so we bought out. We bought that business. The junior partner stayed in, and we have then invested the capital to grow it. Because, you know, when you're 76 you don't want to put a lot more money back into being. You want to take it out. Whereas that was frustrating the management team, who saw a lot of growth opportunity. So we bought that business and really backed the junior partners vision by putting a bit more capital in and creating, it's a higher business. So it needed more product to lease out and so, and that's been, you know, a great success, really, like, huge growth in profit very quickly. You know, growing in Queensland just opened in New South Wales last month. So, so that there was sort of backing someone's growth plan Mike:  53:54 So what's the end game for the typically private sounds to me like it's sort of flexible private equity, almost like private capital Tom Hardwick  54:01 yeah. Both of those deals, we raised about $30 million of equity to plus the other debt refinancing. Now, in a perfect world, it'd be lovely to have a $200 million fund, right? That makes you effectively have a balance sheet. You're very competitive in processes, etc. However, when you have a fund, it sort of burns a bit of burns a bit of a hole in your pocket. And to what extent are you forced to do transactions  Yep, something that we like. But, you know, you spoke before about, why the hell would you do private equity as a business? Because, you know, you find something, you spend a few months getting to know each other, you know, putting a term sheet together, and then. So okay, well, we've got to raise the money, but we need to do formal due diligence. And so yeah, you're out putting, you know, half a million bucks of your own money on the line to, you know, get all the boxes ticked, etc, hoping that you can raise the capital at the at the end of that process. So yeah, it's a bit of a chicken and an egg. But. But I think, I think it's, it's a good model, because it's a transit it's one business, you can tell, you know, certain people like industrial businesses, certain people like this. So, you know, they get to invest in what they like. And look, I think we'll do this for a while, and if, you know, we have a get a few runs on the board, and build the team up a bit, etc. Well, yeah, maybe we might be in a position a few years to raise a fund, but Mike:  55:23 so the kind of growth plays, really, you're looking for growth, organic growth, largely. I mean, you'll do a bit of acquisition, like you do with the medical, yeah, Tom Hardwick  55:31 yeah, we'll do acquisition, but yeah, so it's just finding good businesses that we like, yeah. We got to, you know, we don't really do sort of early stage technology, your property, mining, lots of stuff. It's more just, you know, good businesses that seem to make sense, good founders who are still passionate about what they want to do, and yeah, who are looking, yeah, looking for some people with a bit of gray hair and a bit of experience to help them. I found when I was running guardian, it's, you know, it's lonely at the top right. You have a lot of issues you have to deal with, and that's where I found Mike:  56:06 It's interesting, because, I mean, private equity aren't necessarily that helpful at that stuff, no? And they're great at finance. They're financial engineers, really Tom Hardwick  56:14 Now there is certain within that broader context, yes, there are some people who've probably grown some, you know, properly grown a business rather than just engineer Mike:  56:24 But they're fairly unique there. Yeah, you know, more typically, you're dealing with, I mean, the bright guys and stuff. We deal with them all the time, but, yeah, but we, we generally, they're not, they're not that helpful to a founder who's wrestling with operational and organizational stuff, yeah, yeah, but, but, but, you know, as you said, you know, in terms of what they are, I mean, they're good at what they do, yeah, yeah, no. And what they do is provide capital, yeah? Tom Hardwick  56:56 sort of turbocharged businesses, in a sense, right? They, know how to grow a business and think about how to create real value. Yeah? And yeah, I, I've made more money than I than any other stage in my life working with private equity. So So parts of it are frustrated. It's the discipline. Mike:  57:14 They're very disciplined, and they're quite rigorous. Yeah, absolutely. Whereas as an owner, you own all the stock, you can kind of do what you want, really, you can get you can lack focus. I mean, you know, no doubt, Tom Hardwick  57:29 I think it's important for a founder that you need a network of people around you that that are outside of the business, that's a safe space for you to go and, you know, unload your deepest thoughts and troubles and and just get that help, etc. And, you know, yeah, I think boards and in private equity firms aren't the place to do Mike:  57:51 No, it's interesting. I got most of my schooling from non execs really that, so they weren't private equity people. I mean, the first guy was sort of private capital. Put some money in years ago in England, into my first but the what I got out of it was just the coach, and every month I had to turn up and tell him what, what happened, yeah, yeah. Whereas, you know, without that, I just kind of just carried on, Tom Hardwick  58:14 That, that accountability of it is, yeah, that process of, you know, a board report and a meeting. Yeah, it is, it is important to get that, yeah, institutionalized. The other thing I did, well, I didn't, I didn't do career counseling. I did, I did a bit of, sort of, it was sort of like CEO counseling with a friend of mine who was a, you know, organizational psychologist. And, okay, it was just as a CEO, you know, you're the smartest guy in the room, but you're trying to build a leadership team, and you need to learn to empower them. And you know, you need to think about, sort of your EQ and sort of how you present yourself. And you know, you can get a bit frustrated at times. Yeah. So I started to do a little bit of work there in the last sort of two years of guardian, just to, you know, try to, you know, there's a point you can run a business, and you can force it through the funnel with sheer force of will, yeah. But at some point it gets big enough with an out, enough outside people that you need to sort of make that transition of, yeah, inspiring them to get it there, rather than you forcing at the end. Mike:  59:22 And it's not easy to do that, is it? We're kind of, I'm on that journey. I've been on that journey for the last 10 years, really, which is, you know, how do you, how do you bring people through and and not express your frustration? But You've almost got to slow down to speed up, really, because you don't get the buy in, yes, unless you slow down and you get everybody, everybody feels I've been heard. And you you're actually clear about what it you know, I'll leave, leave a meeting. You know, I used to leave a meeting. Think everything was so a week later, no one's done a bloody thing. Tom Hardwick  59:57 So it was clear we're going to do this. For that, or they go out of the meeting and one says, Oh, this is what He wants us to do. And then the other says, This isn't what it I mean, it's Mike:  1:00:06 It's an interesting area. I mean, I'm sure that, you know, I'm sure that you'll do fine, no doubt about that. But first, for context, there's a million businesses in Australia that employ people, yeah, 0.4 million, according to abs, but most of them are trusts and non operating. And of those million, about 75 depending who you listen to. But 75 a minimum of 75% of them employ up to four people. So they're kind of micro businesses. There's probably a couple 100,000 the mid market that employ between sort of five and 200 Yep. And that's the kind of place where we kind of play. And there's only 3400 that employ above 200 and we think there's probably only 1000 of those that are serial acquirers, yeah, so you've so you've actually only got 1000 now, there's a bunch of guys overseas, but there's definitely, that's what's going you've got 20% of that market. Yeah, it'll baby boomers. They're age 60, right? That's right, yep. So in the next 15 years you've got, they're all gonna have to retire, and it's gonna need some creativity, and the free market is gonna have to start to fill the gap. Yeah? And I think we are seeing private equity get more flexible, yeah, we call it a splintering. We're seeing a splintering. They're starting to do, buy, hold. They never used to do that. Yeah, they're starting to do, you know, 1 million. You know, it used to be 3 million to have a conversation now, well, 1 million, EBITDA, you know, yeah. And I think that because there's lots of good assets there. Oh, yeah, you know, you know, businesses that have taken owners have taken 4050, years building the damn things? Tom Hardwick  1:01:43 Some of them are a bit, sort of tucked away in factories and warehouses the back of Dan new places, right? So they're not sexy business Mike:  1:01:52 and some of them are doing world class so far, I visited a few years ago. I mean, we're big in manufacturing, but I visited a guy up in Newcastle who was making submersible compression chambers for the US Navy. He'd made 150 of them, yeah. And he's got this kind of shedding. And on his desk, he's got a letter from the head of the US Navy saying, what an important strategic he couldn't even get a meeting with the Aussie Defense Force. Yeah, yeah. But so, you know, it's like, is this a shed in Newcastle supplying, and we're seeing a lot of that niche, you know, world class stuff going on, yeah, the whole mass manufacturing that's gone, yeah. But that niche manufacturer, Tom Hardwick  1:02:35 There's a book, was it? Is it called Small Giants? Or, you know about these companies that just focus on one thing, yeah, and they just become experts at it around the world. And, you know, it's so I wish I had brought it, but I saw a slide out of a JP Morgan investing event investment deck recently, and it said that the best returns out of private equity were sort of coming out of the sub $200 million you know, growth, early stage growth companies, right? Because my experience at guarding was the same. It's much easier to make three times your money, going from 10 million of earnings to 20 million of earnings, even up to 40 or 50 million C then when you start to get bigger, then all of a sudden there's a lot more overhead, a lot more in all the governance, and it gets harder to move the dial because you're further away from the coalface. And so, you know, there is, I think it's a really interesting space, and there's a lot of great businesses there. As you say, they are going to come out as as we go through. And you know, not all families, not the kids, don't always want to take over the parents business. Mike:  1:03:38 Well, I mean, rarely do they, that's the problem, yeah? I mean, they're all, they've all become, you know, I mean, the baby boomers, kids are all got degrees, and then they're working from home, or working at their farms or holiday houses, their lawyers, you know, they're like, What do I want to do that for? You know, widgets, yeah. So look, that's been a great discussion. I'm very grateful Tom Look, just a few questions, right? Sure. So who were you, who were the kind of mentors, and what would your advice be around getting hold of a mentor for someone who's thinking of following you on that kind of journey? Tom Hardwick  1:04:10 I had two mentors that were just natural mentors, because I work for them, and I really learned to respect them. One was a guy called John Denton, who was like a senior associate when I first started at cause, he ultimately became part he was the managing partner of cause for probably 10 years. So John was a really great part of my early career. Then I think Frank Wolf at abacus. I when I was investment banking, we floated abacus, so I banked him for two years, and then worked with him for four years, one of the most astute property investors going around. And what I loved about Frank was he always looked at an asset to say, What's in this asset? That means I'm going to preserve my capital. He wouldn't go and buy the tax office building in Parramatta on a 20 year lease at 5% yield because he knew if interest rates were. Up cap rates up, he'd lose capital. He was looking for something had a bit of vacancy or a bit of underappreciated land value there. And so he was a hard taskmaster, but a really great mentor. So they, I think, were the two great, what I'd call career mentors, and then the other two were, I've got an uncle who is started big meat business in Victoria, very entrepreneurial, and so he was sort of a great influence on my early life, and to this day, we're still good mates, and I'm great mates with his five boys, crazy entrepreneurs. And yeah, and then it's Mike:  1:05:32 It's amazing how much we get in our upbringing from watching, isn't it, yeah? Tom Hardwick  1:05:36 Just, I just say, with my kids, it's sort of through this osmosis of Yeah, around it. Mike:  1:05:42 My granddad was went into business, and I was kind of working class from the Midlands, and no one I knew. You know, they all had jobs. But my granddad was sold cars, very successful. This was in the 50s and 60s where there was a lot of cars to sell. And I always remember thinking, What a great way to, you know, what a great what a great way to seem so much better to me than clocking on and clocking off. And, yeah, and he always seemed exciting, yeah, and, and I've loved sales really right from that, yeah, but, but no one told me about it. No one said he's an entrepreneur, yeah, the word entrepreneur, but we couldn't even spell it in our story Tom Hardwick  1:06:26 was, you know, you attracted to that way of working, or the lifestyle or the your personality suits yourself, so you do sort of, that's why you say, you know, I employed a lot of people at Guardian that didn't work out. You know, one of the, yeah, one key to being a great CEO is how many bad hires you make and often you had to let them go, and they thought it was a, you know, some big problem or slight and I was like, I'm actually doing you a favor, because you're coming to work, you're in a routine, you're not happy. You need to go and find the thing that, you know Mike:  1:07:02 I've done that a lot. I mean, I had my first mentor, you know, we had to make a load of people redundant in 1990 right around that recession. And the guy that was helping me was like, I'm thinking, You know what, what are they going to do? He's like, Get over yourself. They're going to be fine. And they were, yeah, you know, variably, they went on, found something better, you know, he said, he said, You're not God mate. It's just a job. Tom Hardwick  1:07:27 And they could take, you know, some kids come out of uni and they kind of know what they're doing, and bang, off they go. Others, you know, float around for 10 or 15 years time Mike:  1:07:37 what about a book? Can you recommend a book does anything you've read strike you that made a difference. Tom Hardwick  1:07:43 I really like,  there's a guy in the US called Vern Harnish, and he has a methodology called habits. And I thought that was, I like his work. I've spent time at one of his boot camps, you know, I like his books. And, you know, we bought him the one page strategic, Yeah, isn't that great? I just, and we've now, with our businesses, say this is the methodology we want the businesses to use. So while I've read, you know, a lot of great books, and, you know, I love the Steve Jobs book was a fantastic book. The Elon Musk books recently is pretty interesting. But I think for an entrepreneur, sort of grappling with this concept of, how do I systemize my business as it gets a bit bigger? And yeah, I think that Fern harness methodology is fantastic. Mike:  1:08:23 We love that strategy on a page. I mean, we get all our clients, you know, getting involved in that, because there's just nothing. It's that ability to simplify something that's essentially quite complex, yeah, so that everyone can kind of get hold of it. Tom Hardwick  1:08:36 Yeah, that's right. No, I think you've got your business is complicated. You need to be able to strip it back to the key, you know, tenants, Mike:  1:08:43 yeah. And then, what about your favorite place in the world? Is it Coogee or somewhere else? Tom Hardwick  1:08:50 Look, I do love riding around Provence, right? I think Provence is fantastic for a place to go for holiday with your bike and cruise around. Yeah, there's lots of great places in Italy and the wine as well. Good wine, yeah, but Provence is our sort of Mike:  1:09:05 Okay, that's you kind of go to you and your wife, yeah, you've been married a long time, right? Yeah, I heard you, you, you got you got together when you were 16 or 17. Tom Hardwick  1:09:15 We met at a guy we met at a rock on a school bus trip. I was in year 12, and Michelle was in year 11. Is that right? Then? In year 11 together ever since, three kids. And, you know, we've had, we've had a great run of it, you know, we've had, you know, Michelle's parents passed away the last couple of years. Michelle's had breast cancer this year. But, yeah, thankfully that it was a minor version of and the science and medicine. So we sort of just getting, you know, had a few more bumps in the road, that's, you know, but when you've got that strong Mike:  1:09:46 I've been married the six, seven years now, and five kids and yeah, I mean, it was best days work in my life, to be honest with you. So what about, What about entrepreneurs? Are they born, or are they or can we make them? Tom Hardwick  1:10:08 I think, I think you can make them okay, yeah, I I think anyone can be an entrepreneur. I think, you know, yes, you have to work hard, etc. I think the biggest thing is having the courage to believe in yourself, to give up the security of a job while you've still got a mortgage and kids at school. And, you know, I think there are some people who love corporate life. Yeah, I suspect most people probably at some point in their lives would like to do their own thing, to have the freedom of doing your own thing, to have, you know, something they're really passionate about, to drive, you know, what they do each day. And, you know, read some books, go and do some courses. You know, go and join YPO and meet some other entrepreneurs and and through that process, you know, you build a community around you and you're into it. Mike:  1:11:08 amazing, I mean it. You know that idea that you know, if we can coach and train and encourage entrepreneurs, how can we perhaps do more of it? Because I think the world's going to need more more of that creativity, to be honest. I think that, you know, we've seen now the biggest five companies in the world at the moment, all tech companies that weren't around four years ago. Yeah. So, you know, we're seeing a kind of paradigm shift in the way things can happen. Tom Hardwick  1:11:37 But I look at my kids and their mates, etc, like I think this generation is different to ours, Mike:  1:11:44 less willing to go the corporate route. Tom Hardwick  1:11:46 When we finished school, it was okay, you should go to uni and then you should get a good job at a big company, yeah, and I still think that is a very good path for anyone. I look back at those first three or four years of my career at cause I still miss that environment and what I learned about life, not just law, but about life. I just think it was such a valuable part of my life. I said to all my kids, I think you should try and go and work in a big company your first job. Easy to go from big company to small company. Hard to go from a small company to a big company, and give it a go. If you last, said, two years, if you last there five years, you last year, 10 years, fantastic. But, and, and so I think, if you can, I think it's a good way to go, but, but a lot of these kids, man, they just come out. They're working on business plans for startups. They're, you know, freelancing and different things. They're working from home. They're working from home. They're working for their company. They're doing other stuff on the side Mike:  1:12:44 I think there's more freedom there, where they got access to information. Yeah, I left school and you want to, you're they went to they the universities were the gatekeepers of knowledge. Yes, only 80% kids in my year went to uni. Yeah, right. So the the issue in I had to go to the library. Tom Hardwick  1:12:59 Yeah it's right, no, it's you had to do the micro fish to find anything and like it was, yeah, we say, like dinosaurs Mike:  1:13:07 A lot happened in the last four years. Yeah. I mean, when I started in business, even there was no omputers. I remember the first time we got a computer. We bought it from ultra and football club because they didn't know what to do with it. And we stuck it on a desk. And then Tony, in account seemed to know more than anyone else. So we made him, we made him in charge of the computer. Tom Hardwick  1:13:25 Well, I I think when we first started commerce at uni, we were doing lotus, 123, and then I think by about second or third year, they'd migrated to excel, amazing. And then when I started a cause, we had the Wang computer system and dinosaurs. Yeah, what's happening? Mike:  1:13:45 Tom fantastic discussion. Thanks for coming in today and sharing your your story, which I'm sure many people get a lot from. So thanks again. Thanks for coming in. Tom Hardwick  1:13:55 Nice to meet you, and thanks for having me. Mike:  1:13:57 Okay, thanks. Thanks, Michael. Well, there you have it. What a journey. How encouraging to learn what can happen if you back yourself. Tom is clearly a troubleshooter, able to navigate change and risk. If you want to learn more about Tom's company, Coogee Capital, the details will be in the show notes. Now. A quick shout out to our sponsors, Oasis partners, if you are thinking about how best to exit your business, contact Don Hunton at Oasis, with 500 successful deals done since 1984 Don and the team know a thing or two about unlocking value. If you like this podcast, be sure to share it. Or if you're feeling very generous, leave a like or a comment. Only good ones, please. As you know, we're very sensitive, so until next time, stay safe. Link to previous episodes: https://www.oasispartners.com.au/podcast/  ]]> https://www.oasispartners.com.au/wp-content/uploads/2024/08/Tom-Hardwick-1.png clean no 1:14:50 No no https://www.oasispartners.com.au/podcast/tom-waterhouse-betting-on-legacy/?utm_source=rss&utm_medium=rss&utm_campaign=tom-waterhouse-betting-on-legacy Tue, 02 Jul 2024 23:58:32 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17453 Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike:  00:10 Welcome to the troubleshooters podcast with me your host Mike McGrath. Now today's guests may well be familiar to many of you. Tom Woods house is the son of the famous trainer, gay Waterhouse and famous bookie and father, Robby Waterhouse. And if that wasn't enough, his grandfather Bill Waterhouse was one of the biggest bookies in the world in the 1970s. Now whatever you think of gambling, there's no denying that people love a flutter in 2023 horse and sports betting in Australia was worth six and a half billion dollars employing 6500 people. In my view, Tom Waterhouse is a force of nature at age 42. Birthday to day 22 years and still going strong in business toma pitta, Mises they have a good attitude so essential to success in a free market. So take a listen as we unpack Tom's incredible journey and chat about his new venture. The Waterhouse VC. Good morning, Tom Waterhouse. Great to have you come in and join us today. Thank you. Thank you. It's great to be here. So we were just talking before we started that you and I were that we both started out in business fairly early. I think you started at age 21 or 22. Tom Waterhouse  01:20 Yeah look, I started. Actually my dad asked me when I was first year uni so I must have been 18 or 19 is that right to go and work at the track and I worked for him and and he was he's a great dad in that about basically just threw me always in the deep end. So I think I've ran his stand for him when he went away when he was 19 when I was 19. And then I started being a bogey bogey at the dogs soon thereafter. And then by 2021 I was a bookie at the races, which was there was a lot of fun. Mike:  01:49 I know originally you were thinking about finance, but you The story goes that you got to the track and within 20 minutes, you'd realize you wanted to do it. Tom Waterhouse  01:57 Yeah look, I still finished it. I did commerce degree. It's in the union and majored in finance and I yeah, I loved doing that. But the racing industry and and bookmaking, there was just so much money there back then 20 something years ago, and it was just full of energy and excitement. And also I had a big advantage in that my grandfather was biggest book in the world and the 60s and 70s. My dad, he ran a professional betting syndicates since 1980. And was leading bookmakers. So I had a blueprint of what to do. And you're very lucky when you're young, and you have a mentor or a couple of mentors that can say, Look, this is how you do it. Because then it's easy. You just follow what they say. #newpodcast #SME #businesschallenges #troubleshooters#seasontwo full 23 2 https://www.oasispartners.com.au/wp-content/uploads/2024/07/Tom-Waterhouse.png clean no 45:14 No no https://www.oasispartners.com.au/podcast/human-leaders-over-hero-leaders/?utm_source=rss&utm_medium=rss&utm_campaign=human-leaders-over-hero-leaders Wed, 22 May 2024 02:05:41 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17403 https://www.hortenselegentil.com/ Hortense le Gentil is a global executive leadership coach and two-time author, with her upcoming book, “The Unlocked Leader: Dare to Free Your Own Voice, Lead with Empathy, and Shine Your Light in the World” released September 26, 2023. She has worked with various Fortune 500 companies and CEO Perspectives on executive leadership programs. - Top 30 Global Guru in 2020 and 2021 by World Management Global Gurus - 2021 and 2023 nominee of the Thinkers 50 Coaching and Mentoring Awards - Certified Marshall Goldsmith Stakeholder Centered coach and MG100 Coaches member - Featured in Forbes, Fast Company, Inc. and Business Insider - Harvard Business Review and ThriveGlobal.com Contributor Points of Interest: Life story and journey to becoming a successful coach (1:40) Becoming an entrepreneur (4:50) Using empathy as a superpower when you’re a leader (8:15) Connecting with others using the right-side brain (11:35) Recognising when something resonates with you, using emotion to heal (16:15) Hortense’ story, not listening to external voices (18:00) Making peace with the past (21:56) Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike:  Welcome to the Troubleshooters podcast with me your host Mike McGrath. Now, my guest today is a successful author and executive coach, Hortense Le Gentil has recently written her second book, the Unlocked leader. Today, she helped her unpack a contemporary take on leadership, including the importance of making peace with the past and finding your true north. So, if you're a leader, and you're looking to up your game, have a listen. So, Hortense Le Gentil, welcome to the troubleshooters podcast. Hortense  Thank you for having me. It's a delight. Mike:  We're delighted to have you on. And we want to talk quite a bit today about this book you've just written called the unlocked leader, which is a terrific read. And I can thoroughly recommend it. For anyone who's interested in this subject. You talk about dare to free your own voice, you talk about leading with empathy, and you talk about letting your light shine in the world. So, you know, great kind of sentiments really. So what I want you to do, if you don't mind, just before we jump in and start unpacking some of the concepts and ideas in your book, which I really think are going to be very thought provoking, I wanted to just get you to perhaps tell us a little bit about yourself, Hortense and your story and your journey, because I'm only guessing here, but I suspect you weren't always a very successful author, and a successful coach. So, talk to us about your story. And I know you cover some of this in the book, perhaps introduce yourself to our listeners. Hortense  So, I was born and raised in France. It's not a surprise with my accent. And my first passion was horses. I was a horse rider and show jumper. And I was show jumping and my horse was everything, was my friend, my best friend. And I learned a lot from there, you know, empathy, communication, hardworking, and everything about having a vision. So, I think I learned a lot there. So, it was it was my life for more than a decade. And then I was around 18 years old. And I was you know, finishing high school. And I had to take a decision, should I contin]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo full 22 2 https://www.oasispartners.com.au/wp-content/uploads/2024/05/Tile-V1.png clean no 33:00 No no https://www.oasispartners.com.au/podcast/how-to-play-the-long-game/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-play-the-long-game Thu, 08 Feb 2024 01:47:30 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17344 Contact Brendan https://www.linkedin.com/in/brendan-green-34859215/ Brendan is the Founder and CEO of GCG, and established the business in 2005. He considers leading the wonderful, close-knit community at GCG as the best part of his job and loves the challenges of working alongside such a high performing team. Brendan believes GCG is an outstanding workplace because there are so many team members who are genuinely committed to helping their clients with WHS. Brendan has spent more than fifteen years working in Work Health and Safety (WHS) and Occupational Hygiene, and has been fortunate enough to gain exposure to a wide variety of industries since leaving BHP Billiton (to start GCG). He is a Senior Consultant focusing primarily on upskilling and supporting clients on implementing practical and sustainable WHS management systems within their businesses. GCG is fortunate enough to sponsor the annual Australian Institute of Occupation Hygienists (AIOH) Presidents Cup Golf Day, and as a golfing fan Brendan enjoys - whenever the opportunity arises - getting out on the course for eighteen holes. Brendan is a member of the Western Australia chapter of the Safety Institute of Australia (SIA) and actively contributes to the ongoing development of SIA's presence in Australia. He is also involved in the Young Safety Professionals Network (YSP) and continues to mentor people new to WHS and Occupational Hygiene. Brendan has tertiary qualifications in Occupational Health and Safety (OHS) and Industrial Hygiene. He was also a recipient of a WA Business News '40under40 Award' in 2012 - an award "designed to recognise and celebrate Western Australia's 40 leading business entrepreneurs under the age of 40." Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interest. Mike: Welcome to the Troubleshooters podcast with me your host Mike McGrath. Now, Brandon Green has been running his company for 18 years, and along with these two directors has built GCG into one of the leading independent health, safety, and hygiene companies in Australia. And they are not done yet. This growing business is reinventing the way the industry delivers its services through tech enabled innovation. GCG is a great example of what happens when talented people get together and play the long game. Sit back and listen to this Troubleshooter talk about how he built a winning team. So Brendan, welcome to the troubleshooters podcast. Brendan: Thanks, Mike. Great to be here. Mike: I've been wanting to get you on because I really, really admire what you've done in that business. And what you and your colleagues have achieved because it's just a great story. I mean, Professional Services is a hard market. It's people oriented. And you know, you guys have grown since I met you you've grown from three to 20 mil, which is outstanding. And so I thought we'd we delve back a bit and I'd ask you some of the things are perhaps not completely across myself. So you started Green Consulting Group, which is a health, safety and hygiene business in 2005. And so prior to that, you have been to uni, you trained. You got your bachelor’s in health, safety and hygiene. And, and then you went to work for bhp, which a very well trodden path, no doubt. Brendan: Yeah, I guess, getting over to Wi Fi and Port Hedland was my fir]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo full 20 2 https://www.oasispartners.com.au/wp-content/uploads/2024/02/Tile-V2.png clean no 38:50 No no https://www.oasispartners.com.au/podcast/meet-mr-ebit/?utm_source=rss&utm_medium=rss&utm_campaign=meet-mr-ebit Thu, 23 Nov 2023 00:03:34 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17291 Contact Mark: markholloway@shadesofpale.com.au Points of interest Life journey from football to eyewear entrepreneurship. (0:10) Upbringing, sports, and business success. (1:21) Career progression from engineering to sales management to business ownership. (3:16) Leadership and company issues. (7:43) Liquidation and survival in the fashion industry. (11:50) Overcoming business challenges in the eyewear industry. (16:35) Selling a business to a supplier. (21:13) Business ownership and sale. (25:37) Selling a business and transitioning to a new role. (31:17) Turnarounds, brands, and entrepreneurship. (36:33) Transcript Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interests for you. Mike: Welcome to the Troubleshooters podcast with me your host Mike McGrath. My guest today Mark Holloway has a great story working class lad from Birmingham in England, who is not just football crazy, but is himself a very decent centre-forward. His life changes direction when Sydney Croatia spots him and bring him to Australia to play semi-professional football. At that point, this cryogenics engineer switches to sales and becomes a very effective troubleshooter, nicknamed Mr. EBIT, for his consistent ability to make profit! He then gets to work on building a very successful eyewear company. So, sit back and listen as I delve into Mark's fascinating story. So, Mark, welcome to the podcast. Let's go back a bit. So, you come from Birmingham, originally, working class sort of upbringing? Yeah, yep. Tell us about that. And you were mad on football. I mean, everybody was where I came from, say, my street in Solihull, you either supported Aston Villa or Birmingham City. And you played football all the time. Mark: Exactly and that's right, Michael. Well, I am from a working class background. You just mentioned Solihull. I came from Mutual's there was a big difference there. So it was a classic, you know, terraced home, to up to down. My father was a mechanic. But he he had to take work as a truck driver in the end to you know, to make ends meet. Mom did two jobs. So it was a brother, one brother, two sisters. It was football was all really we had. And schooling took a second sort of position for me, which was a problem for my parents. Because all I was bothered about was football at that stage of my life. Yeah. So my parents at the age of 11 thought it was a good idea to send me to a Rugby School. But all all that did was was give me another sport to fall in love with so, I came a tragic rugby player and football, but football or soccer, as we call it here in Australia was my my first love. Yeah. Mike: Okay. So look, just looking back before we move on, right? What did you get from your upbringing? And what did you get from sport? Right, that sort of set you up for t]]> #newpodcast #SME #businesschallenges #troubleshooters#seasontwo full 19 2 https://www.oasispartners.com.au/wp-content/uploads/2023/11/V3.png clean no 38:54 No no https://www.oasispartners.com.au/podcast/finding-purpose/?utm_source=rss&utm_medium=rss&utm_campaign=finding-purpose Wed, 18 Oct 2023 02:33:50 +0000 https://www.oasispartners.com.au/?post_type=podcast&p=17279 Contact Mat: LinkedIn https://www.linkedin.com/in/mathew-stillone-b4797a41/   Points of Interest: The “AHA” moment for Mat. (0:30) Food industry, entrepreneurship, and product quality. (3:35) Starting and growing a supplement business, quality control issues, and manufacturing products. (7:38) Starting a contract manufacturing business and creating a brand. (12:09) Entrepreneurship, innovation, and plant-based nutrition. (16:36) Managing stress and purpose in business ownership. (23:29) Entrepreneurship, resilience, and relationships. (31:52) Transcript Mike:  Welcome to the Troubleshooter’s podcast with me your host Mike McGrath. Today's guest Mathew Stillone started his first business protein supplies in his garage. So successful was it that it eventually took over the whole house. This bold startup initiative, in the better for you food sector, followed a period of deep reflection by Mat, who had suffered from anxiety in his late teens and early 20s. Mat felt he needed to express himself and do more of what mattered to him. Since then, he has started three more companies, all of which have become successful. So, sit back and listen to this inspiring story of how Mat overcame adversity, built strong resilience, and found what really matters in life. Mat Stillone Welcome to the Troubleshooter’s podcast. Mat Stillone: Thanks for having me, man. Appreciate it. Mike: I'm very grateful that you've been able to attend. You got into business? Was it your late 20s or early 30s? You started Mat? Mat Stillone: Yeah, my mid 20s. Yeah. 26. I started my first business. Yep. Mike: Okay. And up until then, Mat. So I didn't know from your story. Just going back, a little bit that you? You sort of had a bit of an aha moment. One time when you were crossing the story bridge there in Brisbane about just not wanting to continue on with your job as an employee. Mat Stillone: Yeah, that's right. I was in. Yeah, I was on, you know, honestly, I was in a pretty dark place. I struggled with anxiety, depression, a lot of my teenage and, you know, early 20s. And yeah, a lot of things. I've moved to Brisbane to start a whole new life and a new journey. And I thought that would just change things for me. But it, I guess it did, obviously. But at that time, I just couldn't. I felt like I had a higher purpose, something that, you know, something that was great for me out there. But I just was like, as was just a fingertips away, and I couldn't quite get there. So yeah, I had this. I had this moment. And you know, at the same time I was working in, you know, the pharmacy industry. And yeah, I got, I got jacked up in thought, I think I could do something a little bit better. But yeah, on the story of bridge, I tried to U turn, which if anyone that knows the story of bridges, it's wild to do that had a bit of a meltdown. But also, at that poi]]> #newpodcast #SME #businesschallenges #troubleshooters #matstillone#seasontwo full 18 2 https://www.oasispartners.com.au/wp-content/uploads/2023/10/Tile-2.png clean no 35:52 No no