Top Entrepreneurs

12.04.05 An article selected by IXL publication 2005 Top entrepreneurs Published by Boss- Financial Review, Nov.2004 Author – Mike Hanley As far as they’re concerned, it may be just what they do, but for those of us who haven’t (yet) built multi-million dollar businesses, they are a source of inspiration and wonder. They are the wealth creators, the people who have put their lives on the line and come up grinning. Statistics say that for every successful business, for every Gerry Harvey or Frank Lowy, there are at least four who tried and failed. Perhaps their product or service was no good. Perhaps they couldn’t find anyone to back them with the bucks. Perhaps they simply couldn’t communicate to others what they were trying to do, or they couldn’t attract the right people. Perhaps they just had a run of sheer bad luck. But the entrepreneurs featured on these pages prove it doesn’t always have to be this way. Here we present some examples where things have gone okay. Not perfect, mind you; none of our entrepreneurs would claim that life has been smooth. Just the opposite, in fact. But in talking to each one, what comes through is that there truly is something called the entrepreneurial spirit, and that those who have it have many things in common. AFR BOSS sat down with Tom McKaskill, professor of entrepreneurship at the Australian Graduate School of Entrepreneurship at Swinburne University of Technology, to try to tease out the common threads in each of the stories on the following pages. People Performance Profit 1 12.04.05 An article selected by IXL 2005 Top entrepreneurs This is what we found out about our top entrepreneurs for 2005. 1. Passion Every one of these individuals started with a passion for what they are doing. Not one mentioned money as a motivator. 2. Problem orientation Most of them set out to solve a problem. For many it was about doing something for customers that would enhance their lives. They are passionate about providing value and quality to customers. 3. Perseverance Success has been a long time coming for many of our entrepreneurs, and most had to work long and hard at getting it right. It doesn’t happen overnight, but these individuals had the determination and belief to keep going when many would have given up and got a job. 4. Once an entrepreneur, always an entrepreneur Entrepreneurs do it again and again and again, reinventing themselves and their organisations. 5. A lack of orthodoxy Entrepreneurs think of doing things differently: a pocket sock, a flat chicken, a new way of looking at financial planning. They put ends and means together in different permutations. 6. Values and a people-based approach These individuals are very people focused. It’s evident in the way they talk about their staff. 7. Delegation You can’t grow an organisation unless you understand your own strengths and are willing to delegate your weaknesses to others. 8. Vision. All have a vision of a business that helps lots of people – a big dream. 9. Fearlessness about changing direction If these entrepreneurs hit a roadblock, they will find a new way to do things rather than give up. These qualities may be the minimum requirement for achieving success as an entrepreneur. They may be a tall order in themselves. But as many who have tried and failed will attest, often they may simply not be enough. Timing, technology, teams – all these things and more combine to make a successful entrepreneurial career. People Performance Profit 2 12.04.05 An article selected by IXL 2005 Top entrepreneurs Runs on the board Arun Abey went from Canberra academia to the world stage with his ideas on finance. These days he's always on planes. Many entrepreneurs might allow themselves a little time off after a multinational bought their company for more than $200 million. For Arun Abey, the day the cheque hit his account may have been the end of his career as an entrepreneur, but it was the beginning of his life as a high-flying corporate executive. “As my wife never tires of telling me, I’m working harder now than I ever have,” says the executive chairman and founder of the financial planning giant ipac, bought by Axa Asia Pacific (the Australian arm of the French financial services behemoth Axa) in 2002 for $205 million. But he is enjoying it more, too, because – to use a cricketing analogy – “now we’re playing in the World Cup”. Abey admits that, 22 years ago when he and his four partners set out on the ipac journey, the team was playing schoolboy cricket. To stretch the analogy, in the late 1980s and early 1990s they moved into English grade-style cricket and later the Sheffield Shield, with some overseas tours – to New Zealand, South Africa and Taiwan, where the company established successful joint ventures. “We could have kept growing steadily like this for the next 20 years, but very few people get to play at World Cup level at anything in life,” says Abey. Axa offered the ipac team that chance. Now Abey is not only executive chairman of ipac, a firm that manages some $9 billion in funds and has some 2,000 private clients in Australia alone, but he is head of strategy for Axa in Australia and the head of wealth management strategy for Axa Asia Pacific. All this may seem far removed from the world of academic economic research where Abey began, but his status as the quintessential globalised businessman who spends as much time on planes as he does on the ground is the logical outcome of the observations he was making in the early 1980s. It was the beginning of the Hawke/Keating years, and Abey was a 25-year-old researcher with links to the Australian National University in Canberra. The words deregulation and globalisation were cropping up in his work “well before they started appearing in the Financial Review”. Meanwhile, he was indulging in a hobby: investment. People Performance Profit 3 12.04.05 An article selected by IXL 2005 Top entrepreneurs “As a personal investor I would constantly be challenging my stockbroker about the implications of deregulation and globalisation,” he says. “In the end, he would be ringing me up for ideas.” Abey sensed opportunity in his stockbroker’s ignorance: “I believed, and still do, that financial planning would become the world’s second most important industry, after medicine.” Abey knew he didn’t have every skill he would need to build the kind of business he wanted. At the time, financial planning as an industry was almost non-existent. Paul Clitheroe, now well known as the chief commentator on Channel Nine’s Money program, had only three years in the financial planning industry under his belt but was practically an éminence grise. Abey put in a cold call to him. The other partners to come on board – all of them still full-time executives with ipac – were Darryl Harford, a tax lawyer; Peeyush Gupta, a computer scientist; and Suvan de Soysa, with a background in accounting and law. The company’s principles were based on observations that at the time were not obvious: the world was changing fast; the investment options opening up to the individual would prove confusing and complex; and people would need good long-term advice to help them through. The company took a three-pronged approach. Its strategies and recommendations were based on solid economic analysis. Its people would be tertiary educated in economics, law, business or finance, as well as being certified financial planners, the top industry qualification. And it would feature non-transactional remuneration. Traditionally, a stockbroker gets paid based on the size of the trade, a situation that creates all sorts of moral hazard, according to Abey. ipac advisors have always been paid, among other things, on the basis of how long they retain a customer. Abey’s 22 years in business have taught him four things, he says. First, understand the “psychological value” of the product you are selling. Second, team-building is not about finding people who are the same as you. Diversity rules. Third, understand the difference between human capital and intellectual capital: how does the company keep the genius of its people, even when they’ve walked out the door? Finally, if you are going to play in the World Cup, you’ll need “sheer, bloody-minded perseverance”. People Performance Profit 4 12.04.05 An article selected by IXL 2005 Top entrepreneurs Healthy wealthy & wise Lorna Jane Clarkson is the fitness freak who turned her personal take on the leotard into a million-dollar empire It may be the nature of the breed: many entrepreneurs never know when they have achieved “success”. That is not the case for Lorna Jane Clarkson, the power behind Brisbane’s fast-growing Lorna Jane wellness group. For Clarkson, success will come in the form of a phone call – from Oprah Winfrey, asking her to appear on her program to tell millions about the Lorna Jane approach to wellness. She modestly accepts that Oprah might have to get one of her producers to call. That’s the impact on the global fitness scene this entrepreneur wants to have. It’s not about the money: “We just really want to make a difference to people’s lives and to help them understand how much better quality of life you can have if you have balance.” There may still be a way to go before Clarkson attracts Oprah’s attention, but it is more likely now than it was 15 years ago. Then Clarkson was working in a backroom studio in a Brisbane gym cutting and designing her own lines of activewear for women. Today, she owns a string of 22 activewear shops across Australia, a chain of health and lifestyle centres in Brisbane, and Lorna Jane branded water, and she’s preparing to launch a wellness publication this month. Revenues this year are expected to top $15 million, and the company is shaping up for an IPO sometime in the near future. Clarkson began making gym clothes while working full time as a dental therapist in Cairns. A fitness freak, she became frustrated with the limited range of women’s workout clothes and began experimenting with her own designs and fabrics. Her housemate, a home economics student, was the first to teach her how to sew. Those were the days when aerobics was glamorous, when instructors made a name for themselves by developing new moves and having the best soundtrack to help people get through their workouts. Clarkson moved to Brisbane, quit her job and became a full-time aerobics instructor. Local stardom was to follow: not only could Lorna Jane put you through a mean cardio routine, but she also did it in some funky gear. People Performance Profit 5 12.04.05 An article selected by IXL 2005 Top entrepreneurs “In the early 1990s everything was big and bold,” saysd Clarkson. “My stuff was a move away from the boring black leotard – I was making things with one leg missing, with big bows on it. Everyone was trying to make a fashion statement in those days. “I was an instructor at one of the biggest clubs in Brisbane and I had all the other instructors wearing my gear. They were my angels. All the customers were wearing my stuff. I would wear one shoe one colour and the other a different colour, and suddenly everyone else would be doing that too.” Her husband, Bill Clarkson, saw the potential for the business. “He could see that the brand commanded fierce loyalty from people; they were really loyal to me as a person as well as to the brand,” Clarkson says. “Many wouldn’t wear anything else. The pair opened their first shop on the first floor of The Mall in Brisbane. Transferring the fierce loyalty of her aerobics clients into a mass-market brand has itself been a workout. “We are predominantly activewear, and we only do clothes for women,” says Clarkson. “When you are cutting down your market like this, you have to have that uniqueness. Because of that, we are really careful with the people we employ. We always ask them what they know about Lorna Jane. We want them to live the life and wear the clothes so that they themselves become examples of the culture. When people wear Lorna Jane they are telling you that they live the Lorna Jane lifestyle.” Lorna Jane stores play their own networked music, and between tracks the announcer gives health and fitness advice. The brand has never sold through department stores because “you just become one of many, and this is about creating a culture and a lifestyle”. The plan is to keep growing until that call comes through from Oprah. No sweat. People Performance Profit 6 12.04.05 An article selected by IXL 2005 Top entrepreneurs Gazebos galore Gary Gale invented a knitted plastic shade fabric. Now he has the market covered. If you go down to your local playground or shopping precinct and look up, more likely than not there will be a shade structure made from a knitted polymer fabric. It was invented by Gary Gale. Sent to study textile technology in Germany in the early 1970s by his father, Gale returned to Australia with the idea of producing a fabric by knitting polyethylene and polypropylene. It was not a glamorous product, and it was some way from his Dad’s core business of knitwear and baby and children’s clothing, but it was simple and compelling – and a step up from what had been on offer previously. Gale Australia quickly won an order from Elders for 10 tonnes of agricultural shade cloth. “We basically invented a better mousetrap,” says Gale. Over the years, as the company has poured money into R&D, the number of applications for the product has grown enormously. Gale Pacific now makes umbrellas, gazebos, tents and shade sails, among other items. By all accounts, Gale’s father Harry was quite a dominant character and Gary felt it best to put an ocean’s distance between them. While his father focused on growing the shade cloth business over here, Gale went off at the age of 26 to the US with his new mousetrap, found a partner in a US public company and, in true 1980s style, built a $US60-million business, Weathashade, that teetered on a mountain of debt. “We were one of the fastest-growing companies in the US for five years in a row, but in the 1990s we had to restructure,” he says. In 1992, the US finance dried up and Weathashade couldn’t attract the capital it needed. It had grown too fast, says Gale. With 7 per cent of the equity of the US business, Gale stayed on as chairman until 1994, when he left to start his own importing business using the products developed by his father. “All that enthusiasm and bottle needed to have a conservative underpinning,” he now says. “As a shareholder, I exited the US with a very different view of what was needed for a successful business.” Gale was importing products from Australia and overseeing Gale Pacific’s manufacturing People Performance Profit 7 12.04.05 An article selected by IXL 2005 Top entrepreneurs in the US when his father retired, in 1995, and handed over to a CEO in Australia, who moved the manufacturing back from the US to Australia. The move had an adverse impact on costs and quality. Harry Gale took charge again in 1997, but died of a stroke just months after coming out of retirement. Gale moved back to Australia and spent the next year restructuring and refocusing the business. The company had diversified into pot plants and garden furniture, and those businesses were the first to go. The cloth continued to be made in Australia but was sent to a new joint-venture cut, make and trim plant in China. Today, the company does all its cut, make and trim in China, where it has just bought out its joint venture partner and is attacking the Chinese market with locally made product. Gale Pacific floated on the ASX in December 2000, raising some $15 million. Since then it has bought a business in the US, set up a base in Dubai and bought a European home improvements supplier. Revenues have grown from around $40 million in 2000 to between $150 million and $200 million this year, according to Gale, and the number of people who work for the company has increased from 105 people to more than 1000. Now he’s focused on building a true multinational. People Performance Profit 8 12.04.05 An article selected by IXL 2005 Top entrepreneurs Just add chilli Tony Cerqueira brought the taste of Portugal to Bondi to create an Australian success story. Now he's cooking up franchising deals overseas. It wasn’t until 1998 that Tony Cerqueira felt comfortable handing the recipe for his chilli sauce to an outside company to manufacture. Until then, he spent two nights a week producing 1000 litres of sauce, 50 litres a batch, in four huge pans, turning out a batch every hour and a half, all night long. For years and years. In the mornings he would visit his 11 stores around Sydney, each one attempting to replicate the style and taste of the Portuguese chicken that made Cerqueira something of a local celebrity in Sydney’s Bondi. There he’d opened his first Portuguese Style Bondi Charcoal Chicken shop in 1986. Back then, says Cerqueira, “Australia had never seen anything like it. Flat chicken!” Within a few years, Cerqueira’s restaurant had become locally famous. “From morning to night, queues outside the door,” he says in his distinctive Portuguese accent. One customer was Gary Linz, a retailer with experience at Barbeques Galore and Rebel Sports, who kept bugging Cerqueira to expand. In 1993 Cerqueira sold a 12-month lease on the Bondi restaurant and took his family for a three-month holiday to his native Portugal. He told Linz that if all went well with the restaurant while he was away he would be open to a partnership to expand the concept when he got back. Everything went well. The pair teamed up and worked on an expansion strategy, crafting everything from the name – Oporto, after Cerqueira’s home town and his favourite football team – to the look of the restaurants, the systems and the training. Over the following 12 months they opened three new stores, two wholly owned and one sold as a franchise. With Cerqueira’s bi-weekly batches of sauce, the company grew slowly: by 1998 there were 11 Oporto stores across Sydney, nine of which were wholly owned by Cerqueira and Linz. Then came 1998. With so many stores under its management, the company reached its growth limits. “From day one when I thought about growing the business, I would never have thought it was so hard to find good people,” Cerqueira says. The obvious answer was to expand the franchised part of the business. People Performance Profit 9 12.04.05 An article selected by IXL 2005 Top entrepreneurs Today, the company is Australia’s second fastest growing franchise chain (after Boost Juice), with 68 stores in this country. People Performance Profit 10 12.04.05 An article selected by IXL 2005 Top entrepreneurs Cleaning up Barb De Corti launched an attack on dirt thanks to an Austrian Mother-in-law who helped her clean up her act. It wasn’t until a few years after Barb de Corti began using Enjo cleaning cloths that she noticed that the family was getting a better night’s sleep on Saturdays. “We used to joke that Saturday was a good day for my son to have an asthma attack, because if we had a bad night at least we could sleep in the next day.” Saturday was cleaning day in the de Corti household, and Barb is a self-confessed cleaning fanatic. That meant there were a lot of chemicals being sloshed around, and they aggravated young Mark’s asthma. Then de Corti’s mother-in-law in Austria, who knew about her cleaning fetish, sent her some Enjo cleaning cloths. The chemical-free cleaning system not only cleared her son’s bronchial tubes but also built de Corti’s fortune, which was recently estimated in BRW’s Young Rich list at some $60 million. Enjo products use particular fabrics designed to remove household dirt using only water. Today the Perth-based company reportedly sells about $100 million worth of them a year, through de Corti’s network of 1300 direct sales people who do in-home, party-style demonstrations. A decade ago de Corti herself was the only salesperson in the country, having bought the licence to sell the products from the Austrian parent company. She used $40,000 of her own savings for the purchase. She was then a trained aerobics instructor, “but I wanted a job where I could work around my son,” she says. “I could do Enjo home demonstrations while he was in school, or after he had gone to bed. I loved the product. “For the first three years there was me, me and me. But by myself I couldn’t get anywhere, so I had to look at the bigger picture. We didn’t have any money for advertising, because we didn’t have any money full stop. But we found many people who were willing to take the product on and build their own businesses.” Slowly she began to insert layers of sales staff and management, and the business began to grow. The direct-selling business model the company uses was built by “trial and error”, says de People Performance Profit 11 12.04.05 An article selected by IXL 2005 Top entrepreneurs Corti. Enjo consultants earn commission of between 20 and 37 per cent on their sales, depending on their turnover, and can earn bonuses for training other people to develop their own Enjo sales operations. But de Corti says the nature of the product itself determined the direct-selling method. “We don’t just want people to buy our products, we want to create Enjo users; we want them to be able to use the product in the right way. If you purchase our products we want them to give you a lifetime of use and [for you to] get the benefits from them that you want.” De Corti herself was doing home demonstrations for the first seven years of the company’s life. “It worked for me,” she says. “I consider myself like anyone else – I want to make an income, have a holiday and everything else.” De Corti recently bought the licence to distribute the product in the US and is spending increasing amounts of time there developing the company. The challenge, now that the company is a $100-million multinational behemoth, is keeping close enough to the ground to ensure that all parts of the organisation are pulling together. “I’m still pretty hands-on; you have to be out there and talking to people,” she says. “We made quite a few costly mistakes by not talking to the people on the ground. If you are going to invest in an advertising campaign or an incentive program, you have to talk to the people who are selling the product, and those in the warehouse. You might have one vision, but if the sales team don’t like it, it won’t go anywhere. To keep motivated I find you always have to surround yourself with people who know better than you.” For de Corti, the most important thing for aspiring entrepreneurs is to love the product. “It doesn’t come much better than this. We are improving the environment, and when our products are used we take them back and recycle them. And our people are making money.” De Corti says she’s still having fun running the business. “The girls keep asking me how many pairs of shoes I’ve got now,” she laughs. She’s not saying, but with $60 million in the bank, she may give Imelda Marcos a run for her money. People Performance Profit 12 12.04.05 An article selected by IXL 2005 Top entrepreneurs The start-up king Serial entrepreneur Brian Dolling has found his calling in making plastic wine stoppers. Having just sold the last of his three start-up businesses and settled into retirement, Brian Dolling found something to keep him busy. He had planned to invent a simple plastic icecream stick so that after the last lick of your paddle pop you wouldn’t get that awful taste of wood in your mouth. He knew a bit about plastics, having had a specialty extrusion business manufacturing plastic brushes and handles and the like. But before it came to fruition, a winemaker told him he was sick to death of using cork to close his bottles and suggested Dolling pursue a potentially more lucrative market: plastic wine stoppers. So did he have any prior experience in the wine industry? “Not apart from drinking it,” he says. Dolling’s wife asked him two questions: how long before I get you back, and how much is this going to cost us? Nine years and $8 million later, his original answers – six months and $250,000 respectively – have turned out to be somewhat wide of the mark. But, he says: “We’ve got a tiger by the tail and we can’t let go until he’s in the cage.” Back in 1996 when Dolling began his research, he was unaware that about 12 different companies around the world had similar ideas. In Australia alone, three companies came to the market within a year of each other, in 1998. Dolling’s company, NuKorc, was second to the market and is now the only significant Australian survivor of the stopper wars of the new millennium. Only three synthetic stopper companies in the world are still standing, the other two being based in the US. But the market has grown. NuKorc now manufactures more than 350 million high-tech synthetic closures a year in Australia and exports to about 30 countries around the world, with turnover of about $24 million. Dolling is about to produce a sparkling wine cork, and stopper corks for whisky, gin, sherry and olive oil bottles. What about the dominance of screwcaps? Dolling, not surprisingly, has an answer. He says there are about 16 billion corks sold each year in the world today, of which synthetic stoppers make up about 1.3 billion. Screwcaps are only big in Australia and New Zealand and face problems, he says. First, they seal with an absolute vacuum, which does not allow any air in or out. The result is that the contents of the bottle have less character. People Performance Profit 13 12.04.05 An article selected by IXL 2005 Top entrepreneurs Second, they are easily damaged: “If two bottles knock together at the top, it can break the seal.” NuKorc installed two new production lines in Adelaide last month. “In three to five months we’ll be facing a difficult decision – will we invest in a new plant with double the capacity of this one?” he asks. “We expect to be three times the size we are in three years’ time, with 10 per cent of the world market – that’s 1.6 billion units.” If NuKorc succeeds, it will be a bravura ending to this serial entrepreneur’s career. Dolling’s view after a lifetime of building businesses is: “When everything collapses around you – which happens about twice a year – you just have to have the fortitude to get up. If you’re in a start-up business, you just have to have the strength to continue.” Nine years and eight million down the track, when does he think his wife will get him back now? “We have a highly professional team here, rapidly taking over all areas of the business from me,” he says with a chuckle. People Performance Profit 14 12.04.05 An article selected by IXL 2005 Top entrepreneurs Pocketing the cash Bruno Schiavi convinced Wal-Mart it needed 400, 000 extra socks. Then again, these were no ordinary socks. If Bruno Schiavi, 32, succeeds in building a ragtrade empire, it will be on the back of one big idea: the Pocket Sock. A sock, with a pocket. The pocket is big enough to hold a key, maybe a credit card, some cash, but useful enough for someone going for a run or to the gym who is otherwise pocket less. The idea is good, of course, but anyone will tell you that good ideas are not difficult to come by. A good idea does not an entrepreneur make. What does is the gumption to work nights for two years to create a design, find a manufacturer and then find a customer. An entrepreneur might try all sorts of materials, and different ways of making an idea work. And they might spend all their money (and their mother’s) taking their idea to China to see if they can get it manufactured, fix the technical hitches so that the Chinese can make it and bring the final product back home. While it’s a good idea, well executed, and they’ve put their heart and soul and all their money into it, they might have difficulty selling it. Particularly if, as the department stores put it, it has no product history. What then? Schiavi and his mother Anca just wouldn’t let it rest. They borrowed money and went to LA to open an office to sell the Pocket Sock. A little office in Wiltshire Boulevard – fashion central. They produced an infomercial for $15,000 and had it broadcast over America’s QVC shopping channel network. The Pocket Sock went off like a rocket. And who should come a-knocking? None other than Wal-Mart, with its 3300 stores and a couple of orders for 400,000 Pocket Socks. “We kind of freaked,” says Schiavi, “You think: ‘where am I going to get the capital to do it?’” But the pair found the capital, corralled their suppliers and filled the order. Returning to Australia, Schiavi took the Pocket Sock, with its newly-minted product history, to the iconic Sydney-based retailer Gowings, which took 100 pairs. Two days later Gowings rang up and asked for more. Soon the Pocket Sock became one of the bestselling lines in Target, K-Mart and Myer. There was even a spin-off range: the People Performance Profit 15 12.04.05 An article selected by IXL 2005 Top entrepreneurs anklet Pocket Sock for the pocketless sporty lady, and children’s Pocket Socks, for icecream money. Flush with Pocket Sock success, Schiavi quit his day job (he had been recruiting marketers) and turned his attention to lingerie. How expensive it all is! Fifty dollars a bra! These days, thought Schiavi, you can manufacture good quality garments in China and produce a much cheaper product: the Anabella line was launched on the internet in 2000. Supported by a rolling ad campaign in women’s magazines, Anabella promised cheaper bras and panties than you get in the stores, in beautiful fabrics, delivered in three days. “Your La Perla bra costs you $90, and it looks beautiful,” says Schiavi. “But if you can get it for $29.99?” The first shipment of Anabella sold out in a week. For the first year the range was sold only online, then Schiavi took the product history to K-Mart. Needless to say, your local K-Mart is stocking Anabella. It is also stocking Delta by Anabella, pop singer Delta Goodrem’s line of underwear, launched last year. Schiavi met Goodrem on the set of the film Hating Alison Ashley, and the two, he says, hit it off. Goodrem knew only too well the problem of finding quality underwear at an affordable price and leapt at the chance of a collaboration with Australia’s emerging underwear giant. Having now sold more than five million Pocket Socks, Schiavi knows what it takes to turn a good idea into gold, but he says his business is guided by one principle: when you say you are going to deliver, deliver. Even if there are other tasty projects waiting to be snapped up. The company now has an annual turnover of $15 million. “We are a small company, but we have to have the discipline to say no. We’ve said no to two different projects in the last two years, and it is very hard to say no, but you have to keep your growth under control.” People Performance Profit 16 12.04.05 An article selected by IXL 2005 Top entrepreneurs Paris, Rome, Paddington Tony and Maureen Wheeler met on a park bench in London. They've traveled a long way on the strength of an idea. A first edition copy of Across Asia on the Cheap goes for about $60 in rare booksellers these days. It had a cover price of $1.80 on its publication in 1973. That might seem like a steep rate of inflation until you realise that this is one of the first 1500 books of the more than 60 million that the Lonely Planet guidebook empire has produced in the last 32 years. Lonely Planet has traveled almost as far as its two founders, Tony and Maureen Wheeler, since they met on a park bench in London. A year after that, in 1970, they set out on their honeymoon trek in a £65 panel van across Asia, arriving in Australia with 27 cents between them. It would have been hard to imagine the journey the company would take as the pair sat at their kitchen table in Sydney’s Paddington, stapling those first 1500 copies. They now attribute its success to the fact that they never lost the spirit of that first adventure. It was the right idea at the right time. Over the years, airfares came down and the number (and wealth) of travelers mushroomed, as did the world’s hunger for information about faraway places. The Wheelers have recently been road-testing the writing and accuracy of the Ethiopia guidebook. They do this for six months of each year, across different parts of the globe. Says Tony: “It has been hard at times. For the first 10 years we were sitting around with no money and all our friends were onto their second company BMWs, or buying houses and having kids. Meanwhile, we’re struggling because we had an idea.” “Part of it has to do with the type of person you are – really independent,” says Maureen. “We didn’t take on any big debts, we were young and money didn’t mean much to us at the time. By the time we started to have our own children we weren’t well off, but we were getting there.” The constant struggle to make ends meet put a strain on all parts of their relationship. But as Maureen points out, the intensity of working and living together helped cement it. The growth of the business has been a gradual progression, one which Tony and People Performance Profit 17 12.04.05 An article selected by IXL 2005 Top entrepreneurs Maureen claim has never presented any conflict with their personal goals. “The things you hear about these dilemmas are generally where people try to keep control of everything, and they find they have to do things they are not very good at or don’t like very much, and the business goes awry,” says Tony. “I have always been able to see when I am not very good at things and let others do them.” The transition from kitchen table start-up to a significant business was almost seamless, they say. “It was six or seven years before the business stopped being just Tony and I,” says Maureen “That was quite a long time, and we were ready for it.” Lonely Planet hit a bump in the road after September 11 when travelers stopped traveling but has since come back stronger: “A lot of our competitors are owned by large publishing companies that could diversify into other lines of business when travel went bad. We didn’t have anywhere to go. But it meant that when the market came back we were here, with a whole new line of products, and the others were nowhere to be seen,” says Maureen. The company gained plaudits for its donation of $500,000 to tsunami relief but has been criticised over its travel advice during disasters. Tony’s advice has always been “go there if you can” – tourist dollars flow easier than aid dollars and have a more sustainable impact. The company now has offices in the US and in London, more than 400 permanent employees and 150 freelance authors. Perhaps astute collectors ought to be tracking down those $60 copies of Across Asia on the Cheap. People Performance Profit 18 12.04.05 An article selected by IXL 2005 Top entrepreneurs Taking on Starbucks Nabi Saleh and Peter Irvine met at church and decided they had a mission. Now they're bringing coffee to the masses. Either Peter Irvine’s personal assistant, Meg, really has “absolutely nothing at all negative” to say about her boss, Peter Irvine, or she is a great politician. She describes him as “always willing to compromise”, “easygoing”, and having a sense of humour. Meg has a three-and-a-half-year-old daughter and the phone calls, the unexpected incidents, the inevitable distractions are “never an issue”. Meg’s surname, however, turns out to be Irvine. Meg is Peter’s daughter-in-law and the three-and-a-half-year-old is Peter’s granddaughter. Gloria Jean’s Coffees really is a family business, and what a fast-growing family it is. Since the first two Gloria Jean’s coffee shops – franchised from America – opened in South Sydney in mid-November 1996, the company has opened another 242 franchises in Australia. In terms of franchise numbers, Gloria Jean’s in Australia is now one-third the size of McDonalds. Both CEO Irvine and chairman Nabi Saleh attribute its startling growth to two things: the groundwork they put in after they opened their first two stores to get the processes right, and the company’s family values, of which more later. The partners waited 16 months after opening their first two coffee outlets before starting to roll out the franchise operation. “We were finetuning and getting the model right, figuring out how a franchisee could provide the quality of coffee and service and atmosphere that we wanted to provide and still make a buck,” says Irvine. Once the model was built, however, it proved to be the company’s killer app. Growth in the Gloria Jean’s franchise base in Australia gave the pair the opportunity to take their model global. While Gloria Jean’s Australia was prospering under the watchful eyes of Irvine and Saleh, its parent was suffering. When the pair bought the master franchise for Australia from the US parent company in 1996, Gloria Jean’s US had about 260 stores. Then the company changed hands three times, lost focus and shrank to 150 stores. As the Australian operation grew, the franchise fees and sales commissions it was paying to the parent company were growing too. Irvine and Saleh went to the States to try to buy out the master franchise for Australia. They ended up buying the company. People Performance Profit 19 12.04.05 An article selected by IXL 2005 Top entrepreneurs According to Saleh, Gloria Jean’s goal is to present the world with a second globalised coffee offering – the first being a well-known chain out of Seattle – to allow customers “to make their own choice”. Saleh enthuses about the Gloria Jean’s family with religious fervour. “We are committed to building a unified family,” he says. “Everything we do is based on family and family values. Once you are family you are always family – it is no different from how it is in your real family. There are times for reprimanding and times for learning, and times for setting the record straight, but our goal is to equip our family members with success, and out of their success comes ours.” This kind of rhetoric may be all too common in a business world indoctrinated by the likes of Anthony Robbins and Tom Peters, but in Saleh and Irvine’s case the religious zeal is real. The two partners met through their place of worship, the Hillsong Church in the Sydney suburb of Baulkham Hills, now Australia’s largest congregation with some 17,500 members. At the time, Irvine was managing director of DDB Needham, where he had worked since 1963, and Saleh was running his own coffee and tea importer and supplier. “We were of the same heart and mind and faith,” says Irvine. “I had experience with franchising through working closely with McDonald’s at DDB, and Nabi approached me and told me that an opportunity had come up.” The pair went to the US and checked out Gloria Jean’s. They both felt there was room for the coffee market in Australia to move from its primarily instant base towards more premium products. There have been times when they have felt forsaken. Two years ago a fire swept through the company’s headquarters in Castle Hill, destroying its offices, stock and factory. “When you have 92 stores open, you really don’t need that,” says Irvine. Both men are confident, however, that their unique approach will see them through. “We have a belief in the template and in the product offering,” says Saleh. “That is how life goes: you have to have a dream and it has to be bigger than yourself. When things look challenging, that is when you get help from above.” People Performance Profit 20 12.04.05 An article selected by IXL 2005 Top entrepreneurs Minding your own business Former university dropout Craig Winkler came up with some sharp tools for success when he founded the software company MYOB. Craig Winkler doesn’t want to talk about his personal life, not even whether he has a family or not. For him, there is a clear distinction between work – building the $121million (2004 revenues) MYOB software empire – and not work. This has always been his modus operandi. When he was starting the business, he worked from his spare room, and “in the traditional fashion” used his garage as a warehouse. It sent him a bit “stir crazy”, so “I had this rule,” he says. “When I was in the lounge room I was at home; when I was in the spare room I was at work. When I stepped into the lounge room I would say, ‘I’m home’.” Winkler is dedicated to helping people like himself take control of their lives. He has made his pile ($120 million, according to BRW’s Young Rich List) by helping entrepreneurs do what they do well, and liberating them from the administrative hassles that can be such a drain on small business energy. MYOB (Mind Your Own Business) provides a suite of accounting and business management software and services to small businesses. For Winkler they are tools to help people who run small and medium businesses get their lives back. When Winkler was running his own business as a consultant he realised that people get into business for many reasons, and often that reason is not to get into business. Often they are just good at something – carpentry, dentistry, auto parts – and the business management stuff is a major inconvenience. Winkler dropped out of university to work for a computer company in the mid-1980s when that industry was just beginning to bubble. “The firm I worked for picked up the rights for a type of accounting software,” he says. The software was for big businesses, but it formed the seed of an idea, Winkler had previously run a business supplying a computer hardware component while studying electronics engineering. His accountant had taught him the wonders of the cash book – money in, money out. Surely, thought Winkler, there must be a better way. At that time, small businesses were buying computers essentially to use as typewriters, he People Performance Profit 21 12.04.05 An article selected by IXL 2005 Top entrepreneurs says. “There was so much more they could do.” He and his partner Brad Shofer, spent about 18 months specifying the requirements of the product they wanted to create to take advantage of this opportunity. They came across MYOB, a small US company based in New Jersey, run by Chris Lee. “It was really so close to what we wanted we thought we should talk,” Winkler says. They bought the licence, and in 1991 launched the company, which doubled expectations in the first year, and doubled in size for a couple of years after that. At the end of 1996 the company bought the global intellectual property rights from MYOB. Buying out the company was a bigger risk than Winkler and his partner wanted to take: “We didn’t really have the money to do it, but it was a critical opportunity,” he says. Next thing the company had won the Telstra Australian Government Small Business of the Year Award. The company floated in 1999, was tossed around in the wake of the dot com boom, and has helped Australia’s businesses get to grips with administering the GST. Its share price has been under pressure recently, but Winkler’s dream is pretty much unchanged: “I want people to be able to realise that they are more than their businesses. it is the most concerning thing, when talking to business owners, when you see their business is almost their own self image.” Helping them get their administration sorted is his way of helping them out of this bind. People Performance Profit 22