Speaker 1: Welcome to the mentor. I'm Mark Boris, David short you're
Speaker 1: the managing directman, and I guess the founder of short
Speaker 1: Ink I n C short Ink, formerly the owner of
Speaker 1: a Shorties liquor too. Welcome to the mentor. Mate, Thanks Mike,
Speaker 1: our mutual friend has got us here together. He's seeing
Speaker 1: your praises. So, David, were you called Shorty at school?
Speaker 1: I was, well, you're a big dude. You're about six
Speaker 1: ft two. What are You're a pretty tall bastard. More
Speaker 1: person the street and I said, who's this big guy?
Speaker 1: And here walking wait waiting to get in. So you developed, well,
Speaker 1: can you go back to that time when you first
Speaker 1: thought to yourself about Shorties as a as a business idea?
Speaker 1: Like what we where did you think to yourself that
Speaker 1: this is as potential to make a lot of dough
Speaker 1: and maybe one day I'll sell it. I mean, I'm
Speaker 1: always curious to find out people's mindset when they come
Speaker 1: up with an idea. What sparks the idea?
Speaker 2: Yeah, okay, Well I've been selling corporate booze for Porter's
Speaker 2: Edgecliffe for a couple of years.
Speaker 1: Well what does that mean? Porters and porters?
Speaker 2: But Porter's Edgecliffe at the time, in nineteen ninety eight
Speaker 2: to two two thousand, or for ten years before that,
Speaker 2: was a great corporate retailer. So they are supplying McQuary
Speaker 2: bank right the law firms and merchant banks all their
Speaker 2: beverage needs. And I got a job there as a
Speaker 2: delivery driver and then worked there for a couple of years,
Speaker 2: then went traveling and I was actually traveling through Turkey
Speaker 2: when September eleven happened, living in a treehouse and I
Speaker 2: got an email from a cousin saying, Hey, we've got
Speaker 2: the Australian Hotel and they just opened up cargo bar.
Speaker 2: Do you want to come back and do that corporate.
Speaker 1: Liquor stuff for the Australian Hotel for.
Speaker 2: The Australian Hotel out of the Australian Hotel and the Rocks.
Speaker 2: And then a couple of probably a year later than that,
Speaker 2: BW Wes brought Porter's Edgecliff and all of a sudden
Speaker 2: we had a really good business. So, like you know,
Speaker 2: we sort of boomed and picked up a lot of
Speaker 2: those existing clients that I used to manage and.
Speaker 1: Then well do so if you just stop you there
Speaker 1: from them, Dzer because BWS dash Porters lost those clients.
Speaker 2: Yeah, so BWS moved the bottle shop into the shopping center.
Speaker 2: Right they got that, they brought the liquor license and
Speaker 2: they stopped doing the corporate.
Speaker 1: Oh, they stopped doing it. Yeah, so that opened up
Speaker 1: for you guys.
Speaker 2: That created a little niche and it gave us a
Speaker 2: bit of a momentum to start picking up clients. And
Speaker 2: then soon after that we had an opportunity to open
Speaker 2: a bottle shop out at Road Shopping Center, which was
Speaker 2: the first Shorties in two thousand and four with the
Speaker 2: Walkers that we were very excited about. But it was
Speaker 2: probably my lesson in learning how to run a business.
Speaker 1: Because when you say the Walks, you doing Wark Corporation.
Speaker 1: Good corporation. Yeah.
Speaker 2: So Walkers built Road Shopping Center in that precinct and
Speaker 2: we excitingly took a bottle shop there. That was it's
Speaker 2: pretty hard work in a shopping center when no one
Speaker 2: turned up for the first a year or so, and
Speaker 2: that sort of drove me. By that stage, you know,
Speaker 2: I'd borrowed one hundred and five grand off my brother
Speaker 2: in law and my sister and it was like, you know,
Speaker 2: I got to make this work. Three or four years later.
Speaker 2: After that, it was like, let's go back and do
Speaker 2: corporate sales because the original plan was to open one
Speaker 2: bottle shop every year for ten years, and we decided
Speaker 2: not to do that. And I took a warehouse least
Speaker 2: six hundred meters from the city in Ultimo in two
Speaker 2: thousand and eight, and that was probably when I got
Speaker 2: some real momentum. The GFC happened and a lot of
Speaker 2: corporate businesses like De Lute started saying, you know, we
Speaker 2: want to do all our entertaining in house, and they
Speaker 2: employed Michelin chefs and you know they it became a
Speaker 2: really good business. So what looked like could have been
Speaker 2: a disaster, we sort of went from one or two
Speaker 2: million revenue in one year to ten million in two years.
Speaker 1: Well, what was your back if you go back to
Speaker 1: early days when let's see, when you open up the
Speaker 1: business in the bottle shop in roads shopping center, what
Speaker 1: was your business model? Like people can come to me,
Speaker 1: get my staff, they'd just walk into to the bottle
Speaker 1: shop by the bird's walk out. Was that your model
Speaker 1: or was your business model something more than that? Prior
Speaker 1: to that, it was all deliveries. Yeah, and you were
Speaker 1: going out of customers and saying what it would you
Speaker 1: like to buy? Email and maybe saying this is some
Speaker 1: specials we got on. It was more like sort of
Speaker 1: like digital marketing a little bit, but by email or some.
Speaker 2: Other or even back in the day we had an
Speaker 2: ad pages, right, so you know under beverages bottle shops
Speaker 2: now you know, saying corporate liquor supply, right. And we
Speaker 2: always sort of built the business by taking photos of
Speaker 2: the lobby and then we'd call call those businesses that
Speaker 2: were in each building, organize the time to meet the
Speaker 2: person that would organize the beverages off them bottle of
Speaker 2: champagne if they'd give us fifteen minutes, and you know,
Speaker 2: nine times out of ten would pick up the account.
Speaker 1: So what did you take photographs to lobby for of
Speaker 1: all the different businesses in there? So we're thick the
Speaker 1: of the lobby board.
Speaker 2: Yeah, figured if we're already going to that building, would
Speaker 2: take a photo of the lobby board and then try
Speaker 2: and secure all the businesses in each building. And you know,
Speaker 2: over twenty years we ended up picking up sixty five
Speaker 2: percent of the businesses in Sydney CBD.
Speaker 1: That's funny and that's what I often refer to was
Speaker 1: wearing out the shoe leather and the old days. Ye
Speaker 1: had no digital marketing as such back in that period anyway, heartily,
Speaker 1: the old days actually is only twenty eight years ago.
Speaker 1: But the way you did was knocking on people's door
Speaker 1: and go and seeing them and doing a demo or
Speaker 1: talk them into it or explain the benefits and then
Speaker 1: follow up the old school follow up, you know, back
Speaker 1: on the phone to them, not even text. Everything was
Speaker 1: like actual communication, actual communication, like old school communication and
Speaker 1: door knocking.
Speaker 2: It's exactly how we built it.
Speaker 1: So that was your model. So what is to get
Speaker 1: You did some retail. Wedge also did corporate corporate.
Speaker 2: Stuff, and then a good client would be someone that
Speaker 2: would order one thousand to one and a half thousand
Speaker 2: dollars every week and then one week. Once we built
Speaker 2: the relationship with them, we'd invite them to wine tastings,
Speaker 2: like if the chef to Carve of Don Pererion was out,
Speaker 2: would do forty five minute master class so they could
Speaker 2: come in and try a couple of wines or try
Speaker 2: a couple of great don perions or penfolds, and then
Speaker 2: still get home for dinner and be home with their families.
Speaker 2: So we did a lot of relationship building, We did
Speaker 2: a lot of events within the corporate and we tried
Speaker 2: to solve their problem. So this person was often using
Speaker 2: three or four or five different suppliers, and we were
Speaker 2: pretty much the complete beverage supplier for these corporate clients.
Speaker 1: That means water, soft.
Speaker 2: Drink, water, butcher juice, you know, then all their fine wines,
Speaker 2: all their beers.
Speaker 1: How did you work out what the office should be like?
Speaker 1: Did you work it out? Because I mean, obviously you'd
Speaker 1: had a lot of experience in the corporate world, corporate
Speaker 1: the liquor world, so to speak. But did you do
Speaker 1: it by trial and error or did you sort of
Speaker 1: survey them and say what is it you need from
Speaker 1: someone like me and our business to become like a
Speaker 1: one stop shop? And I hate that bloody phrase, but
Speaker 1: like as basically you're one stop shop when it comes
Speaker 1: to beverages generally yep.
Speaker 2: Well, we would ask the customers what they wanted and
Speaker 2: would actually look at any other beverage that going into
Speaker 2: that building as leakage. So we're trying and collect that
Speaker 2: we'ld go to a deal with a supplier. Often it
Speaker 2: was easier for them to deliver it to us and
Speaker 2: then we could sell it to the client. So you know,
Speaker 2: we were trying pick a core range and then pick
Speaker 2: stuff that would sell, and then that would be what
Speaker 2: we would offer. But you know, we went through all
Speaker 2: sorts of different things over the years, aboriginal water for
Speaker 2: some of the big four accounting firms because I had
Speaker 2: to support supply nation cardboard water, you know, environmentally free
Speaker 2: sugar free drinks. A lot of the big tech companies
Speaker 2: were inspired by what they're using in San Francisco. So
Speaker 2: I was like, you know, sugar free waters from France
Speaker 2: and all sorts of different things. So we're very reactive
Speaker 2: with what they wanted and that was our point of difference.
Speaker 1: So be but to have that point of difference in
Speaker 1: terms of relevant relevancy, I mean, how do you how
Speaker 1: did you remain market relevant? In other words, how did
Speaker 1: you know what was going on in San Francisco or
Speaker 1: how did you find this stuff out?
Speaker 2: That would be part like So our key clients would
Speaker 2: meet with them regularly every three months and there would
Speaker 2: be an agenda and it would be like, what else
Speaker 2: would you like, how can we make your work?
Speaker 1: You would you tell them that, by the way, in
Speaker 1: all the startups in San Francisco, they're drinking water from
Speaker 1: our Lady of Lords and blessing themselves before they have it.
Speaker 1: Or or did they tell you we want the water
Speaker 1: from our Lady of Lords. I think it was both.
Speaker 2: You know, would ask them what they're what they're trying
Speaker 2: to do, especially around sustainability. Do you know whether they
Speaker 2: wanted to get away from plastic.
Speaker 1: Bottles, because that's that's important because they're relevant, So you know,
Speaker 1: sustainability is relevant relative to the cardboard carton, not in
Speaker 1: a plastic.
Speaker 2: Bottle, having non our college drinks at a function.
Speaker 1: Yes, or hydrogen water like what they do these days.
Speaker 1: People haven't put hydrogen water. Somehow they make it high.
Speaker 1: I don't know how they do it, but whatever it is,
Speaker 1: But how did you keep on top of the good?
Speaker 1: I mean, are you a prolific reader or a prolific
Speaker 1: viewer of some station on television or some station on
Speaker 1: YouTube that's telling what the new, greatest and latest is.
Speaker 1: We'll just ask the customers.
Speaker 2: Yeah, would really just push the customers and you know,
Speaker 2: would consolidated all our customers, would meet.
Speaker 1: With them all and from them. And when you say
Speaker 1: we So we.
Speaker 2: Had a sales team that grew from just me, you know,
Speaker 2: to the end we had sort of five or six
Speaker 2: full time salespeople.
Speaker 1: And had and in terms of choosing your sales team,
Speaker 1: because you got your business up to be sure, he
Speaker 1: is leaged to be quite available business. But obviously that
Speaker 1: comes off the back of revenue, and the revenue comes
Speaker 1: off the back of orders, and orders comes off the
Speaker 1: back of these discussions, and these discussions come off the
Speaker 1: back of having the right salespeople which you chose, and
Speaker 1: then you're got to train them. So what was your process, like,
Speaker 1: how did you recruit a salesperson? Did you recruit them
Speaker 1: in your own image? You know, like I know this
Speaker 1: works for me, so I want people who like that,
Speaker 1: or did you yeah, how did you go about recruitment?
Speaker 2: Definitely didn't recruit them in my image, but we do.
Speaker 2: We recruited people that have been working in hospitality, a
Speaker 2: lot of people that have been working, you know, five
Speaker 2: nights a week, working in wedding venues or working Saturdays
Speaker 2: and Sundays. Hospitality was always a good one because founds
Speaker 2: what the customers needs were people that wanted to get
Speaker 2: an intro into sales. So do you know we could
Speaker 2: give them sales train and give them exposure to the
Speaker 2: corporate clients, teach them how to do a sales agenda,
Speaker 2: manage the manage the clients. So that's how we predominantly
Speaker 2: picked up clients, you know, passion for wine with secondary
Speaker 2: So long as they're interested in it, we could teach
Speaker 2: them all that. We could teach them about the product,
Speaker 2: but they had to have an energy and you know,
Speaker 2: be prepared to knock on those doors.
Speaker 1: As you said, it's a tough gig, and salesmen selling
Speaker 1: an idea selling the wine is probably not really what
Speaker 1: they're doing is probably more selling the whole concept. How
Speaker 1: did you how did you? I mean, do you map
Speaker 1: out a training program? Did you build a training program?
Speaker 1: These are the steps or these are the things I
Speaker 1: want you to be good out and these are things
Speaker 1: that are going to train you at. Yeah.
Speaker 2: Over the years and over the years we got better
Speaker 2: salespeople too that came in and helped lead the team
Speaker 2: and they brought different different structures to it. We had
Speaker 2: a really good chairman for a long time that introduced
Speaker 2: a lot of sales skills. He had done a lot
Speaker 2: of sales training and previous jobs. So we had a
Speaker 2: very clear the business had a clear plan. Do you
Speaker 2: know for the last fifteen years, we've had a strategy
Speaker 2: on what we're doing, how we're going to achieve it,
Speaker 2: and then really clear KPIs with the sales team, and
Speaker 2: they were sort of given a portfolio of clients and
Speaker 2: was their job to grow them. We lost very few clients.
Speaker 1: So because I often talk about this reducing stuff to
Speaker 1: writing as opposed to just you calling your five sales guys.
Speaker 1: You're sitting there in charge them, for example, and you
Speaker 1: talk for two hours and everybody no one takes the notes.
Speaker 1: There are no summarison made after it. There's no takeaway
Speaker 1: that they can put into a folder, you know, which
Speaker 1: might have a mental thought, which might have clips in it,
Speaker 1: which you can sort of say, this is last week's meeting,
Speaker 1: and so that then they've got nothing to refer to.
Speaker 1: I mean I often make two talks and I can
Speaker 1: talk to three or for a bit there, and virtually
Speaker 1: no one's writes them down, And I think, why are
Speaker 1: you here if you're not going to write a note?
Speaker 2: Yeah, Well that would infuriate me, especially if they went
Speaker 2: and saw a client didn't take notes. So if they
Speaker 2: if they're going to take fifteen to twenty minutes of
Speaker 2: the client's time, we want an agenda.
Speaker 1: We went climb was to see that.
Speaker 2: Yeah, we want to keep that on record too. So
Speaker 2: if they leave, or if there's a new person or
Speaker 2: the account get shifted to someone else, you can see
Speaker 2: the change because often the point of contact would change
Speaker 2: it a corporate client, but not the you know, not
Speaker 2: the account manager or vice versa. So do you know
Speaker 2: we wanted that history of being able to see, you know,
Speaker 2: what they've been asking for, what they're what they're looking
Speaker 2: for to, you know, to make their workplace better. And
Speaker 2: often they were looking at us for guidance. Yeah, you know,
Speaker 2: because they don't want the booths turning up late on
Speaker 2: a Friday. They want to pick a beer that you know,
Speaker 2: everyone enjoys drinking, or if the CEOs of organizing a
Speaker 2: really special event, they want great booths. So do you
Speaker 2: know they trust us?
Speaker 1: Yeah, it's because trust is an interesting concept. Brand is
Speaker 1: interesting when it comes to trust, and trust is interesting
Speaker 1: when it comes to brand, Like but why do I
Speaker 1: trust you? I trust you because I know you will
Speaker 1: be on time you say you're going to be at
Speaker 1: two o'clock. You be the two o'clock. I know, I
Speaker 1: know you from last time. Familiarity, Like I don't want
Speaker 1: to see a different dude every time or girl. I
Speaker 1: want to know that your content is good, Like you
Speaker 1: know you have valuable insights into the content that you
Speaker 1: will share with me. You can say you know you're
Speaker 1: a Deloitte and you want to be able to say
Speaker 1: listen KPMG without giving any name. Way, like one of
Speaker 1: your competitors, there's a style. But one of your competitors
Speaker 1: has been buying a lot of is that they found.
Speaker 1: It's very successful. Were they're bigger clients. Giving them, you know,
Speaker 1: a French wine instead of an Australian wine, or giving
Speaker 1: an Australian wine instead of a French wine, or giving
Speaker 1: them a low soul fights wine or a low whatever
Speaker 1: wine or a non preservative no preservative wine has gone
Speaker 1: down a treat with their clients. That's what builds trust
Speaker 1: because you give me something valuable, Yeah.
Speaker 2: One hundred percent, and then you take that one step
Speaker 2: further and we'll build a lot of experiences that we're
Speaker 2: doing so our supplies. We'd do strategy sessions with our
Speaker 2: supplies about how we could retail their product with excellence
Speaker 2: and more. Ennessy is an example. Would work out how
Speaker 2: we could retail Verve and Molt with excellence. That might
Speaker 2: be on Melbourne Cup Day in these corporate offices, you know,
Speaker 2: setting them up as bars with Berkeley Co Bars or
Speaker 2: Womb champagne bars with the glasses, the branded glasses, with
Speaker 2: a price for the best dressed. And from that we
Speaker 2: would hit up the supplies and go what's Verv's brand name, like,
Speaker 2: don't give all your marketing material away to the fancy
Speaker 2: bars in the city. We've actually got you know, five
Speaker 2: hundred thousand people for two or three drinks on a
Speaker 2: Thursday or Friday afternoon before they go into the bars.
Speaker 2: So we had we had a big influence around. You know,
Speaker 2: we got a lot of brand money from the supplies
Speaker 2: to activate these events.
Speaker 1: So so you sort of in marketing, you did their
Speaker 1: marketing for them, particularly like the big Unfortunately big corpors
Speaker 1: aren't great at marketing generally speaking, particularly internally. It's nearly
Speaker 1: like a HR exercise firm, like I'm doing something for
Speaker 1: my Cup Day, could be Christmas, could be a birthday,
Speaker 1: could be whatever. An anniversary of the firm being a thing,
Speaker 1: or could be celebrating some big acquisition, or they could
Speaker 1: have sold something, or they could have had a great
Speaker 1: financial year and blah blah blah. You know, it could
Speaker 1: be a town hall, you know, because a lot of
Speaker 1: these organizations have town halls, particularly in the quarries and
Speaker 1: all the sorts of people of the world. The big
Speaker 1: banks are doing the all the time because they staff
Speaker 1: need updates. The staff needs to know I work here
Speaker 1: every day, But what the hell's going on? What are
Speaker 1: you guys doing? Like do we make money this year?
Speaker 1: You know? You know, how how are we going relative
Speaker 1: to our competition, because you know, competition Australias pretty fierce.
Speaker 1: So and liquor alcohol or beverages just generally this say,
Speaker 1: beverages is an important part of the Australian fabric in
Speaker 1: terms of celebration, but it's also an important part of
Speaker 1: the fabric of like, let's networking, knowing your colleagues at
Speaker 1: a workplace. If you've got one drink and I'm a
Speaker 1: twm to get blind drunk, I'm talking just a drink,
Speaker 1: even if it's a half a drink, it sort of helps.
Speaker 1: I'm one of those people. I mean, I don't really drink,
Speaker 1: but I will have a glass of something in my
Speaker 1: hand because it just makes me feel more relaxed in
Speaker 1: my conversation without even drinking it. It's sort of like
Speaker 1: having something to do with my hands, if you know
Speaker 1: what I mean. It takes the awkwardness away from me.
Speaker 2: And we always found that we get. The feedback we
Speaker 2: got was that the Friday drinks and those Christmas parties
Speaker 2: was the opportunity for the mail room person to talk
Speaker 2: to the CEO and get a pulse for what what's
Speaker 2: happening in the company. And that was the beauty of
Speaker 2: the events that we did. Whether it was for one
Speaker 2: of the banks entertaining one of the accounting companies, or
Speaker 2: vice versa. We often were the icebreaker. So we would
Speaker 2: often put on an event that would go or a
Speaker 2: wine tasting or a really simple experience where they could
Speaker 2: meet someone, you know, iconic in the industry, or we
Speaker 2: could teach them how to make a cocktail. I could
Speaker 2: try a couple of different beers and then we would disappear,
Speaker 2: and you know, their weight stuff would take over.
Speaker 1: It was interesting. I wonder. I mean, you may or
Speaker 1: may not know the answers, But I just often wondered
Speaker 1: whether Australia has a lot more of this going on
Speaker 1: than say, in the USA. I mean, is that a thing, because.
Speaker 2: Yeah, I believe so, and I think Sydney had a
Speaker 2: lot of it. I when the Friday drinks and the
Speaker 2: Thursday drinks have really wound down since COVID.
Speaker 1: Yeah, is that right? So our timing, well, no one
Speaker 1: goes to work on Friday. No one goes to work
Speaker 1: on Friday. I don't mean that facetiously. I mean it's
Speaker 1: seriously because my mate, my cousine, Shanes a restaurant across
Speaker 1: the ref and he said to me the new Friday
Speaker 1: when they were people go for drink afterwords? Now Thursday, yeah?
Speaker 1: Or Wednesday? Yeah? Or no? Maybe he said Wednesday. Maybe
Speaker 1: that's what it is. So that's that's the new Friday.
Speaker 1: There's another night of the week where everybody goes and
Speaker 1: has a few drinks.
Speaker 2: So, you know, we found that Tuesday, Wednesday, Thursdays were
Speaker 2: a lot more we were doing a lot more events
Speaker 2: in the last three or four years. Prior to that
Speaker 2: it was and we did expand down in Melbourne. But
Speaker 2: we found that it was a really Sydney centric thing too,
Speaker 2: because you've got these beautiful officers overlooking the harbor and
Speaker 2: they wanted to activate these spaces. And they can activate
Speaker 2: the spaces by clients walking in there and having a
Speaker 2: look in the waiting room, but when they're really doing
Speaker 2: events and when they're really doing presentations, it's where they
Speaker 2: could amplify the event, like and as you said, having
Speaker 2: a glass in the hand, it sort of opened up
Speaker 2: the clients and they could engage with them.
Speaker 1: But sort of yeah, it's sort of like and it's
Speaker 1: interesting you tapped into this, but it's sort of like
Speaker 1: what do you call it? A neutralizer? So like you're
Speaker 1: the I'm the receptionist and you're the MD, and I've
Speaker 1: got a drinking you've got we've both got something the same,
Speaker 1: something like immediately I've sort of come up to your level.
Speaker 1: You've come down to my level, which are where you
Speaker 1: want both ways. And I don't feel as I still
Speaker 1: might be intimidated, but I not as no one as
Speaker 1: intimidated or would If I'm just walking along the corridor
Speaker 1: and I saw you go past, I know it's an
Speaker 1: opportunity and you're you've got your rice breaker there, you're
Speaker 1: the MD and me the reception. I can see your
Speaker 1: eyes breaking. And by the way, you might be a
Speaker 1: pretty normal person, like you know, you're not a going
Speaker 1: to you know, not going to break my back or anything,
Speaker 1: you know what I mean. Like you just you're there.
Speaker 1: I can see you with a drink. You look normal,
Speaker 1: you know what I Meanly, so I'm thinking about you.
Speaker 1: It's very interesting you tapped into that psychology. So your
Speaker 1: business where, Why did you and when did you decide
Speaker 1: that you were going to sell it? What was the
Speaker 1: circum circumstance around that.
Speaker 2: I actually had no plan to selling it, And to
Speaker 2: be honest with you, we I had a plant to grow.
Speaker 2: I've got a domain name wine dot com do you
Speaker 2: and I'd taken out a plan to private equity around
Speaker 2: do you know? Really targeting the twenty nineteen there was
Speaker 2: one and a half million Chinese tourists coming to the market.
Speaker 2: A lot of them were going out to wineries, and
Speaker 2: then there was selling wine back into China and one
Speaker 2: of them came back and said, look, I'm not interested
Speaker 2: in that, but I really like shorties. And then the
Speaker 2: very next day Woolworth's turned up and Rick hired a
Speaker 2: master of wine who had been a mentor of mine
Speaker 2: for many years. He was the master of wine within Endeavor,
Speaker 2: and he brought someone along and he said, you know,
Speaker 2: would you be interested in a joint venture? Can we
Speaker 2: supply you or you know, can we buy your business?
Speaker 2: And I was a bit shocked. I was like, wow, yeah,
Speaker 2: we can explore that. And so that leaded into three
Speaker 2: or four conversations, and then you know, one day the
Speaker 2: MD came down and so he came down for a
Speaker 2: forty five minute talk at you know, seven thirty in
Speaker 2: the morning and left three hours later, and he really
Speaker 2: liked it. And then that was Steve don Hu and
Speaker 2: then that Saturday Bradmandcci came into the office and again
Speaker 2: for half an hour and ended up spending a couple
Speaker 2: of hours there was on his hands and knees crawling
Speaker 2: around the warehouse looking at all these rare wines that
Speaker 2: we had, and we sort of hit it off, and
Speaker 2: we showed them all our customers, We showed them all
Speaker 2: the account plans that we had, and they worked out
Speaker 2: that would crack the code. We'd worked out how to
Speaker 2: deliver Booze into the city effectively and efficiently with ten vans,
Speaker 2: and same day so.
Speaker 1: You got logistics right. We got the logistics right.
Speaker 2: We had you know, that's Tay fifteen hundred square meters
Speaker 2: right heart of the city. And we could not just
Speaker 2: do the corporates. We could do the fiftieth Birthdays were
Speaker 2: supplying all the boats, and you know, we had a
Speaker 2: business that at that stage we're going, okay, lex scale this.
Speaker 2: You know, the belief was that they could scale it
Speaker 2: to one hundred million dollars. So when they sort of
Speaker 2: proposed that, I got really excited.
Speaker 1: So we as an investor, they said that as they
Speaker 1: were coming as an investor.
Speaker 2: Yeah, they came in, took an eighteen percent shareholding eighteen
Speaker 2: eighty eight, and I retained twenty percent, and my Auntie
Speaker 2: was purchased out, and we're given unique negative control rights
Speaker 2: to run the business. So we couldn't get so you know,
Speaker 2: that stage, we couldn't get sucked into the business and
Speaker 2: you know, have the p and all destroyed by processes
Speaker 2: and the matrix, which was you know, at that stage,
Speaker 2: super exciting. So we sort of did that on Christmas
Speaker 2: Eve of twenty nineteen, and then I presented to the
Speaker 2: whole Endeavor leadership group about two hundred people down in
Speaker 2: Luna Park on tenth of March, and then a week
Speaker 2: later we got destroyed by COVID. We had ten vans
Speaker 2: out in the road. Eight of them came back full,
Speaker 2: and I remember one of them came back and I
Speaker 2: was like, what do you mean you can't deliver this
Speaker 2: to one Martin place, to mcquarie bank, And I was like,
Speaker 2: jumped in the van, went there and it was exodus.
Speaker 1: Everyone was leaving the.
Speaker 2: City with their chairs, their computers, and you know that moment,
Speaker 2: the plan and the partnership agreement we had was just
Speaker 2: you know, that was it?
Speaker 1: Like I just lost by twenty percent and I didn't
Speaker 1: know you lost it.
Speaker 2: I felt like, you know, the business plan that we had,
Speaker 2: like we just lost all customers. I didn't know when
Speaker 2: they're coming.
Speaker 1: Already they had already brought him for eighty percent. I'd
Speaker 1: brought in for eighty.
Speaker 2: Percent, but I didn't really know what that meant at
Speaker 2: that stage. We hadn't had a board meeting, do you know,
Speaker 2: so it was all pretty fluid.
Speaker 1: When I say, can I ask a quick quick question
Speaker 1: when they brought in for ety percent, did they buy
Speaker 1: eighty percent off you? Or do they invest in the
Speaker 1: company for eighty percent.
Speaker 2: They brought eighty percent of the shares, so you cashed
Speaker 2: out forty percent, yeah, efectfully. And at that stage I
Speaker 2: was a forty five percent shareholder, so I'd sold out
Speaker 2: twenty five percent and my aunty had sold.
Speaker 1: Yeah yeah, yeah, but you and your idey a cash
Speaker 1: out and they kept you on the hook, so to speak,
Speaker 1: for twenty and to run the business effectively. And then
Speaker 1: did they were there any state stages on the payments,
Speaker 1: your installment that you did they do the deal by instormers.
Speaker 1: You just got one. But I know it was a
Speaker 1: great deal.
Speaker 2: But what their deal was was what I could grow
Speaker 2: the business to the last year, So it was based
Speaker 2: on the times earnings on the ebit of I could
Speaker 2: grow for the last year. So then when everything sort
Speaker 2: of got hit pretty hard, they're like and then the next.
Speaker 1: Day, so that was Friday.
Speaker 2: On Saturday, I was there planning things out with Michelice,
Speaker 2: who was my non executive chairman that i'd brought in
Speaker 2: it had run the four biggest wine companies in Australia
Speaker 2: and was the wine Yoda of the industry and just
Speaker 2: a lovely human. And we had five scenarios and they're
Speaker 2: all pretty bad. We didn't know how we're going to
Speaker 2: handle this. And got a call from Brad Bandici and
Speaker 2: he said, you know, Dave, you're own business with Wilworth.
Speaker 2: Now you're fine, We'll get through this. Steve Donahue's got
Speaker 2: you on next to call. So he called, you know,
Speaker 2: five minutes later, and I said, Steve, I think I'm
Speaker 2: going to need half a million dollars just to pay staff,
Speaker 2: and you know, because we've just set up the new
Speaker 2: company and it didn't have any money. And he's like, yeah,
Speaker 2: no problem, Todave. Well we've got this and there's there's
Speaker 2: plenty of things that you can run. And then you know,
Speaker 2: two weeks later we got a massive line of credit,
Speaker 2: like more money than I've ever seen in my life
Speaker 2: to run this business. And over the next three or
Speaker 2: four months they're like, okay, what parts of this business
Speaker 2: can you improve? And we we we sort of came
Speaker 2: out with a couple of things and we ended up running.
Speaker 2: They want us to reinvent gifting, so online and in store.
Speaker 2: We were given the wedding an event partnership, so Dan
Speaker 2: Murphy supplies a lot of weddings, but it was a
Speaker 2: complete mess. So do you know, people would buy a
Speaker 2: booze or they wouldn't wouldn't be there for collection, it
Speaker 2: wouldn't get delivered on time, a lot of it got returned,
Speaker 2: and then they didn't have a B to B business.
Speaker 2: So we got those three channels to run. Probably all
Speaker 2: of them were under all sat under Dan Murphy's right,
Speaker 2: but it sat under Shorties management. So they see the
Speaker 2: head of Dan Murphy's Alex at the time, was super supportive.
Speaker 2: He goes, we want you to fix these things, go
Speaker 2: like her, rebuild the team teams and see what you
Speaker 2: can build these business units into. So then we use
Speaker 2: the skills from Shorties. So we went out and built
Speaker 2: relationships with all the Baer wedding venues. There are some
Speaker 2: wedding venues that have four or five weddings a week,
Speaker 2: you know, up woods of five hundred weddings a year,
Speaker 2: and we asked them what they needed, just like we
Speaker 2: had with Shorties customers, and they wanted to contact. They
Speaker 2: didn't want to necessarily deal with us. They wanted up
Speaker 2: to give their customer our details and then for us
Speaker 2: to look after the customer, but then get the booze
Speaker 2: delivered to them. So we would have eleven or twelve
Speaker 2: phone calls with these clients and then we would finalize
Speaker 2: the beverage order. Then we'd get it into the local stores,
Speaker 2: and then we organized delivery to their wedding venue. Because
Speaker 2: the endeavored delivery system couldn't do the big two thousand
Speaker 2: dollars ball quarders delivered on within a three hour window
Speaker 2: on a Saturday or a Friday or collection from Dan Murphy's.
Speaker 2: So that was the wedding business we built, and that
Speaker 2: turned out to be the most profitable business within Dann
Speaker 2: Murphy's e commerce.
Speaker 1: So we built that during COVID.
Speaker 2: We started during COVID, and we recruited a whole heap
Speaker 2: of people that have been working in wedding venues, people
Speaker 2: that understood the needs of customers, how much to sell
Speaker 2: someone that's having a wedding, all that, you know, how
Speaker 2: to do with the bridezillers, bridezillers would be planning six
Speaker 2: months out, the guys would be ordering the boos a
Speaker 2: week out, so we understood what their needs were and
Speaker 2: you know, that worked really well. And then with B
Speaker 2: to B clients, we just focused on what we did
Speaker 2: with shorties, focused on the top thousand of them, ask
Speaker 2: them what they needed. While were they're coming to shorties,
Speaker 2: Why were they're coming to Dan Murphy's. And that stage,
Speaker 2: no one had ask the customer what they why they're
Speaker 2: doing or what their pressure points were. So we managed
Speaker 2: to grow them, make them more profitable, show them new
Speaker 2: products to increase their basket size. And then gifting was
Speaker 2: the probably the biggest challenge and the most rewarding one.
Speaker 2: Was that there was just this issue where you know,
Speaker 2: one in five gifts never got to live it because
Speaker 2: it's quite hard to do gifting. So we built a
Speaker 2: reciprocate led gifting platform for Damn Murphy so you could
Speaker 2: give hundreds of gifts with just an email address and
Speaker 2: phone number. And this was during COVID, which was great
Speaker 2: because no one knew where anyone was living or working.
Speaker 2: And then we created a range of product with the supplies.
Speaker 2: It was unique with multiple elements of value, and we
Speaker 2: moved really quickly and built an amazing catalog and took
Speaker 2: that to market and test and learned how we could
Speaker 2: build a really great gifting platform for Dan Murphy's.
Speaker 1: Sounds like you're always looking for additional angles to improve
Speaker 1: your customer relationship. In other words, based on what the
Speaker 1: customer wants. Always.
Speaker 2: Yeah, that's just native, it's just sort of what we're
Speaker 2: trying to do. That's how we're growing the business.
Speaker 1: But always, always, always, and doing it not by you
Speaker 1: working out with the customers, but you are. It's not
Speaker 1: your decision, it's not your deduction, it's what they tell you.
Speaker 2: Yeah, and it's just doing the basics properly. Yeah, and
Speaker 2: doing the basics brilliantly was our focus.
Speaker 1: And did you did any So you had to still
Speaker 1: had your twenty percent retention.
Speaker 2: Had the twenty percent share, and then those business units
Speaker 2: got put into my deal.
Speaker 1: Yeah. So like we ended up saying you only have
Speaker 1: twenty percent of those as well.
Speaker 2: Effectively for the in the in the in the event
Speaker 2: of the earn out.
Speaker 1: Right, so then that twenty percent do they ultimately buy
Speaker 1: you out?
Speaker 2: Yeah, they brought me out. So the deal was always
Speaker 2: to finish sort of in December twenty twenty.
Speaker 1: Year one year later or two it was four years later,
Speaker 1: five year earn out.
Speaker 2: It was a four year one and we extended it
Speaker 2: to five years.
Speaker 1: Yep.
Speaker 2: During COVIDEP so I got a good runway to actually
Speaker 2: fix those businesses.
Speaker 1: But because of the various initues you took. You're actually
Speaker 1: able to get other let's call it assets into that
Speaker 1: to earn our calculation, which are those those other things
Speaker 1: that you've got out of Dan Murphy's in other places,
Speaker 1: plus plus the you know, the weddings and the gifting
Speaker 1: and all that stuff as well, which is something you
Speaker 1: come up.
Speaker 2: With which is amazing, right, which was you know where
Speaker 2: they got they recut my deal halfway through it, yeah,
Speaker 2: and they incentivised me to keep going and and we
Speaker 2: worked like help.
Speaker 1: Okay, I'm going to go to the break and come
Speaker 1: straight back with David dumb because I want to find
Speaker 1: out what he's doing. Now. That's the most important thing
Speaker 1: for the purpose of this podcast and the second half
Speaker 1: of this podcast. So I'm back here now with David
Speaker 1: short previously famously founder of Shorty's Liquor, but now not
Speaker 1: involved in our business. But now, David, tell me what
Speaker 1: it is you are now doing it so you know,
Speaker 1: and it's quite interesting, but what are you now doing?
Speaker 1: Tell the audience, Well.
Speaker 2: I'm on the hunt for a couple of really good businesses.
Speaker 1: So you have a fund, Yeah, I've got a fund.
Speaker 1: To explain that part first, Yeah, So I've got.
Speaker 2: I've got money from my owner, and I've also got
Speaker 2: multiple people that will back me into a investment.
Speaker 1: With investment, we'll invest with.
Speaker 2: You, yeah, should we choose to find the right thing.
Speaker 2: And I'm looking for a wonderful business and like I'm
Speaker 2: actually looking at targeting. You know, there's a baby boomer
Speaker 2: avalanche of businesses coming out, so they'll be close.
Speaker 1: So that his baby boom is moving out of the business, retiring.
Speaker 2: Retiring, so that they're predicting NAB are predicting that close
Speaker 2: to six hundred thousand businesses will be looking for sale
Speaker 2: trans actions over the next ten.
Speaker 1: Years exits, basic or exits. Yeah.
Speaker 2: So it's the biggest wealth transfer of our generation, close
Speaker 2: to two true dollars worth of businesses.
Speaker 1: So if I could just stop there for a second, David,
Speaker 1: So that's pretty much a rising tide. So that's you know,
Speaker 1: that's a big supply of assets. It's a rising like
Speaker 1: a massive demographic and probably structural change causing a big
Speaker 1: supply or what I call I often call a rising tide.
Speaker 1: Which is the best place to invest in rising tides
Speaker 1: because the's people who need exits, because there's a lot
Speaker 1: of people like in Australia with small small busines owners,
Speaker 1: business owners. They're turn sixty five, seventy or whatever, and
Speaker 1: they're saying, I don't want to do this anymore, but
Speaker 1: I don't know there's no real buyer for it. I mean,
Speaker 1: or there is, but as you know they're going to
Speaker 1: pay me two enough times revenue or something, you know
Speaker 1: they're not going to give me enough or I've worked
Speaker 1: my whole life building up this brand, this little reputation,
Speaker 1: et cetera. And they would like to and they don't
Speaker 1: have No some of the family doesn't want to do
Speaker 1: it because you know they're having less kids, has less
Speaker 1: kids or no kids, and or a lot of the
Speaker 1: staff these days don't stay there long enough to sort
Speaker 1: of take over these businesses anymore because people move around
Speaker 1: a lot more than staff move around a lot more
Speaker 1: than they ever have done before today. As you get
Speaker 1: a job and you stay there for your whole life,
Speaker 1: and then the proprietor says, I'm going to retire George, mate,
Speaker 1: can you afford to buy this business? Ye? And George
Speaker 1: might buy it out of the revenue of the business
Speaker 1: and pay run the business basically, but run the business
Speaker 1: for the previous owner and pay the previous owner like
Speaker 1: installments out of the revenue of the business that the
Speaker 1: previous owner built, but that George now runs. Is that
Speaker 1: the scenario. That's a scenario.
Speaker 2: And you know, there's only thirty five percent of businesses
Speaker 2: that have got a clear strategy around how they're going
Speaker 2: to exit and how they're going to succession plan and
Speaker 2: a lot of people and people are working longer, they're healthier,
Speaker 2: so they're staying working longer. And what we're looking for
Speaker 2: is where we're looking for great businesses that we can scale.
Speaker 2: So it might be a business that you know, the
Speaker 2: owner has been probably content on it for ten years,
Speaker 2: but it's got a great moator around it, it's got
Speaker 2: a really good team.
Speaker 1: When you say, it's harder for as a barrier of entry,
Speaker 1: it's harder for others to get involved. It's got a
Speaker 1: competitive advantage.
Speaker 2: So we're looking for something that's got a competitive advantage
Speaker 2: that we can really scale and grow. We could potentially
Speaker 2: acquire it.
Speaker 1: Give an example of an industry that you might might
Speaker 1: look at.
Speaker 2: Well, that's one of the things that like, maybe I
Speaker 2: will give you an example of an industry I'm not
Speaker 2: looking at and that's probably the art cohol industry, Like
Speaker 2: that's shrinking, it's declining.
Speaker 1: There's less people really. Yeah, definitely, people don't drink as much.
Speaker 2: People aren't drinking as much. People are definitely not drinking
Speaker 2: as much. This younger generation of people aren't drinking as much.
Speaker 2: There's they're downsizing how much they drink. They're not drinking
Speaker 2: on Mondays and Tuesdays, you know, Wednesdays, and you know,
Speaker 2: so there's definitely a decline in our rules. Yeah, so
Speaker 2: I'm probably looking at the industries that are in growth,
Speaker 2: potentially healthcare, you know, something that I can grab that
Speaker 2: someone's got an exclusive product, or do you know has
Speaker 2: got a niche market that's got opportunities for real growth?
Speaker 1: And are you looking for businesses that are sort of
Speaker 1: annuity based, like not like a doing charge, like for example,
Speaker 1: a plumber, like he will go and you ring up,
Speaker 1: he does a job, gives you a bill, you don't
Speaker 1: see him again, hopefully you don't see me again. Whereas
Speaker 1: let's call it a pesticide company. They sign up and like,
Speaker 1: I mean, I've done this and I wouldn't even know
Speaker 1: what it looks like. But he comes every three months.
Speaker 1: I don't even know if he does anything, but but
Speaker 1: he comes over for three months, it's like a newity game.
Speaker 1: He just turns over. I get ability for three months.
Speaker 1: He rings my office. Mythe says yeah okay, and he
Speaker 1: turns up. We join up and he goes does it.
Speaker 1: And just because rolling it.
Speaker 2: Reoccurring reoccurring revenue is really exciting. That's what we kind
Speaker 2: of have built it, Shorties, but definitely looking for something
Speaker 2: with reoccurring revenue.
Speaker 1: You know, now you don't know, it's funny you should
Speaker 1: say that, David. I think you turned a transactional is
Speaker 1: into a recurring revenue a Shorties, because normally our references
Speaker 1: are we're going to get it's more a transaction, Shoul.
Speaker 1: We've got to function up. We better buy some booze.
Speaker 1: But what you did, and you know they might bring
Speaker 1: up Shorties or someone else, but we'll use you turn
Speaker 1: that into a relationship where it was just ongoing. You
Speaker 1: turn that transactional business it's pretty able to do into
Speaker 1: a recurring what I call trail business. Like you know,
Speaker 1: you're earning money without having to think too much about it.
Speaker 1: You just you're just rolling through a process all the time,
Speaker 1: over and over again. You have to think about what
Speaker 1: they want and all that sort of stuff. I get
Speaker 1: that part, but in terms of the rhythm, it's like
Speaker 1: every week we turn up to some and so and
Speaker 1: we deliver twenty bottles of champagne and we late, never late.
Speaker 2: Delivered in full on time. With a taxing voice and
Speaker 2: a lot of the systems we built it shorties were around,
Speaker 2: you know. We went to de Lute and said, how
Speaker 2: how would you like us to supply you? And they
Speaker 2: wanted the financial controller to sign off on invoices. They
Speaker 2: want to consolidated invoices, they wanted, you know, we wanted
Speaker 2: to make it as easy as possible for them from
Speaker 2: the person who's what is it or the person that
Speaker 2: pays the bill, you know, and so the person that
Speaker 2: manages that and give them visibility about what they purchased.
Speaker 1: Me well yeah, but also also visibility so it's completely transparent,
Speaker 1: you know, and you fit within their system.
Speaker 2: We fit within their system. And when I first started,
Speaker 2: like it was roque, there were people doing all sorts
Speaker 2: of deals with these corporate clients and offering them backhanders.
Speaker 2: And I can imagine that there was probably twenty little
Speaker 2: bottle shops running around. There was wineries running around, So
Speaker 2: we built a system that was fully transparent.
Speaker 1: Yeah, that's interesting, and just going forward, I can see
Speaker 1: you're either reticent to tell me which industries you like,
Speaker 1: or you're being cagey because you want to don't want
Speaker 1: anyone to compete with you, or you don't or is
Speaker 1: it too early?
Speaker 2: It's too early, Like I'm actually happy to look at
Speaker 2: you one hundred, one hundred and fifty businesses and actually
Speaker 2: find that one find something that I'm going to get
Speaker 2: really excited about and go, do you know that's something that's.
Speaker 1: Also an industry, David Like? So I mean in terms
Speaker 1: of which is thousands, there's millions of businesses here, really
Speaker 1: small businesses in particular. But how do you sort of
Speaker 1: dissect it and sort of say, well, I don't have
Speaker 1: two million hours, or if it's on average three hours
Speaker 1: per business, I don't have six million hours unless you
Speaker 1: have some secret.
Speaker 2: Well think the biggest one of the key ones that
Speaker 2: we're looking at is it's got to be profitable. So
Speaker 2: we want something that's making one to one and a
Speaker 2: half million dollars a year. Ye, so private equity, it's
Speaker 2: too small for private equity, but something that we might
Speaker 2: be able to scale. Something that's got real potential to scale,
Speaker 2: and as I said, something that we can really see
Speaker 2: an opportunity to apply to, you know, whether it's e
Speaker 2: commerce or new technology, or maybe there's aii that we
Speaker 2: can implement that could make the serviceability of the customers
Speaker 2: more efficient. The retail as no, definitely not retail. Nothing
Speaker 2: in hospitality, you know, not food and beverages.
Speaker 1: But it's not services based. It's product based. Product based,
Speaker 1: be product based. Yeah, it's not like there's not and
Speaker 1: there are a few of them around, but there's lead
Speaker 1: dead VP mowing service for example, whether they and he's
Speaker 1: done brilliant a business service. This is more product based.
Speaker 2: Yeah, more product based, or it could potentially be a service.
Speaker 2: Like there was a great business another private equity guy
Speaker 2: brought that was cleaning out council draints and it required
Speaker 2: a big truck and you know he brought it turning
Speaker 2: over making four million dollars a year and in three
Speaker 2: years to turn that around to twenty four million dollars
Speaker 2: a year. So it's like applying you know, the scale
Speaker 2: to that. Someone had a really good niche they had
Speaker 2: a great product. All councils need to clean their store
Speaker 2: water drains once a year and twice in autumn. So
Speaker 2: do you know, so he nailed that part. So like
Speaker 2: something also that's supplying an industry that isn't going to
Speaker 2: get disrupted by AI as well, Like so supplying a
Speaker 2: council or supplying hospitals or those sort of things are
Speaker 2: really exciting. So yeah, I'm very open to what I'm
Speaker 2: looking for. And I don't have a particular industry, but
Speaker 2: what I do want to do is find a business
Speaker 2: in an industry and then focusing on that.
Speaker 1: And is it about is is it also about for example, aggregation,
Speaker 1: like what is typically referred to as a roll up
Speaker 1: you know, have you thought about that? Like I go
Speaker 1: into a newstro, I'm going to roll up all the
Speaker 1: you know, all the all the wedding venue hire people,
Speaker 1: and what I'm going to do is they're all good
Speaker 1: to see if I and they're all good to see
Speaker 1: and they're all going to achieve marketing officer, what I
Speaker 1: do is a roll them all up into one and
Speaker 1: I'll have one CFO, one CEO. Like more of a
Speaker 1: cost game.
Speaker 2: Yeah, and it's more of a long term game too,
Speaker 2: So like I'm not it's not here to buy and flip.
Speaker 2: It's something that we can hold for the next ten
Speaker 2: to fifteen years, you know, use that. Hopefully it's something
Speaker 2: that's got a great management team, or it will be
Speaker 2: something that's got a good management team that we can
Speaker 2: improve and add a new skill to and your dead right,
Speaker 2: add another business to it, add another product or service
Speaker 2: to that that can be that will help scale and
Speaker 2: drive that business.
Speaker 1: So because I have quite a few businesses in my day,
Speaker 1: and one of the things one of the constraints that
Speaker 1: I've experienced in its culture shift, so maybe cultural integration.
Speaker 1: And there all been in the same industries that I've
Speaker 1: been in, and I've often been seduced into thinking I
Speaker 1: haven't done it, but into thinking I could roll up
Speaker 1: things in various industries that I'm involved in because I
Speaker 1: can save a lot of costs. Maybe not necessarily increase
Speaker 1: the volume of business, but I can actually increase the
Speaker 1: price of the same volume because if I now control
Speaker 1: all the supplies, I can sort of play around with
Speaker 1: the price a bit. But usually it's a bit of
Speaker 1: a cost game for me. I'm thinking, well, if they're
Speaker 1: all we're all running the same cost structures, we only
Speaker 1: need one lot of cost structure, I can probably save
Speaker 1: perhaps elute percent of the costs. But one of my
Speaker 1: constraint on not having done it, I have made acquisition
Speaker 1: but not having gone out full roll up is because
Speaker 1: when I have made acquisitions, I found the cultural integration
Speaker 1: was very difficult. And what I mean by that is
Speaker 1: like I bought a business in two thousand and sixteen
Speaker 1: for a fair bit of money. I knew the business,
Speaker 1: I know the business back to front, I'm in the game.
Speaker 1: But it came to CEO, came to c IFO, it
Speaker 1: came with all the usual C suite, et cetera. And
Speaker 1: it was a big revenue, like a very large revenue business.
Speaker 1: I found the culture of their business relative to the
Speaker 1: culture of my business the acquirer was a lot different
Speaker 1: and the integration was very hard for me, and I
Speaker 1: found over time probably took me. Sounds ridiculous, but I'm
Speaker 1: obviously learning who took me about seven years to finally
Speaker 1: integrate it. And the only way I could do it
Speaker 1: was by moving b belond Because what was holding the
Speaker 1: integration back cultural integration. I'm talking about, not business flow,
Speaker 1: which cultural integration, integration was individuals. People had a different
Speaker 1: view on they would even though they weren't the proprietor,
Speaker 1: their teake the view that they were running the business
Speaker 1: and they had a proprietorial interest in it. They weren't proprietors,
Speaker 1: but they still had a proprietial interest. You know, they
Speaker 1: employed all these people, they knew all these clients. I've
Speaker 1: sort of come in and bought the whole business, but
Speaker 1: I didn't know any of their employees. I didn't know
Speaker 1: any of the clients. And I've thought about it. I thought, well,
Speaker 1: that's probably fair enough. Like if you're being in the
Speaker 1: business for twenty years, some of these guys twenty five years,
Speaker 1: you would feel a bit proprietorialer towards it if you
Speaker 1: encountered that.
Speaker 2: Yet I certainly encountered it when we took over those
Speaker 2: channels that Dan Murphy's was running. Do you know, so
Speaker 2: we took it over, and.
Speaker 1: How did you deal with something like that?
Speaker 2: Well, it was really complicated because we're dealing with we
Speaker 2: had the authority from the managing director and the sea
Speaker 2: of the company, but then we had a whole heap
Speaker 2: of middle management that had fantastic jobs that would do
Speaker 2: what you know, work remotely, take the kids to school,
Speaker 2: and picked them up and have you know authority, and
Speaker 2: well we disrupted them.
Speaker 1: Yeah, they don't like it. They didn't like it.
Speaker 2: So what we found is, you know, there were certainly
Speaker 2: people that held us back, but at the end of
Speaker 2: the day, we just had to work harder to work
Speaker 2: on that integration to make it work.
Speaker 1: And I think you're being modest in terms of making
Speaker 1: integration work. Sometimes you just have to move people on.
Speaker 1: Did you find that the only way to break them,
Speaker 1: not break them, but to have a bridge between the
Speaker 1: two different styles. Sometimes you just had we had to
Speaker 1: blow up one of the one of the boundaries.
Speaker 2: Some people had to get off the bus.
Speaker 1: Yeah. Yeah, and that's not that easy to do because
Speaker 1: it has a role on effect. I'll people hang, I
Speaker 1: don't been working for that guy, who's my whole life,
Speaker 1: or I've been working alongside they go with my whole life,
Speaker 1: he's my colleague. Who the fuck do you think you are?
Speaker 2: Well, that's one of the challenges, right, that's what you've
Speaker 2: That's definitely what's going to happen if you're the CEO.
Speaker 1: And so, you know, business growers. People want to grow
Speaker 1: the business. Not they're sell organically, but by acquisition, probably
Speaker 1: need to think about this. There is that it's not
Speaker 1: easy and in your due diligence, Now you didn't acquire
Speaker 1: these other arms that Dan Murphy's gave to you, but
Speaker 1: in the d D process you probably what would you
Speaker 1: suggest people need to do. They need to go and
Speaker 1: interview the second tier of senior people, and what would
Speaker 1: you do if you better buy one of these businesses
Speaker 1: you're looking at.
Speaker 2: When Brad Bandici came down to shorties and the first
Speaker 2: thing he said, what would be the three things that
Speaker 2: you would do afforded buy you? I was like, would
Speaker 2: go buy a closest competitor, which was the Vintage Blue
Speaker 2: at the time, would take more space because we had
Speaker 2: an amazing lease and employ some really good staff.
Speaker 1: So the next day I did go out and.
Speaker 2: Buy a closest competitor, Vintage Blue, who was like a
Speaker 2: retail maybe doing four or five million dollars revenue, but
Speaker 2: they are a roading our margin. They're going into corporate
Speaker 2: clients and they haven't put their price up on soft
Speaker 2: drinks for five years and selling them to close. We
Speaker 2: ended up closing them down and rolling that in and
Speaker 2: then that lickle license was used for Dan Murphy's in
Speaker 2: the city. But yeah, we did it and the best
Speaker 2: staff we kept.
Speaker 1: Right and the best staff, the best stuff, and just
Speaker 1: closed the business down. So basically took that brand away
Speaker 1: and sort of buried the brand somewhere, and then you
Speaker 1: took over the clients that brand was dealing with.
Speaker 2: Yeah, with the staff, with the staff, with a better product,
Speaker 2: with a better service range, with a better offering.
Speaker 1: Yeah.
Speaker 2: And then we closed a really inefficient store in Sydney,
Speaker 2: and then we use their story in Melbourne to scale Melbourne.
Speaker 2: So we kept their Melbourne warehouse, used that facility of scale,
Speaker 2: and then moved into a bigger warehouse.
Speaker 1: So if you're looking at a business now, and if
Speaker 1: someone position of this and they're thinking, well, I'm interested
Speaker 1: doing the same sort of thing as David was doing.
Speaker 1: I might be going to buy a business down the road.
Speaker 1: What are the sort of things that apart from all
Speaker 1: the usual stuff you've got to do digilius on their
Speaker 1: leases and all that other stuff and their financials. But
Speaker 1: at a cultural level, what would you suggest and what
Speaker 1: would you do? What would you say to people?
Speaker 2: Well, I think it's really important that the founder is
Speaker 2: often key in the business, that the business can relate
Speaker 2: that can continue to run without the founder, that the
Speaker 2: staff are to believe in what the product and what
Speaker 2: they're in their product and also their strategy moving forward,
Speaker 2: and you know that the business has a competitive mode
Speaker 2: that you can actually get in there and scale and
Speaker 2: actually work and potentially improve that culture. I think one
Speaker 2: of our strengths of Shorties is we had an amazing culture.
Speaker 2: So we had a lot of we had team members
Speaker 2: that have been there for ten years and you know,
Speaker 2: really brought into that. So bring some of that energy
Speaker 2: and into that team and improve it.
Speaker 1: So if someone's listening to this show, and we did
Speaker 1: get a lot of business owners just listening to this
Speaker 1: show and they were thinking about, well, I'm actually at
Speaker 1: that one of those people. I'm sixty eight. I want
Speaker 1: to get ready to retire. I love my business, so
Speaker 1: I wanted to go on the right hands. I'm profitable
Speaker 1: making one other nod profit year. I'm pretty much qualified.
Speaker 1: How do they get in contact with David Short, Well,
Speaker 1: they can jump on short in dot com dot you
Speaker 1: there's shortening dot com dot ye. Yeah, We've got a
Speaker 1: website there that sort of outlines all that criteria. So
Speaker 1: the business really you can get sort of like not
Speaker 1: an application, but like it's sort of like an application
Speaker 1: was an application.
Speaker 2: There's contact details in contact with us. We built a
Speaker 2: we built a website in two days the other day
Speaker 2: on replet so AI is one of the my passions
Speaker 2: at the moment that we integrated and we built a
Speaker 2: business valuation calculator that's just more of a tool and
Speaker 2: a customer acquisition tool to try and get some of
Speaker 2: these businesses in. But that just sort of outlines what
Speaker 2: criteria we're looking for, you know, it turns about the
Speaker 2: ebit that we're looking for, some of the industries that
Speaker 2: we're really keen on, and what businesses do you know,
Speaker 2: the key points of the businesses that we really love.
Speaker 1: It's interesting. Excuse me, that's interesting. You mentioned the people
Speaker 1: getting a bit of an idea about valuations and people
Speaker 1: often say to me, how do you work out what
Speaker 1: something's worth? Well, it's sort of sort of pretty simple,
Speaker 1: not that we'll sort of pretty simple. If you know
Speaker 1: what you're let's call it you the branding profit cash profit,
Speaker 1: and if you know what youve it is that's earnings
Speaker 1: before before interest and tax, and you know what the
Speaker 1: multiplier is for your industry. If you're in an industry
Speaker 1: that has a multiplier, they need to just work it
Speaker 1: out and multiply one by the other. That's not the
Speaker 1: end of it. That's just like an indicative thing. But
Speaker 1: how do you if you're on your calculator, where do
Speaker 1: you get because most people would know where to find
Speaker 1: how to find out what their multiplier is for their industry.
Speaker 1: How do you do?
Speaker 2: So we found that on perplexity and we also got
Speaker 2: NAB's data and we've got a.
Speaker 1: Couple of Perplexity AI as.
Speaker 2: A Perplexity AI which is an amazing search engine, and
Speaker 2: we pumped some data in that we got from the
Speaker 2: banks and from some of the BIGG accounting firms around
Speaker 2: what the multiple is. Then we looked at the last
Speaker 2: three years multiple and see if that business is actually
Speaker 2: increasing or if it's declining. So it might have been
Speaker 2: an e commerce business that was booming in which lower
Speaker 2: modeble doesn't have a will the found if the founder leaves,
Speaker 2: will that create an issue for the business or affect
Speaker 2: the earnings moving forward? Is there a clear strategy or
Speaker 2: is there a clear opportunity for growth would be probably
Speaker 2: our key one. Do you know, is there another business
Speaker 2: that we could potentially acquire and have this as the
Speaker 2: platform going into the industry plug them in. As you
Speaker 2: said scale, do you have one CFO one marketing team
Speaker 2: doing that or is there other products that we could
Speaker 2: add to it. So you know, potentially, this is a
Speaker 2: business that someone's been running and you know they're now
Speaker 2: playing golf too three days a week, or they're sailing
Speaker 2: and they're like.
Speaker 1: Well, they're not well, they're not well, or they got.
Speaker 2: Divorced, got divorced, or their their wife might not be
Speaker 2: well or their husband's not well, and you know, their
Speaker 2: life's changing, their kids have moved to Barcelona or doing
Speaker 2: something different, and they do care about their business. They
Speaker 2: care about their customers, they can care about their supply chain,
Speaker 2: and they care about their staff. And while I say,
Speaker 2: you know, of course we care about the staff, and
Speaker 2: you know, if they're doing a good DROB, we want
Speaker 2: to bring them along because that's part of the business
Speaker 2: that we're buying. But we look at that and then
Speaker 2: that will is what you know, It comes up with
Speaker 2: evaluation because you'll look at the different valuations for the
Speaker 2: businesses and there's normally a variant you know, between two,
Speaker 2: between three and five times earnings or if it's e
Speaker 2: commerce it might be higher. So that comes up with
Speaker 2: a rough valuation, which is just a guide because obviously
Speaker 2: you've got to there and go do due diligence and
Speaker 2: actually really make sure there is a mote and something
Speaker 2: that protects the business moving forward.
Speaker 1: And have you got many on board, Like in terms
Speaker 1: of contestants, we've looked at a few.
Speaker 2: We've looked at if you haven't found anything super interesting,
Speaker 2: we've sort of backing a founder and a startup that's
Speaker 2: doing a really which is a really interesting business. So
Speaker 2: PTE English exams, so are there's overt English exams, So
Speaker 2: if you want to get citizenship or for students that need.
Speaker 1: To pass soun't.
Speaker 2: Stand for Permanent residence PTE, it's that that's just what
Speaker 2: it's called. And globally they do one point two million
Speaker 2: exams a year and they charge five hundred dollars US
Speaker 2: to do an exam and there's multiple people doing five
Speaker 2: or six or seven of.
Speaker 1: These exaw A excuse me, So is this an strain thing?
Speaker 2: Yeah, for I think three hundred thousand people in Australia
Speaker 2: do it, but then people do it in the UK.
Speaker 2: People do it in Canada and around the world.
Speaker 1: And the objective is to.
Speaker 2: Get an English to pass an English exam.
Speaker 1: The Isles test. Yeah, that type of thing. You've got
Speaker 1: to be able to speak at read it and write it,
Speaker 1: I think.
Speaker 2: And yeah, there's four components and comprehension competition, but there's
Speaker 2: no great dummy test. So one of my developer at
Speaker 2: Shorties has gone off and he was Brazilian and him
Speaker 2: and his wife all the people, all the Brazilian people
Speaker 2: were going, how do we pass this exam? And they
Speaker 2: wrote all these great cheat notes and then with the
Speaker 2: benefit of AI, you can now build a solution that
Speaker 2: might have cost you know, two or three million dollars.
Speaker 2: So we're building a mock test so you can actually subscribe.
Speaker 1: So it's like a practice test. It's like a practice
Speaker 1: test before you sit for the Oles test, which is
Speaker 1: the one of the ones that the government he uses
Speaker 1: in terms of making sure that your English adequacy is
Speaker 1: at a level whereby you can apply for pr Yep, right,
Speaker 1: I get it. That's interesting. But this is a global thing.
Speaker 2: It's a global thing, and half the reason why we're
Speaker 2: doing it's pretty low cost. He's got a huge passion
Speaker 2: for it. And we're learning how to use this new technology.
Speaker 1: Yeah it's online. So yeah, and that.
Speaker 2: Shorty is we spent millions of dollars on websites, which
Speaker 2: you know now you don't need to do. Yeah, so
Speaker 2: you know, like shorting dot com. You we built on
Speaker 2: PERPLEXI in a couple of days. And it's what you
Speaker 2: know you would have got charged ten fifteen thousand dollars
Speaker 2: for in the.
Speaker 1: Pain we'll take you three months, and.
Speaker 2: It would have taken you three months. And to change
Speaker 2: the color of a button would cost five hundred dollars
Speaker 2: and take two days. So we're learning how to do that.
Speaker 2: And that's what you know, which is really fun.
Speaker 1: Maybe you should go into that business website building using AI.
Speaker 1: I just say this will use a I will if
Speaker 1: you're paying ten, we'll get to do it for five.
Speaker 1: And because you about one thousand bucks, you do yourself.
Speaker 2: Well, I'll tell you what they're as a disruption, there's
Speaker 2: huge disruption. There's you know, I see massive disruption happening
Speaker 2: across multiple industries, whether it's design, graphic graph design, web design,
Speaker 2: and then it goes into most white collar.
Speaker 1: Jobs that I mean, I don't really understand the website stuff.
Speaker 1: But I do know that AI can do a lot
Speaker 1: of this stuff. I haven't used perplexity I generally speaking,
Speaker 1: but I know people who do use perplexity I AI.
Speaker 1: I know people use it perplexity to ask and ask
Speaker 1: perplexity questions about their life. Well, like this is what
Speaker 1: I'm confronted with at the moment.
Speaker 2: Yeah, Well, the biggest change I'm seeing is Google used
Speaker 2: to be your landlord to.
Speaker 1: Talk to anymore, I go straight to a copilot or
Speaker 1: something like that.
Speaker 2: So, but how people are going to build websites in
Speaker 2: the future is going to be completely different. Like Google
Speaker 2: released something last week where you could get this you know,
Speaker 2: you've got a skirt and will show you what it
Speaker 2: looks like on you you take photos of amazing. And
Speaker 2: then there was another one that you know I saw today,
Speaker 2: like you can put a widget on your website on
Speaker 2: your browser that blocks all the ads, so the here
Speaker 2: goes all Google's ads and all the rest of it.
Speaker 2: And then it could compare prissing across every website in
Speaker 2: the world that was on gen Spark. So these things
Speaker 2: are going to be what your website is going to
Speaker 2: have to work with all this new technology, and you know,
Speaker 2: We'll be talking about how you used to spend Google
Speaker 2: money on Google AdWords, and you know you're actually going
Speaker 2: to have to improve your site so it actually comes
Speaker 2: up relevant. It is true, true deception, and I've never
Speaker 2: seen anything like it in my career.
Speaker 1: Everyone keeps talking about it, by the way, and I
Speaker 1: agree with you. And when we keep talking about it,
Speaker 1: because we keep hearing about it, we say, oh, yeah,
Speaker 1: right whatever, But like, is actual real? This is real?
Speaker 1: This is this is like mental.
Speaker 2: It's mental. And I'm lucky enough to be you know,
Speaker 2: YPO forum with seven other online retailers, and it's what
Speaker 2: we talk about. We catch up every month for half
Speaker 2: a day and half of what we're talking about is
Speaker 2: this and how it's going to affect their global online
Speaker 2: businesses and how it's going to affect, you know, how
Speaker 2: they can improve their business, what they can now do.
Speaker 2: It's truly incredible.
Speaker 1: Yeah, I know, well, I remember, if I go back
Speaker 1: back in the nineties, when the Internet started kicking off hard,
Speaker 1: people sued to say, any you read a report from
Speaker 1: Price Waterhouse, one of those sorts of organizations say the
Speaker 1: internet is going to be is that going to be
Speaker 1: the greatest revolution of commerce? That we've ever seen in
Speaker 1: a history. You know, there's going to be a ten
Speaker 1: bag of anything we've ever seen before. Then then came
Speaker 1: out the Internet of Things, and they to say again
Speaker 1: IBM and price water, but both both wrote reports on
Speaker 1: the Internet of things, and they said the Internet of
Speaker 1: things that is like using sensors to connect not not people,
Speaker 1: but using sensors to connect outcomes from things that they
Speaker 1: data that they find and coming up with conclusions like
Speaker 1: we're no human intervention, intervention that will be a ten
Speaker 1: bag of what the Internet did. And now they're saying
Speaker 1: AI will be a ten bager of everything. And I
Speaker 1: didn't I never believe what they said about an internet.
Speaker 1: I never believe what they said about the Internet things,
Speaker 1: but each one of them actually achieve that. And now
Speaker 1: I believe what they say about AI. I mean, we
Speaker 1: use AI here for a lot of stuff, like crazy,
Speaker 1: how it can just replicate me. Yeah, it's scary, Yeah,
Speaker 1: it's really scary.
Speaker 2: And you know, I see it's moving just so quickly,
Speaker 2: even in the last two months, because.
Speaker 1: It's learning all the time. It's getting better and better
Speaker 1: and better.
Speaker 2: It's learning all the time, and the only way to
Speaker 2: keep up with it is YouTube, you know. So there's
Speaker 2: a great podcast that I watch religiously which is HubSpot
Speaker 2: Against the Grain that will teach you how to eliminate
Speaker 2: your marketing team in thirty minutes, how to do all
Speaker 2: your creative But you do your creative now, and you
Speaker 2: can make videos. You can make all this amazing content
Speaker 2: that used to take days to feel loutch money, yeah
Speaker 2: and lot, it's cheap effectively. The best way I heard
Speaker 2: it explained is we've just found a new continent and
Speaker 2: there's one point two billion people on it and they've
Speaker 2: all got honors, degrees and PhDs in every field you
Speaker 2: can think of, and they have been to work for
Speaker 2: twenty five cents now.
Speaker 1: Yeah, so do you know twenty four hours a day.
Speaker 2: Twenty four hours a day or like yeah, they'll get
Speaker 2: subbed in out, you know, and you can change your specialty.
Speaker 2: But that's what's effectively been happened. That's what that's what's happened, right,
Speaker 2: And I don't think anyone's really I think a lot
Speaker 2: of people haven't grapsed that.
Speaker 1: Yeah, because we're still coming to terms with how to
Speaker 1: use AI because it's sort of overwhelming a little bit.
Speaker 1: It's quite freey and it's overwhelming. You know, it's interesting
Speaker 1: sitting here listening to you today, And I actually asked
Speaker 1: you right at the very beginning. It seems to me
Speaker 1: that you're always prepared, no mind to think about what's
Speaker 1: new in terms of learning about and what's relevant. What's
Speaker 1: new is really good, not a good word, what's relevant,
Speaker 1: what's relevant to consumers, and what's relevant to society. And
Speaker 1: that's probably one of the ways you made in your
Speaker 1: particular society, that's slither of society that you were dealing
Speaker 1: with Corporate Australia. You knew that, like as a religion.
Speaker 1: Now it seems to you're applying the same concept to
Speaker 1: a broader a broader church. And I think, would you
Speaker 1: say your strength.
Speaker 2: Yeah, I think it is. And liquor was so competitive,
Speaker 2: and when I look at the underhood of these other businesses,
Speaker 2: it's like, what, I've been doing this for so long,
Speaker 2: there's other opportunities.
Speaker 1: I was apprenticeship.
Speaker 2: That was the apprenticeship, right, and you know, it was
Speaker 2: a hard apprenticeship and it taught me how to do
Speaker 2: it and we ended up winning. But yeah, I'm excited
Speaker 2: about I'm excited about applying that energy to another industry
Speaker 2: that can really disrupt it. And you know we did
Speaker 2: do that at Shortias and some of that technology. Would
Speaker 2: you know, we're the first Microsoft E RP cloud in Australia,
Speaker 2: the second one in the world. You know, someone built
Speaker 2: it for us for pretty much free, one of them
Speaker 2: and then they end up getting brought out by KPMG
Speaker 2: and you know, we've we've tested and learned and we're
Speaker 2: prepared to fail. I think that's probably the thing that
Speaker 2: drove everyone in Endeavor, Matt, like, we're prepared to file.
Speaker 2: We had this line of credit. My earn out was
Speaker 2: on the last year, so like we had a couple
Speaker 2: of year wrong ways to really experiment and try things.
Speaker 2: And in big corporations, people don't. People don't do that.
Speaker 2: They're focused on their KPIs, they're focused on there in
Speaker 2: devastate the stip so they don't want to get out
Speaker 2: of flying becaus and they get their bonuses.
Speaker 1: And you know.
Speaker 2: Where we were one hundred percent prepared to fire.
Speaker 1: That's organizations like that buy organizations like you. Yeah, that's
Speaker 1: why Generatory brought my business because they could never create
Speaker 1: my business, they couldn't ever run my business, but they
Speaker 1: wanted me to stay there but for the GF so
Speaker 1: it would still be there. But they wanted me to
Speaker 1: stay there because they knew that they didn't have that flex. Yep.
Speaker 1: Internally general, you just didn't have the flex because you know,
Speaker 1: you're reporting upwards always. It's a global business. You know,
Speaker 1: they've got to have they've got to hit sholder expectations.
Speaker 1: They go by a business like mine, and even though
Speaker 1: they've paid a lot of money for it, but they're
Speaker 1: going by business like mine, and there's lots of upside
Speaker 1: in it, you know, and they need people who like
Speaker 1: me or who are working still working there to Actually
Speaker 1: they gave me that flex. They just said, Mark, you
Speaker 1: go for it. We can't do this a g just
Speaker 1: you go for it, and that's what we'll give it.
Speaker 1: That's an amazing opportunity.
Speaker 2: Yeah, and you know I wouldn't I wouldn't trade that
Speaker 2: for anything. That was amazing.
Speaker 1: Great learning space.
Speaker 2: Awesome learning space. And you know we went in there thinking, oh,
Speaker 2: these guys want to how to do websites on how
Speaker 2: to do deliveries and go do yourself. And see Oven
Speaker 2: said that, he goes, you know, you need to go
Speaker 2: out there and break things and make it work. And
Speaker 2: I think Steve Donne, who had a meeting with him
Speaker 2: every every month, like he missed one of them over
Speaker 2: the course of five.
Speaker 1: Years, he probably loved it.
Speaker 2: He loved it, and you know he would want to
Speaker 2: know what's happening and.
Speaker 1: See what you're building in the sand pit. He's all
Speaker 1: that in the same pit. You're the young boys, got
Speaker 1: your own sandpit. And Mecano said, you can build lego
Speaker 1: or whatever you can build if you want. It's like
Speaker 1: a yes, It's sort of like it's like for him
Speaker 1: would be a dream you can live through you vicariously. Well, David,
Speaker 1: I'm really glad we caught up and I wish you
Speaker 1: the very best for short Nick. I'm dying to know
Speaker 1: what you ended your first investment will be. Maybe we
Speaker 1: can find out when you get there. And good luck
Speaker 1: to you mate. Great thanks mark H.