How to Build Wealth the Smarter Way | Scott O'Neill

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Now you've built eight businesses. You've never had a business fail. Not one. Today? No. You've transacted over 6 billion in property, thousands of clients, and built one of the largest commercial property agencies uh here in Australia. What's the greatest risk of trying to build a portfolio like this? People are not planning for the dark time as much as they should. When the economy turns, the first thing banks do is reduce leverage. and you don't want to be caught off guard.

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>> What is a boring business and why is it a better bet for making money? The unicorns don't come up often. There's more opportunities in the boring accounting business or the pool shop for things that everyday people need rather than trying to create a new app or online product that may never work. Everyone knows solar panels, but they think of it from a residential point of view. So, what we've done is, you know, we've got access to these roofs. You just put a big solar panel on, maybe

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some battery storage to kind of cover the the downtime overnight and then charge direct to the tenant. It's like decentralizing the power system. >> God, that's genius, man. >> Cuz a lot of people are trying to figure out how they get out of the middle class and how they can start compounding wealth for that next stage of wealth building. You just got to take more and more risk really. So the risk I took was this episode is brought to you by Wix Studio. Here at the agency podcast, we're building a

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community and we would love for you guys to be a part of it. So, we would love to hear from you. What are you enjoying the most? What would you like to see more of? And what do you think might be missing? Drop a comment. Make sure you subscribe. And now on with the show. Scott, welcome to the Agency podcast. >> Good to be here. >> Excited to have you, man. It's been a long time coming and it's been fun watching you build what now looks like an empire at a distance. And I know

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you've said that it's been a slow burn at the start, but now it's really starting to I guess have that hockey stick trajectory. >> Yeah. No, slow start. Um couple years we didn't even make money as a business, but then the last 5 years it's kind of just upward trajectory type stuff. And yeah, it's it's not getting easier cuz there's more things happening, but in a way it's feels a little bit easier. So like at least in terms of profits and guess assume growth rates, it's uh yeah,

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everything's starting to click at the moment. Did you always know you were going to be an entrepreneur? >> Oh, definitely not. No, I was doing the whole corporate dream thing. I was in Port McQuary, like I was chasing uh I guess pay increases and there was a a really good manager role up in Port McQuary. It was like a midn north coast in New South Wales role. And the CEO at the time who was um he's literally one of the longest standing ASX listed CEOs at the time. He was making you know tens

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of millions a year. He had the Point Piper mansion paid off. He was traveling every 3 or 4 days on a plane. like he was an old tie guy and he he basically said uh you know I I cost my relationships to a degree with my kids and my wife and I just thought that doesn't sound as sexy as I thought it did and all of a sudden all that money like he's not even at that home so what's what's it matter >> right >> you could literally say most of the money you earned was not relevant

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>> what was the epiphany you had where you realized that you needed to go go all in essentially on on changing your strategy >> was probably couple years before I started the business, I was um I make like I was really heavily involved in like residential at the time. So I was buying unit blocks, strata titling them. There was a point over a six-month period where I was making four times my salary with about six to seven hours of work a week in in investing. So and then here I'm smashing myself 60 hours a week

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in in in the corporate game. It just didn't the math wasn't mapping really. It was just so much easier to make money at that time leveraging into a growth asset and then tinkering it with value ads than, you know, popping a salary and paying 49% tax. >> And you've talked about this where there's kind of this popular notion that if you're going to build a property business, just try to get 50 houses that are negatively geared uh and it'll all come out in the wash and essentially

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you'll build a portfolio of wealth. What's the greatest risk of trying to build a portfolio like this? >> Well, it's a house of cards really. So, the if you own 50 houses, so like some real rough math on this, like 750 grand house, which is roughly what they're targeting at the moment, uh you're going to lose 10 to 15 grand cash flow, assuming there's a 20% cash deposit. But a lot of them are doing 90% lend. So either way, like imagine you just say, I'm going to take a 15 grand less salary

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this year. that's fine for one or two. What if you why would you buy 10 of these? You know, that's 150 grand negative you got to make up somewhere else. That starts to become a really difficult situation. A lot of people are doing it. Like there's people in the industry buying a hundred of these things, but they're propped up by very good businesses. They're using that as a marketing tool to say, "Look, I've got 100 properties. Come join me. I'm a great investor." But then they're

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spruing the same deal for their clients and they're not in the same position, >> right? It's just so risky and you you watch when the economy turns the first thing banks do is reduce leverage you know and they I saw it in 2010 when I was starting to invest there was a investor in the quite a well-known guy and he was buying a lot in like South Brisbane and he had about 300 properties and these were town houses units houses all negatively geared but he had enough from his business to kind of keep it

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going but first thing when the um subprime crisis happened was the banks reduced exposure and like you know he was with CBA I was I was talking to him at the time he lost 70% of his properties that year because he had to sell out and it was fire cell so all these like assumed equity positions that he had in spreadsheets all of a sudden would you know 20% down 30% down it's just a classic didn't carry the cash flow through a dark time and people are not planning for the dark time as much

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as they should because they're assuming it's going to keep going nicely and it might might go for 5 years and happy days if it does, but at some point um you just got to assume bank policies will tighten and you don't want to be caught off guard. >> In the Australian ecosystem, it certainly seems like in order to get ahead in business, you should be parking a significant amount of your wealth in property to then leverage that back into your business. Do you think that we're

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playing this game of a monopoly to try to create a fugazi in Australia to build wealth whereas actual wealth is is a completely different practice? That's a great argument and you know one of the things about building a business in Australia is it's very difficult like it's hard to capital raise. It's hard to generate any investors to get interested in a business that's not their own. But property, you know, it's a sure thing. Yeah, let's go it. So, and it's an unproductive asset. We've got some of

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the highest prices in the country. Like, and I'm a property guy. I'm saying this, but you know, it's it's it's like a political thing. like you you keep it going and it it kind of wins votes you know like you know the more population uh you know immigrants they let in it sort of boosts like that's why we got record tight vacancy rates there's a million extra people in the country haven't caught up with building it's so tax it's so expensive so yeah it's uh

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it's an interesting scenario we're in I don't know how we'll get out of it but um yeah I'm with you like you know the Silicon valleys of the world like if they had a bit more of that culture in Australia there might be more productive wealth getting created but there is definitely passive wealth getting created And that's why the baby boomers are all as a as a group loaded per capita. And yeah, if you're if you're not in property, you've been left behind. >> Something I want to touch on before you

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move too far ahead into I guess strategy, which we want to dive into today, is that you've transacted over 6 billion in property uh for thousands of clients and built one of the largest commercial property agencies uh here in Australia. Um you said all of it started when you watched your father lose money in property post GFC. Can you take us into that and what you experienced uh with your father? >> Yeah, so we were a classic family at at the time where you know they he was a salary worker had a good job financial

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controller and he used that money and invested locally. That's what everyone did at the time. And that went pretty well. Like he did did um quite well. And then where it sort of got unstuck was when the GFC happened and he started investing in a couple of mining towns at at that time and they went absolutely pear-shaped. I remember he bought three properties for 750 each and within 2 months you couldn't sell them for 200 each. >> What exactly happened with the mining towns? >> That was in Mumbar. So Mumbra was a gas

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mining town and they were renting these 750 properties 750,000 were renting for about 2500 a week. So he recognized that yeah I need to turn the cash flow scenario around and this is before everyone knew mining towns are risky. So hindsight's a wonderful thing but I guess >> it seemed promising right? Yeah, because the the mines had, you know, big businesses backing them and and and it was they weren't investing in properties at the time and I guess where things kind of really took a took a sharp turn

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was when I guess a lot of the projects started closing and going into from uh from construction phase into production phase. So maybe they need a fifth less uh workforce there and then there was a slowdown in the economy. Everything happened at once and banks then turned the screws on investors and there's a couple of famous stories where like some were bought 10 odd properties in Kur like it happened everywhere and they all harved in value overnight and they they were basically bankrupt these investors.

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So >> we're talking about like tens of thousands of homes across the nation. Yeah. >> That just harved in value almost overnight. Yeah. >> And the entire workforce essentially harved. >> Yeah. >> And then >> and there's there's been different variations of this. I look at like what's happening in the Gold Coast at the moment like before that crash there was a unit crash in the Gold Coast where there was too much supply and >> prices got high and a lot of baby

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boomers were speculating on units in the Gold Coast and it's funny like people without long memories or don't read history like it's all happening again up there cuz they're just building prices are skyhigh do the local incomes actually support those prices that's the question >> in many cases no like I've heard you know properties triple in value in 5 years time like it's yeah I don't know if the chickens have come home to roost there yet but um you just you can see

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pockets of risk around the country but but overall things are still kind of coasting >> my grandfather now one thing about your parents like what belief about money did you inherit from your parents or your father um that you've I guess had to completely unlearn >> so one thing I got to thank my father for like in terms of business is he was the ultimate pessimist so you know you get excited about something and it was like, "Yeah, no, terrible idea. that's not going to work." And you know,

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it got it was good advice cuz like it's funny, you know, when you're driving along the street and you see, you know, a certain type of business, like instantly in my head, I feel like I know if they're going to succeed or not just through, I guess, speaking about it from such an early age, seeing so many foreclosures over the years, like, you know, certain types of restaurants or, you know, certain types of, you know, retail businesses, you think, oh, they're a goner, you know, like, but yet

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someone is thinking that I can invest money and put my whole life into that why didn't they think about that? You know, it's such a low percentage play. Yes, some can work, but just thinking negatively that businesses will fail and they do. Just don't be involved in those types. Just go for the ones that make sense. And there's plenty of those, but there's just so many that people just keep trying and there popping these things up and then 3 years later they're, you know, they burn out. Like

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it's it's a hard game for not much upside. So when you're thinking about the the sheer cliff of like failure that people are faced with in business, what is it that people are missing? Like what are they not seeing? I think people get excited like like again when I was in Port McQuary, this is way before I was in business. Like one of my boys at the time, his wife bought a video easy store. You know, this is it's really easy to think this in hindsight, but like you know, I remember just the first

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question was like, "Oh, that street, how much rent are you paying?" It was like, you know, six figures in rent. I'm thinking like how many videos is like like where's the money? And you how many staff like, you know, it tended to turned out like the only way to make a profit was uh that lady working seven days a week and you just think, well, wouldn't it be easy just taking a salary job somewhere else and then not investing and they bought that business, too. So, it was a, you know, 300 grand

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negative start because you start you have to buy all this, you know, everything and then it's the stock takes. So there's money invested forever and you know we all know what happened to video stores. It's just there's a thousand variations of that out there as well where you think like yeah I don't know not everyone needs to be an entrepreneur and the whole bricks and mortar shop front in many areas is is slowing up and dying but there's you know new things popping up all the time

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like you know health and wellness and you see these things like some gyms are doing incredibly well like high-end stuff can really work but yeah you just got to really be you know ahead of the ball game and that's yeah you kind of just it's easier said than done >> when you think about these people that are buying the flashy new thing. Um, what is the risk of that play and why do you think so many people fall in the trap of like jumping in the next wave business without looking at the numbers

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or looking under the hood like is what I feel like you're talking about at this point. >> Whenever you invest with the crowd, you're going to pay more for certain things. Like let's go back a few years ago. Everyone wanted a crypto business, you know, without really understanding the fundamentals. It was this new sexy industry with huge upside cuz we heard some people made billions of dollars in it overseas. But again, like this is where I sort of kind of default to more of a, you know, a boring or stable way

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of doing a business. Like I rather just know I'm going to make money even if it's, you know, a little bit more than you think. Like, but I don't like the idea of just making no money. Hope hopefully you create a unicorn at the end of it. And you know, the unicorns don't come up often. Like if you're the one in a 100, good luck to you. But you like to be that like rare person. It's it's a lot to risk and you know time is money. Your reputation's something and then it's not just time you're putting

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money into it as well. And every time you every year you don't make money I think like you know compounding interest as an investor like you want to keep putting stuff away as well because that will make the big difference in the end. If you just stowed away a little bit 10 years ago all of a sudden it's a lot and then you got a business that's ticking away. Combine those two things together you do quite well. I I really want to tear this apart because I I love your idea around you have like this

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conglomerate of unicorn businesses that are like shiny and sexy and cool and flashy and you can get rich quick and then you have this more traditional, you know, maybe it's not as sleek and sexy, but they're more stable. They're more, I guess, guaranteed to have a portion of the market that are willing to pay for it. You have a manifesto that you've coined the anti-unicorn notion as as a bit of a philosophy. And what exactly is a unicorn and why do people fall so hard for the idea of

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building a unicorn business? >> So for example like AI at the moment there's a lot of people out there that wants to you know create the next whatever business in AI and you know we're all involved in it to a degree. Even just getting a basic engineer could cost you 200,000. You know like you can hire a GM for that money in many other industries. So because it's a wave things cost more and it's a bit of an unknown. So if you're kind of getting in early and you don't make it that you can

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burn a lot of money very quickly. But where I've made just most of my money is just creating simple service industry jobs like you know even like a financing business. It's so basic and boring. But you know where we're netting you know good seven figure net profits from just doing what everyone else does. We just got decent marketing, good reputation, some good operators. Do that and then you can do the same in the insurance industry. Same goes. You can do that with legal. same go accounting you can

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go like you got go just go up the value chain and it's not hard you just you just need to know how to do a bit of marketing on a good business and like I was talking to an accountant this morning and he was just acquiring a bunch of other accountancy businesses because there's a lot of baby boomers retiring and he's basically buying the business for one year of revenue so one times multiple of revenue >> that's crazy >> so basically you get their entire client book which could double the size of your

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business and you you just pay like let's say they make 5 million You go to the bank, you get a $5 million loan off your existing business and then use that and then you know your revenue is going to be hopefully five million more next year. It's paid the loan off and you know then you got like basically clients the next 10 years, double the clients and that just doubles the size and it can increase the multiple of the business because as you know there's tiers. So if you can get your business

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over 10 mil uh revenue all of a sudden you got multiple of you know instead of it one times it might be three or four go to that next level uh you know four to five and it just it's money for jam really >> and what you're saying here is the way I understand it is like let's say I'm an investor and let's say I have my own successful you know accounting company and let's say I'm north of 10 mil rev I'm doing really well I've got a valuation on the business that I'm worth

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3x >> Yep. And if I'm buying your business for 1x because you just want to get out and you just want to get rid of it, then I essentially immediately double the value. Let's say it's a million dollar business. Now it's worth two or three cuz I'm a 3x multiplier. That's what you're saying. So like, you know, kind of this notion of the rich get richer because they're multiplying valuation of what they're absorbing into their entity. >> Yeah. And it's one of the oldest games

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of the book. like this is what they all do in Silicon Valley and you know raising capital and buying out businesses to you know play that game and um you know it happens in gyms happens with accountancies, real estate agencies as well like if you can kind of get to a certain level um yeah your multiple goes up and you can use that to either list on the stock exchange down the like you there's there's um companies that are accountants on the stock exchange and they're sitting at 12 11 12 moldables and like they're doing

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the same job. They just got more clients and they got better processes. So, if you know how to kind of set the business up and AI is going to be a part of this, good management, good marketing, then yeah, you can really make big wealth quickly. Now, for someone listening to this who's thinking to themselves, I don't have an accounting degree, I don't know insurance or understand it. Let's say someone that has no credibility or or certifications or or what have you. What would be your advice if they're

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looking at going, "Hey, I want to start a business one day. Like, where should I go? What should I think about? What should I start?" >> You you can look at any sort of corner store. Like, think about a pool shop. All right. So, I don't know anything about pools. Like, maybe I'd need to partner up with someone like you you got to go and get some capital somewhere. >> Well, let's use the pool shop as an example. How would you look at it from your own lens so that others could

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consider it for themselves? >> So, firstly, you got to light the business. say like pools you might go all look it's if there's a recession that could hurt where am I in the market cycle am I happy with this kind of asset class we're kind of where we're at the moment you know things are growing in many areas discretionary spends okay it's better than it was 3 years ago so yep people are still spending money on pools construction costs coming down so how are they making money well they're

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probably making money through building pools servicing pools so would I want to go buy a pool shop in a lower sociode demographic area probably not because They're the guys that'll do it themselves. So, you don't have that servicing cost. I don't know anything about pool shops, by the way. I'm just thinking. But, you know, if you're in an upmarket area like Mossman or, you know, a good part of Melbourne, you know, of course they're going to just, you know, get the pool boy to do the work. And

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that's that's recurring income. So, I like recurring income. And then you think, who's owning it? It's are they a 70 70-year-old baby boomer is about to kind of sell out and they got no succession plan in place. Like, you need some luck. They're not just going to hand you these businesses and then like you just need to market better, develop better systems. You might not need >> everything they currently got there. You could get the work done and once you sort of perfect the model, which will

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take time and effort. So this is hard work. This is not like you just sit there and buy it and it's going to go okay. You got to like rebuild the business potentially. And then once you do that, you'll know it. You got to be on the hunt like non-stop for the next business. And once you get three or four or five of those all of a sudden and they all got the same brand and they've become a known entity, >> your multiples has gone up, >> right? Cuz you've built a system that is

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like self-sufficient. >> So >> or automated. >> Exactly. So people do this a lot in child carees at the moment. So childc carees are it's a really weird industry where you got some global giants and then some mom and dad businesses and they're got no brands like they're just random but the the private equity mobs are trying to buy them out because they know they can get an you know a multiple of three and then be worth 12 to them or 10. I don't know the exact moldables for

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child carees, but uh I know a guy that's kind of the middleman of this. So, he's kind of buying out U up market child carees in good areas of Sydney and Central Coast, and he's playing that same game to hopefully sell to the the bigger giants down the track. And >> he's he could quadruple his money. Um but he's his wife's in childare, so he knows how to service them better. So, create really good reviews and just perfect business. He's a good businessman, marketer. So combine those

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two skill sets. That's how that scenario works. >> Do you have to love what a business is and what it does to make money with it? >> It helps. Yeah, it helps. Like it depends. Like a lot of people just love money and that that'll keep them going. But um that's a short-term thing. You know, you don't want to be playing in a space you don't enjoy. Do you think do you think people get an extra perspective or like kind of like a you know if you play in Mario Kart and you

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get the star and you go extra fast and you can run through walls like do you think you get a little bit of extra energy if you're in an industry that you find fascinating that you have some passion for? Oh 100%. because you you'll go deep, you know, like if you're not into AI, you're not going to be studying the latest trends, you know, on a on a Sunday night. Like you're just going to be focused on other things. And that's what would like to get to that next level, I think. So, like I was always

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interested in property investing because I I saw it as a free ticket out of the middle class. That's that's what it was for me. I was like, >> I can stay in a job. I can make good salary, but I'm never going to get rich. I I'll have enough to buy a house in the suburbs, maybe get an investment property or two and then go on one holiday a year. And that's that's great for I just I felt like wanted a bit more. And um once I found this niche in, you know, what I was doing with the

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value ads and also the commercial property, I was felt like a cheat code. So I just went deep after that point. Can you explain like the psychology behind this? Because a lot of people are trying to figure out how they get out of the middle class and how they can start compounding wealth. And I guess the way I've seen it is when you look at property and you think about what it can do for someone is you can work essentially a job, take a portion of that income, put that into a property. In your case, you bought a house with a

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granny flat, you know, bought it for 480, then you had two incomes. And then then what? like how do you then leverage that for that next um that next stage of wealth building? >> So you just got to take more and more risk really. So the risk I took was I just leveraged as much as I could. I had the stable job and that's probably the only reason I had the confidence to kind of go all in and you know I got to the point where like as soon as I had enough deposit I'd buy it with no buffers and

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I'd be like >> exactly. So, let's say you needed 100 grand for the deposit for the next property. I'd have 100 grand in my bank account and it'd be that to the wire and I'd have the deal lined up. I'd delay settlement. Sometimes I even had to delay like um this is later when I had a business. I was delaying tax payments just to scrape through because I knew the deal had a lot of upside. So, it was like guaranteed money if it settled, >> but there was timing issues every time.

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>> Okay. So, you're like squiring money away. >> Yeah. >> You're not quite at your target and you're already working on the deal. So, the second your bank account hits 100 grand, you're buying. >> We're gone. Yeah. >> And you're delaying payments and massaging things around to make it work. >> And I missed missed it a few times like um there was a deposit I lost once. Um there was what I got a 30,000 personal debt that kind of it was a horrible 20%

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interest on it. But like it got us through the deal. And that that deal was like I remember it. I bought it for 710. It was a strata title title place. So effectively it was five units on one title. I went there the day it was listed and I took a town planner, a surveyor and a builder out with me and there. So there's all these guys walking behind me and we're like, can we stratile it? Do we need firewall separation? What's the car parking rules here? How much do we have to spend on

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water meters? Like a new wall in the head and then if you strat titled it, those five properties individually were worth 1.2. So I had to spend aboutund 100 grand on it. 100, you know, 710. I was in the hole for 810 plus stamp duty. All it, you know, like there's several hundred grand profit just by settling on the deal. >> Yeah. And where did that method come from? Like were you reading books? Did you have a mentor? Like how did you acquire all this knowledge? >> It was just common sense. Go how much

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does it cost to buy that unit or this this unit when there's five onone title? Why is the price so different? Like it's like buying a cake and selling the slices at a higher per capita rate. Like it doesn't make any sense in property if you can convert it to that. So all it is is a change of ownership and a little bit of, you know, very loose renovations and construction. And then that's the other part of the strategy. If you renovate it and then boost the rents up at the same time, you then can get it to

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a better final product as well. So yeah, there's a few stages. It wasn't just chop it up and sell it, but >> yeah, chop it up, fix it up, then revalue it. I didn't sell, I just kept. And uh >> yeah, it worked out quite well. >> How how did this really catch fire for you? Because I guess going from one investment to this investment and then you know 19 in the period of two years like what was really going through your head at that time? Was this just fun for you? Was this was there

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>> did you have a strategy? Did you have a playbook? Like what what were you trying to create? >> Oh, I was just living on spreadsheets basically. Like I remember like I googled unit blocks title multi-tenant. These are keyword searches on real estate.com and that >> and I looked at every single deal around the country under under a certain price point. And so I had them all lined up and and and you just sort of go through the math on each deal and again I didn't have the money so I was kind of just

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like planning hopefully that one still is still there in 6 months and you know then other deals came up like duplexes and um it later went on to like once those deals kind of dried up because this is like 2014 15 period and everyone started buying these things in their super cuz the yields were good. So the yield got me there in the first place and then I just worked out there was an extra angle to it. But then uh we moved into commercial where the yield was triple as good on a net basis. So instead of being a 3 4% net which is

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equivalent of 7 8% gross returns the commercial were like 8 to 9% net. So all of a sudden I was like yeah that that was a whole new world that one. So instead of I guess um buying and renting or flipping residential, you you found that commercial was uh I guess a better investment or more valuable cuz people tend to say stay away from commercial especially during co you know it felt like everything commercial just kind of stopped. >> What what was the appeal for you other than the higher profitability in

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commercial? It was the income like because I was trying to replace my income at at the time and that was >> you're still working at this point. >> Yeah. Yeah. And I was like I had my own office and closed the door and like you know when no one was there you just quickly get on the spreadsheets and work away cuz I knew I was going to you know do this full-time at some point. Like again Australians love property so like if there's any way to work with it profitably it's kind of a lot of people

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do make that choice and I was one of them. And I just remember plugging in this deal in Perth. It was, you know, 700 odd grand. And the the thing was renting out for 55,000 nets. And by the time you take a took a mortgage out on that at the time, like you I was looking at like can't remember the exact numbers, but it was something like 700 grand $700 a week clear 35,000 a year. And it's like that's a massive pay rise just from buying this thing. Like like what what's the catch? And like why is no one

00:28:40 - 00:29:28

looking at it? Um, I remember I was I called up a few people in Perth at the time and they're like, "Oh, don't invest in that commercial. It's it's terrible." Like, you know, Perth down in the dumps. They were freaking out. Like, they oh, you're a young guy. Don't don't make this silly mistake. Like, everyone was saying, "Be careful." And my logic was this thing was a little supermarket. It's been there for 20 odd years. And then it was two businesses. The other

00:29:04 - 00:29:55

was a fish and chip store. And so I called up the fish and chip guy and he was you run it for 30 odd years and said who's taking over the business because I'm scared you're going to retire. Like yeah got that lined up. You know I know we're paying good rent. I went what what do you mean good rent? Oh cheap rent. I was like oh that's weird for a tenant to admit that but I like it. So then you know and I thought all right so Perth has been in the dumps. There's it's got

00:29:30 - 00:30:24

through like this business has got through the GFC got through the you know the 90s you know crash back then there's been all sorts of up and downs in Perth over the last you know few decades this business has survived so again thinking as a business person you well even if that guy retires there's a there's a cash flow business there that someone will want maybe it's not passive maybe it is but either way they're probably going to pay the rent and the other one was a supermarket and they were making

00:29:56 - 00:30:43

huge money um I'm think selling cigarettes pets and vapes and all sorts of things like that. And then obviously just everything else the supermarket sells. It was a small one like a mini m like 400 square meters. But yeah, just I thought if the recession hits tomorrow, like people are going to still buy eggs and buy milk and >> fish and chips. >> Yeah. They'll probably buy more of it if anything cuz they're not going to go out to restaurants. They're going to go buy their fast food and

00:30:20 - 00:31:12

>> stock up their fridge. So I just like the idea it's kind of recession proof. >> Yeah. It sounds like you're looking at like the really obvious basic fundamental things. Um, and some would say maybe like more like of a boring concept potentially. >> Um, and you often say that you want to build boring and you want to build forever. >> What is a boring business and why is it a better bet for making money? >> It's everything they don't tell you about in seminars and all that kind of

00:30:46 - 00:31:36

stuff. So, there's all these things like start the next unicorn online marketing, you know, whiz biz business and there's just so much competition by really good operators. And the problem with I have like I've never really seen many of these seminar. I've never gone to one in person um in terms of you know but I've heard what they talk about and I just think well that's for the 1%. They're they're talking about what will win for if you're the best of the best. Like

00:31:11 - 00:32:03

what if you just are you know a pretty easygoing salary guy or girl who just you know just wants to get by. Like I think all right so the masses what how can the masses actually get ahead and it's doing what more there's more opportunities so there's more opportunities in the boring accounting business or the pool shop >> or you know the things that everyday people need >> rather than trying to create a new app or online product that may never work out. I would agree with you. Like I

00:31:37 - 00:32:26

think I was I was reading some articles about how in Japan like the younger generation don't want to take over the more traditional older type businesses. And even Cody Sanchez, she's like running across the states right now like buying laundromats and doing cool branding and cool marketing and flipping and making them rad. So like when you think about like the world of business, I think everyone's looking for like the big crazy 100x unicorn. And you're saying, hey, you can actually look

00:32:01 - 00:32:52

locally at like the fundamental businesses that have sat in the community for decades and have just like printed cash every year. >> Yeah. >> How do you even start to get into that world? Do you just go >> meeting these people? Like where can I start to browse where I can even find one of these businesses? >> Well, a lot of people will inherit them in the next few years. It's like, you know, I know lots of people that have inherited their father's mortgage broken

00:32:27 - 00:33:17

business or accounting or or wealth creation firm, whatever it is, but they're doing it on a local level. So, if they can kind of, you know, like the services you guys offer, like if you can get in and turn that business into, you know, a citywide type thing and become a known entity brand, you're turning the multiple from one to three to three to six. Yeah. You know, so >> you can sell it or you can just keep running it, right? >> Yeah. So rather than focusing on the 100 multiple like you said, focus on what's

00:32:52 - 00:34:01

realistic and it's it's kind of a percentage play. Clients want it all. A slick looking website that can run their business and scale with their success. Wix Studio is built for that. Plan out your client's whole site in seconds with AI powered site mapping and wireframing. Then when everyone's on the same page, jump into the creative. Starting off in Figma or in the Wix Studio editor with super precise layouting tools like grid, stack, and flexbox. Go above and beyond the brief with no code animations,

00:33:26 - 00:34:34

custom CSS, and built-in business solutions. And make your whole vision responsive in a click. And there's zero need to break a sweat when clients grow fast. A dynamic CMS with global design settings and reusable assets lets you turn one page into hundreds. Design smoother and deliver sooner. Go to wickstudio.com. >> Now, when you think about the boring business, I like this idea around like trying to find almost like the hidden gems. It's almost like you're sifting through the local community to try to

00:34:00 - 00:34:54

find these opportunities in the rough that people are overlooking because they're not sexy. Um, what is it that a boring business will give you that you won't get if you're trying to chase, you know, these seminar opportunities? >> It's cash flow. So, most of these other sexy businesses like the 100x ones require capital raising, years of proof of concept, building it from building something that doesn't exist from scratch and you're not making money during that period. So, that's lost

00:34:28 - 00:35:15

opportunity. You know, it's like the whole negatively geared versus positively geared type asset. I'd rather something that, you know, if you can buy into it, you can see the P&Ls of it. Um, even if you're starting from scratch, you might have a line of like this is what I did with my buyers agent business. I was I started testing it before I had, you know, a website. I didn't have business cards. I didn't have any of that stuff. I was just doing basically cash jobs because I was

00:34:51 - 00:35:42

helping mates or, you know, and then their mates wanted work. So, I saw the word of mouth kind of scenario work where people wanted help buying similar properties to what I did. And that's like it was an accidental business. I didn't need a website. Didn't need craziness. I just knew all well the cash flow is there. I wasn't thinking about multiples or you know is this going to be the next big thing. I just thought well there's a service there's a need for it and that if if people are paying

00:35:16 - 00:36:01

you then you're on to a winner. How can people put themselves in a position to better I guess find and start these opportunities? Let's say in your case you had I guess supply and demand. People wanted to talk to you because you were already servicing something. How can someone start to find an opportunity like this for themselves? Like where should they go first? >> Most people just do a side hustle, you know, do it like keep your job because your salary is your biggest friend. Like

00:35:39 - 00:36:30

again, speaking as investor first, business owner second. Like I'm an investor. That's how I I got ahead. It's how I got the confidence to kind of invest or that's how I got the confidence to go into I guess business. Otherwise, I would have never left the golden handcuffs at the job. I I started um you know investing and you know you want to be able to make sure you're kind of again getting the cash flow that you can kind of put into that and yeah if you're going into a business that makes

00:36:04 - 00:36:57

you no money then that will just increase the risk massively as well. So do it on the side, have the, you know, salary there protecting you and, you know, take your time that way. Do it properly. >> Because I meet a lot of people and you're right, like I you see events come up where there's like these seminars and these gurus come out to share uh ideas on how to build a business. But if you look under the hood, typically it's, hey, I have a business model. If you buy this product or join this community or

00:36:31 - 00:37:22

become a part of this thing, um, I'll show you how to build wealth. And I think there's there's there's issues with that because they're leveraging in marketing what they think you might think is sexy to come into their seminars, to buy into their products, to buy into their community. Then you kind of end up stuck in this framework. You're saying that you need to look outside of that. You need to go identify like things in the real world that already exist that are already cash flow

00:36:56 - 00:37:51

positive and you got to find a way in. >> Exactly. I think if it's cash flow positive, you know it's working. It's so simple. like you know like I got a mate and these are bad examples but like even a vending machine business like um I got a mate who did it very well out of that but the issue was it was just too hightouch you got and you're dealing with people restocking and I used to put um you know cans in front of like big construction sites so you you're driving around it's very manual but it was cash

00:37:24 - 00:38:18

flow it was highly positive it was great business margins but came with effort so there's kind of a you know you want a balance between you doing it all yourself for that kind of thing. But at least you knew I'm not going to lose money on this because if you can maintain or increase the profits, still sell the business again down the track or uh or just keep it and keep collecting money. >> Is it less risky to start a new business uh on your own or to acquire someone else's business who's existed before?

00:37:51 - 00:38:38

>> It's a good question. I like I've only um started businesses cuz I found that at least in my industries, it's cheaper to build from scratch than buy someone out. >> Why? because then I don't have to pay a 3 to 5x multiple on future income. So it might take me more time to get to that level, but I'm not 5 years behind in profits. You know, it's like, you know, when someone buys a cafe, you you don't need to buy the the brand. You might want their equipment and all that sorts

00:38:15 - 00:39:06

of stuff like that. You're not going to pay goodwill on that because you probably think you can do better as an operator, you know, even though it's the same location and just different staff. But >> yeah, I I always found I I've started from scratch in my industries, but there's others where, you know, you kind of want their systems. >> Now, you've built eight businesses uh and they're all profitable companies and you've not needed to get any venture capital. What do bootstrappers

00:38:39 - 00:39:30

understand that fund raises or people that seek capital don't? >> Not I try to not over complicate things. I was just buying properties myself and I realized there was a gap in people helping me. There was a lack of education out there. All right, how do you fill that gap? And then when we started buying a lot of commercial property, we needed commercial finance. No one was really offering great commercial finance solutions. So you just then start that business. And then the insurance, a lot of people were

00:39:05 - 00:39:57

trying to get budget direct quotes and then they don't, you know, they're not going to insure a large industrial site or a shopping center. So you need a specialist insurance broker. So it's kind of just filling the gaps because it would have helped me in the process. And that's um wasn't thinking multiple. So like I was just knowing that this there's a demand for this. It's not really out there. So it was just living through it I guess and I guess a venture capitalist is looking all right how do I

00:39:31 - 00:40:25

turn the rethink brand into a global thing and they're just going to I guess they might then go into markets where they're not thinking all right is this really solving a problem or am I just trying to expand the brand for the sake of it. >> You've never had a business fail >> to date? No. >> Not one. >> Every single time we put on a cost there's got to be a business case to it. So you don't just put a 150 grand marketer on because what if that marketer doesn't return on their costs

00:39:58 - 00:40:44

and you want to kind of cover themselves three times over because by the time you account for I guess a business margin like let's say you're making 300 grand and your 30% business margins on that so 90 grand you know like that's that's what you're really getting out of that. So they need to kind of increase they don't just cover their wage they got to triple their wage. That's how I look at things. Okay. And you built one business and then you realized, okay, we're

00:40:21 - 00:41:10

solving this problem. >> Then you realize that there's no other business that can support that. And then the parties that you were trying to partner with weren't really great. Then you would just build another business and then another one. >> Was there any point where you were like, "This is getting crazy. I should just build one massive business." Like, why have um these different cohorts working together? >> We we actually created Rethink Group last year because we found that they

00:40:46 - 00:41:33

were all growing at different speeds. It's like one was doubling in size and that created a lead funnel problem because if we grew too quick and then they're not growing at the same rate then the service started breaking down. Complaints would start there because wait times were too long. So we really needed to grow at the same speed. So creating everything group was a way of like kind of centrally managing everything, making sure we're all talking together. We're all on the same

00:41:09 - 00:41:57

team. It's a different brand. They're like the lawyers are going to be lawyers. So they got nothing to do with the insurance business, but they're all tied together really because if that's not working, they're not working. And you know, if we're not finding the right deals, then it's it creates a pretty big problem quickly. Well, your collection of businesses operate kind of like the Richard Branson concept where it's like a Virgin style ecosystem. Um, and it's

00:41:33 - 00:42:26

what we deem as a branded house where everything is branded together rather than a house of brands where everything is branded separately. Why did you feel like this strategy was the best for you? >> So after maybe like 5 years in business, we found that people started trusting the brand more so and the difference between year one where I was door knocking like I was trying to get leads from mortgage brokers. I'd go to their place physically and say, "Here's the the pamphlet deals of the week. Here's a

00:42:00 - 00:42:40

cash flow breakdown. Let me know if you got any clients that want those deals." The problem came as soon as someone said, "Yeah, I like that deal." Like, and I had great deals there. They were literally unit blocks that I couldn't afford and stuff like that. And as soon as I mentioned there's a fee involved, they're like, "Who are you? You're just some individual like, you know, insinuated I'm dodgy and they can just go direct to the agent even though I got

00:42:20 - 00:43:15

it off market or whatever." Their whole game was to cut me out. And then it got easier when word of mouth started because they're trusted because their mate used my services. And then that went through the line of we've helped people build, you know, I've had clients buy 15 properties or more with us. So soon as I send them a deal, they're like guaranteed yes because they know they trust what like I'm putting in front of them. And so the trust started building and that's where we thought all right

00:42:47 - 00:43:49

well look the brand has some clout now especially in a high growth new industry where there's all these oneman bands out there and we're like the you know I guess the old school OGs in the industry especially for commercial um yeah that just started kind of multiplying and you wanted that same brand over other industries cuz when we were referring out to some random insurance business um no one knew who they were so there's no trust So we found the cut through in leads like 75% of people would say no to

00:43:18 - 00:44:13

that and just use their other guy. Now it's probably 90 95% guaranteed they'll use the Rethink brand even even leaving their own brokers in many cases um just because they trust the brand and especially if it's in commercial. So yeah, it just got easier with the brand. So we just wanted the brand to kind of be more visible. >> What about this do you think created trust? Like why did the brand work? Why was it building trust? what what was it that was actually happening in the mind

00:43:46 - 00:44:41

of your customers? >> Like our biggest strength were were our results like um because we grew quick and that created problems over the years where sometimes wait times were too long or there was a you got new employees that still learn in the ropes or sometimes like there were little kinks in the armor here or there that we were always working through and we still are to this day. But the results were always good with clients. So, word of mouth, like, you know, if you bought them a $3 million deal and it's worth 4 million in

00:44:13 - 00:45:04

two years and they got a million equity, like it's just guaranteed repeat business. Doesn't matter if um someone took an extra day to get via an email, but like the bigger I've got, the more I realize that customer service is just paramount. So, we've created like, you know, we got this thing called Project Elevate within the business where it's like literally just going through every single step. like there's these gant charts that go on for for days and it just shows every little touch point in

00:44:39 - 00:45:32

the business and we're just trying to like make it bulletproof. If we can do that then that can go to the next level of scale. The more humans you got involved in the process there's more room for error and that's a problem for a big business like there's there's like over 120 of us now it's a lot harder to train you know the last 30 people that have joined compared to when it was just two or three of us. >> So process is everything. Now, you said earlier that there was a certain point

00:45:05 - 00:45:57

where it was like really hard to make money and then all of a sudden became a lot easier to make money. What were the different stages that your business went through and then and then how has it become so that you're able to make so much more profit now that you're so far in? So, the first stage you're just starting out like it's you doing all the sales and probably all the ops as well. So, it's all about leads. That's the hard bit. and you got to spend as a percentage of your revenue, what you'd

00:45:31 - 00:46:10

have to spend to keep up on Instagram or, you know, wherever you're doing your external marketing is going to be huge. So, every dollar you spend is going to be a kick in the teeth. And you really think, "All right, do I do it? Oh, the market's quietening down. Let's hold back on that." And then all of a sudden, you're not marketing to your full potential. So, that's that's a problem. But you eventually get past that if you've got a good product and you work

00:45:50 - 00:46:40

your ass off and the next stage is my first employee and you think, "All right, how much are they going to cost?" All right, it's 120 grand. but then I got to pay super and all these other costs and like are they really going to cover their cost and the answer is probably not. So you got to then take it as a cost and hopefully you're covering enough of their income but that can't last for for long and this that kind of happens for maybe three or four or five employees where you're kind of just

00:46:15 - 00:47:03

almost going sideways in profit. You might be doing all the big jobs personally like dealing with all the big clients and um and then that's the next stage. when can you remove yourself off the tools? And that's really hard because you lose all the, you know, you you number one, you can't probably do that in many cases. You still have to look after clients and you got you might have 10 staff now relying on you and you are the profit margin. You take that out, your profit drops 30%. You're doing

00:46:39 - 00:47:22

it for the love of it. Like you mentioned, you're at 40. Like your last, you know, you will go to 60 so easy now because you've probably pulled yourself out of like the, you know, the nuts and bolts. You're still doing it to a degree, but you've got control over your day. You then every like you're in business, you've got the experience, you go, "All right, I'm going to do that. That's going to have a big impact on potential revenue upside." And you're

00:47:00 - 00:47:48

chasing bigger and bigger things. People trust a business with 40 people or more, a lot more. So bigger clients, higher margins can get created out of that. And all of a sudden, you can start filling gaps. >> And then relative to what that initial 120 grand salary is, it sounds cheap all of a sudden. >> Yeah. Like anything, your profit margins larger. What's another 120 now? It's nothing. Then that's that's where it gets easier. >> Do you think most people quit in that

00:47:24 - 00:48:11

stage? >> Most people don't have the product or the nouse to get out of that stage. Like they just become the gopher. They're not they're just technicians or they're they're on the tools basically. They're doing it themselves. So, and they they might be happy doing that forever because they're not a real business owner. They're just good at the job and they've just expanded around and leveraged their skill set a bit. Um but yeah, most businesses stop there.

00:47:47 - 00:48:40

>> Okay. What if someone wants to stop being a gopher and they want to start to build profit? They want to start to expand. Um how does a founder need to evolve and change their business so they're not stuck in the business that they can start working on the business. You got to have really good staff. They got to have the ability to collect what you're not doing. So, and there's still going to be a bleed rate. You lose 30% your profits like and they're doing it. There's just they might get 20 of that.

00:48:14 - 00:49:03

there's still going to be a bleed rate there. So, you then need to be able to use your time to get more marketing um you know, more more leads coming through, but the systems need to be in place by then. At that stage, a lot of employers can often leave because they go, "Oh, look, I'm doing all this. Maybe I'll just do it myself." So, you're going to have that run into that issue, which happens with any business. So, got to kind of be hiring relentlessly sometimes and then you're paying

00:48:38 - 00:49:29

recruiters their fee. Like, it it starts to get very costly. But if you can get out of that swampy area and you've got really good at marketing or like you know you built your personal brand or you got a podcast or something that's got some edge over the market which means you can deliver consistent leads to that business and it might be word of mouth. It might be just a great product. So it's got to be how can I get more leads than others and if you as a founder can do that I like that a lot

00:49:03 - 00:49:59

more than staying in that gopher zone. Do you think that founders that have little to no sales acumen are going to struggle get out of to get out of the gopher phase >> ongoing every year two three months in Europe? So every time I did that is where I get this 30% drop from. That's how much my revenue would drop the months I was overseas cuz I wasn't selling. And then I realized like yeah I've got to fix. Then we just started investing more in like good sales people like commission only jobs where they can

00:49:32 - 00:50:18

like it's like their business that way. So they get more of a piece of a pie, but then it effectively meant they were selling like it was theirs. >> Yeah. I see so many business owners get caught in this trap where they are the sales mechanism in their entity. They can't go away. When they do, they get the drop, then they come back and they get frustrated, then they get overwhelmed, then they're back in the hole again. What are some of the things people can do to get out of that trap?

00:49:55 - 00:50:44

You're saying hire a sales team that are better than you. >> Yeah. So like the thing I did was the commission only roles. Like that was a way of like cuz the revenue I guess the leads were there. So you got to have that ability to generate leads when we were strapped for cash. The commission only ro was a lot easier than paying someone 200 grand up front because it's going to take them three to six months to get going. So that's like lost revenue. And it doesn't work for any

00:50:19 - 00:51:17

every industry but like for ours you could do commission only roles. But then the I guess the negative side from a business owner point of view is they can earn a lot more money doing that as well. like did you find that you went through different evolutions or different versions of yourself as you went from like 10 to 20 to 30 to 50 people? Like what were those evolution points for you as a founder? >> Um probably the biggest one was like in the early days like you'd want to almost be too close to the staff and there's

00:50:48 - 00:51:34

been a few times where like some of them gone sour whether they wanted more money or they thought they could whatever doesn't matter and then I try kind of keep them happy. I think this is really important. I think a lot of people deal with this where they let's say they have a team of 10 and everyone's friends >> and they run the business for a year or two and then as a team goes from 10 to 20, 20 to 30, >> there is a bit of like animosity because it's like we used to hang out, we used

00:51:11 - 00:52:03

to chat, now I'm like, you know, I'm over here and we don't talk anymore and there's there's like this point by which the culture shifts or the relationships merge and morph and they they change. like what exactly have you experienced at these stages of growth where where teams can go sour? >> Yeah, it's exactly what you just said. Like sometimes their growth rate hasn't been as quick as the company. Like there's that old saying, misery loves company. And so if there's another

00:51:37 - 00:52:26

employee that's kind of had a bad day and then all of a sudden they're chatting and things can kind of get worse that way. But I used to be like, "All right, let's then take this person out, try to fix them." And like there's a structural issue there that they're not happy with. Just let them go. Let them go. Like cuz no matter how valuable they are, it's not worth it. There's there's like I've hired I love hiring people because it's like a new personality. They're vibrant. They're

00:52:01 - 00:52:57

got skill sets, new ideas. Um you don't need to keep the old dogs happy. Let them go because the new ones are going to probably be a lot more productive and uh it grows to the next stage there rather than trying to keep you in the old days. I think in the world of marketing, the word disruption just gets thrown around haphazardly all the time and it's constantly in marketing. How how do you define real disruption? Like what is that? What is it really? Uh in essence, >> you either got to be the first or the

00:52:29 - 00:53:19

best generally like go for one of those like if you >> first or the best >> first or the best. And if you don't think you can be the best in an industry or your it doesn't have to be the biggest, it might be I'm the best for that subsector of clients like know we're into rural commercial investing. You know, we can help rural clients invest because we know they're not represented well. We're the best at that. So there's so many like niches to this, but you know, everyone's thinking

00:52:54 - 00:53:43

be the first. How do I create the next AI company that's going to challenge all that? And that's just fairy tale stuff. Just be the best at whatever your niche is. You know, if you're an accountant, be the best at, you know, representing plumbers or, you know, tradies in the in your local area and you'll clean up because you'll get the word of mouth. >> Can I challenge you on this? >> Mhm. >> When people say the best, we hear this all the time. So, we've done thousands

00:53:18 - 00:54:04

of workshops. Everyone thinks that their product, their brand, their offering, everyone just has this delusion that they're already the best. The market just doesn't realize it yet. Yeah. >> How do you define whether you actually are the best or not? >> I honestly think 99% of those people know they're probably not the best. It's kind of like something to say in marketing, but they know they're up there or they're trying to use that as a marketing ploy. You can't even like

00:53:42 - 00:54:36

market that because that keyword is just used on 400 different sites, you know? So, like everyone is it's it's a redundant claim almost. So, >> what are what are some signals that someone is the best from your perspective? >> Um, I think size. is like if they've been in 10 years in business and they're like doing I don't know let's say 2 billion in loans a year and there might be one other competitor up there like it has to be them because the you know the proof's in the pudding like terms of

00:54:09 - 00:54:57

like net wealth and net revenue and all that kind of stuff like that's the scoreboard. They wouldn't get those numbers if they were at their job. They get them because the word of mouth is there. They got the critical mass of people that have heard them and like you're dealing with not just someone's mates. you're dealing with like your seventh generation of lead referral and that that's kind of where it starts to get to a point well maybe they are the best cuz they're the biggest in the

00:54:32 - 00:55:28

industry and they're not then they stay small. So a small operator saying they're the best that's wishful thinking. Now, if someone is listening to this and they're like, "I'm swinging for the fences. I'm making a unicorn. Damn it, I'm gonna be a billionaire." What What is that disruption? That is that really at the end of the day, the most disruptive thing to do is to give the end consumer the most valuable product possible. Yeah. Like if you can cut something out of an industry or

00:55:01 - 00:55:54

provide like this extra level of service that they've never seen before or something half the price, you know, like then I think yeah, you you you've got the ability. You just got to have that uh you got to be a bloody good salesperson because all of those things require capital raising, you know, because you're going to have years of no income before you get to that >> big uh you know, integrated network that solves a big problem for assass >> built and it can take decades.

00:55:29 - 00:56:16

>> I had this fun experience last night where I was getting um a taxi back from an event. I did a keynote, couldn't be bothered getting an Uber because there was a taxi right at the front of the venue and I I jumped in and I'm on the phone and I I pull up at the front of my house and I I I I wave to the guy in the front seat, open the door and I walk off. He's yelling at me. He's like, "Hey, you haven't paid." I was like, "Oh, dude." Like, it was a taxi, so I

00:55:52 - 00:56:39

didn't pay him. I in my unconscious mind, I just have become so used to using Uber. >> I was like annoyed. I'm like, "Ah, I got to get my card out. I got to pay this guy." Like it's it's like those little tiny things that I think so many business owners forget is like those little details matter. Yeah. >> Like not having to think about doing something. If you can remove a point of friction or if you can remove a painoint that is innovation that is disruption

00:56:16 - 00:57:02

100%. >> Yeah. >> And like especially with everything that's happening on like the AI level like most industries are going to face disruption otherwise Yeah. They're going to fall behind. So just being ahead of the game and that would involve doing something very creative in a very simple industry that's been around forever. Like not reinventing a new wheel or you know new product. You're just fixing an old one for the better. >> And it's not always a product, right? It

00:56:39 - 00:57:33

could be the way it's marketed. Yeah. >> It could be how you talk about it. >> Like we're seeing laundromats become cool again because they're just marketed with cool merch and cool signage and all the rest of it. >> Yo, my name is Dane Walker and I am disgustingly obsessed with branding. I had to figure out a way to do branding every single day. So I branded myself. >> Then I started my agency Rivalionary. The way I'm blacking out >> and hired a team of branding mavericks

00:57:13 - 00:58:10

hellbent on creating brands so good that they'll make your competition dead pants. So here's the thing. You want your brand to go viral and Rival makes brands go viral. That's why we're offering you a free 30inut branding session to get an expert's opinion. If you don't believe me, the proof is in the pudding. Here's what clients have to say about Rival. Rival is trusted by brands like Nutrition Warehouse, Light My Bricks, and Voomie. So, if you want to absolutely smash the competition and

00:57:42 - 00:58:38

make your brand go viral, hit the link below and book in your free 30-inute branding session. What's the next major Australian industry or wave that you're seeing that people aren't quite seeing that you think that there would be a significant amount of profit in? >> Like what I'm getting into is probably the renewable side of things. So uh so basically what we've uh you know as you mentioned we bought 6 billion in uh property and a lot of that is large industrial sheds, shopping centers. So

00:58:10 - 00:59:01

they got these big roofs in the middle of suburban areas. Everyone knows solar panels, but they're what everyone thinks is that they think of it from a residential point of view. So, what we've done is all right, well, they're paying huge power bills. Like some some of these bills can be a million a year in electricity if they got a giant old storage facility or a manufacturing. >> So, there's a lot of direct um I guess benefit to the tenants. So you put the solar panel on instead of you know

00:58:35 - 00:59:26

shooting the the power from a coal station like 200 km away with all that you know friction on the wires like you're going straight to the tenant and you can deliver it at a much cheaper rate. So what we have come up is is just basically all right well power bills are going through the roof so the market's in our favor every time that goes up more margin getting created. So, you know, we've got access to these roofs. You just put a big solar panel on, maybe some battery storage to kind of cover

00:59:01 - 00:59:47

the the downtime overnight and then charge direct to the tenant, become a power supplier. So, it's like way of decentralizing. >> That's genius, man. >> It's like decentralizing the power system. >> When did you have this epiphany? Cuz you're you're right. You're buying all this commercial property. Yeah. >> And at some point you realize you got 10 km of roof and you're like, dude, we could >> and it's middle of like, you know, cities like where where they're using

00:59:23 - 01:00:21

the power. So uh initially it came from the idea how do we reduce the outgoings because like remember it all goes back to cash flow like all right we want to boost the yield for investors. One way of doing it is to put a big storage facility on top you know generate the power. Um the the business model is we deliver the power like roughly 20% below mains rates for the tenant so they're happy. We sign a lease with the landlord pay them a rent on the roof. We then like as in Rethink Renewables owns the

00:59:53 - 01:00:47

infrastructure on the top. So it could be a million dollars down or 200,000 down, whatever the size of the job, we're taking the risk, but in return for that risk, by the time you collect from the tenant and then you pay the landlord a roof lease, there's a margin in it. So that's the business model. And then everyone goes, what if the landlord just does it themselves? Well, one, you're going to have to cut cough up with a lot of cash. And then yeah, you won't have to pay us a roof lease, but you legally

01:00:20 - 01:01:12

have to, you know, you can't legally charge to a tenant. So you have to have like otherwise the Australian electrical um commission is going to be on you because you got to basically have a license to do this stuff. So and we can manage those licenses too if the landlord wants to take that risk. But basically it's just a way of taking market share away from the big guys, the als of the world, turning it green. So, it's obviously much better for the environment. Just the whole energy world

01:00:46 - 01:01:35

is is there's so much opportunity. There's so many grants going on. There's so much need for it. There's there's uh yeah, huge opportunity. Ours is just one niche, but I'm sure there's >> Yeah. >> plenty of others at the moment. >> Now, this sounds like a bit of a um outlier in your collection of businesses because you've got kind of more of a traditional system that is like integrating together into one brand. This feels like a bit more of a unicorn

01:01:10 - 01:02:01

type play. Yeah, it's the highest risk because it's like capital up front. So all my other businesses, you're kind of collecting money as you go. This you got to spend a million and then you got a return on that. So it's like a it's almost like a debt business. >> It's almost like inverted. It's >> exactly. Um but the benefit of it is the multiple a lot higher. So instead of being a, you know, 3 to five, it might be a 15 because it's recurring. >> It's just more expensive and takes

01:01:36 - 01:02:25

longer. >> Yeah. You got to spend it a lot. Like you know, think about a roof. you got to come up with me and it we we haven't got a real good banking solution either. So, it's literally cash. So, you just go, I'm making money through this business. I'm going to then put it on that because I'm going to get a very good return on the roof there. It's all scheduled in like the tenant signs a PPA, power purchasing agreement and um and then we sign a lease like we create a lease for

01:02:00 - 01:02:54

the landlord. And this is the best bit as well like the landlord because we've increased the income on the property, they get an equity uplift. So they get extra cash flow and free equity for no money down. But let's say you increase the value of um the rental income by seven grand a year and then >> that's more valuable. >> Yeah. And then that seven grand there's a cap rate in that local market of 7%. So what if it's 70,000 a year? Just it's all on paper, but then they can

01:02:27 - 01:03:19

refinance it or sell it because whenever that next buyer looks at buying that deal, they're going to see, all right, the industrial tenants paying 380 grand rent here. There's a I could be a cafe complex paying 60, but there's a roof lease paying 12 grand a year on top. So, it's all included in the numbers. So, people will pay more because the yields higher. So, kind of win-win-win. The tenant gets cheaper power, we get a business margin, and the owner makes cash flow and equity. So,

01:02:53 - 01:03:41

>> that's remarkable. And then you're collecting the power and then selling it as well. >> Yeah. And our long-term goal with that is like once we've got, you know, hopefully a couple of thousand of these under management, then maybe one of the, you know, big companies wants it. >> Either you make a ton of dough or you >> make a ton of dough by selling it. >> Yeah. But it's going to cost us because it's debt up front or your cash. So, um, but yeah, like even if you just sit on

01:03:17 - 01:04:07

the cash flow, it's kind of >> an easy machine. >> This makes this seems like a bit more of a big swing for you. Were you able to make this type of bet because you felt like you'd created some sense of a security blanket with your other businesses? >> Well, no one else could do this unless they had our I guess database. So, like you can go to rental managers for industrial property and say, "Oh, can we get access to your books?" But like unless you give them massive kickbacks,

01:03:42 - 01:04:30

you're not really going to get far there. But we've got the trust of the clients. We know them. We go, "Hey guys, do you want want to discuss this?" And we can do feasibility studies for them. And so we've got the access to what we need to. And because we do the due diligence on these properties, we we know the power bills already. >> So you can kind of break them into sections and go, "Yeah, that that's column A. That's the higher target jobs, and then they're the ones we want."

01:04:06 - 01:04:51

>> Jesus Christ, man. So you've you've found a way to like >> commercialize this market, collect all the data, and then use that >> to build renewable energy. >> Do you see this as like something that's going to be quite significant in the Australian market? Uh look, if we can get cheap debt for it, yes, because it's like that's our restricting factor because like we've got pipeline of 100 million in terms of jobs right now. We can't afford that,

01:04:28 - 01:05:19

you know, 100 mil cash. You just can't keep doing it. So, um right now the market's not ready for you can get loans like asset finance loans and stuff like that, but the interest rates are well above 10%. Okay? It's not not worth the risk until like we want a bank loan style. like if you can get a 6 7% type interest rate on the loan, business margins look great after that. That's when you can scale. >> A question I have around what you're building here though is the Australian

01:04:54 - 01:05:48

distribution energy market is projected to grow over 43 billion by 2033. Um, how much of that market do you believe you could capture with a business model like this if you had the debt to back it? >> Um, yeah, I think anyone with a commercial property that doesn't have solar on it, it's you should be considering it. So you know the there's a the like there's about a trillion in commercial property in Australia compared to like 11 in in residential. It's still a small market but the good

01:05:21 - 01:06:13

thing is it's a lot more larger scale per capita. So you know you think the towers in the city the the giant warehouse distribution centers like residential is a lot more like you know there's units and there's you know 400 square box of dirt. So deal size is a lot larger and that's very convenient for I guess the renewable energy market cuz it's so different. You wouldn't like to put solar panels on on a house and selling it back to the grid doesn't work. A lot of times you can't even sell

01:05:47 - 01:06:43

anymore back to the grid and the houses don't use enough power to really generate things compared to what commercial would be. So uh what do you intend to do with the business next? So because of the amount of capital invested, this is probably my only business that I see the need to probably sell onwards because, you know, I'm investing millions of my own dollars in cash into this. So if I can get that back at a multiple of, you know, you know, 15 times or whatever, even if it's 10, it doesn't matter. Like you want to

01:06:15 - 01:07:14

probably think how can this business be as automated as possible. So then maybe a big power company wants their market share back and it kind of gives them the green tick as well. So you got to we're thinking about that as well. But it's just the capital up invested is is probably >> why is it a 50x like what gives it such a significant multiplier? >> So you could we sign leases of um 10 years but we have two 10 year options. So you got control of the roof for 30 years. So that's real estate and I think

01:06:45 - 01:07:38

in time that real estate will be worth more. So maybe the there's another upside there >> like there's an increase of demand and power usage on on AI infrastructure like people are talking about building you know underwater like energy farms so we can have enough power to run all this AI tech. >> Is is a part of this running through your mind as well? >> Oh for sure it'll make it easier and we all know we got to move away from the traditional uses of or creators of

01:07:11 - 01:07:58

power. So there's going to be this period ahead where we're in this middle of this transition. I think we're going to be a part of that, you know, whether it's large or small scale, like we're part of that transition and yeah, that's I guess being part of that is the opportunity itself. >> Now, if if you're a founder and you're running more of a unicornbased business or more of a traditional based business, have you noticed that there's a behavioral difference in how people run

01:07:35 - 01:08:29

and operate a business based on whether it is a unicorn or if it is more traditional? >> It's such a good question because I've only realized this when we've done the renewables. they I guess the mindset is you want to create the product completely upfront where it's like ready to go user ready like I've always had this mentality like I I want to make money straight away to take the risk like my first business I didn't make money cuz I expanded too quick so after that I was like all right it's you know

01:08:02 - 01:08:55

think about the monthly P&L make sure it works cuz that doesn't work in the unicorn business you your monthly P&L is going to look horrible for a long time and then you got to owe investors money and then the pressure starts building because you got a return on that, you got to dilute your shares to keep it going. It's kind of it's so different and it feels less lucrative to be honest. But if you uh if you win, it's like winning lotto. That's what everyone's focused on.

01:08:28 - 01:09:15

>> How how do you identify these moments in the market because it sounds like you're someone who's kind of looking around the corner and going, "Oh, this is kind of coming next. We got to take >> take advantage of this now." >> Well, it's it's what I would use myself straight away. like even the renewables energy business cuz I've got 65 commercial tenants like and there's all these tenants paying huge amounts of power bills and I was looking to reduce

01:08:52 - 01:09:46

the outgoing I thought well look if I just invest myself on the roof it's going to cost me a lot but then I can't legally charge them so that's a problem so then how do we get around that and then you know you got to sign a got to have a a provider do this you got to have like the guy that I run this with Paul Harmssworth is a genius in that space where he's sort of setting up all the p purchasing agreements and then he's got the licensing and you know he's it's a decade long process to to get

01:09:19 - 01:10:07

credit credibility in this industry. So I'm not going to compete with that. So he's now on the team and then basically we we worked together and it helped my properties. I got better returns out of it and then because the business took the lease roof then it can be recognized as a third party income on the leases and that's where the equity component comes out of it. >> Yeah. If you just invest on your own property's roof, you don't get an equity benefit. You're just saving on cash

01:09:43 - 01:10:33

flow. But if a third party business signs a lease, it's no different from having another tenant there. And that's where the banks valuers recognize the extra income. So I thought, oh, that sounds good because then I can get free equity. And then even it's just it's like running through a company instead. So >> like I know you feel like >> this is like a normal thing, but this is pretty nuts. It's like how how how I want to understand how you think about this type of what is happening in your

01:10:08 - 01:11:01

mind for you to catch these >> these patterns or these systems that you go I can build a business with this. >> It's probably just the investor first mentality. Like I'm I feel like I'm a born investor. Like you can kind of I'm more that than a business person. Like so and to get a like an above average return like I've always gone with like go against the crowd invest like you know I can't wait for a big recession you know like the only reason is >> I can't wait for a big recession

01:10:35 - 01:11:23

>> because it's what you can buy at a discount like and I've trained my mind to think right >> it's like your black Friday like when's it happening cuz I'm ready >> like the stock market will drop 30 40% that week that's the point where it feels like it'll drop another 30 or 40% and you won't want to invest like the fear of losing everything will be there. But you got to train your mind that's when you get in, right? When it's the worst psychology point of view is is you

01:10:59 - 01:11:48

got to go that's the moment I get in. Cuz if you look historically, which I, you know, I've done, that's when you get the good gains out of it. >> Like when COVID hit and everyone thought we're, you know, every fifth person on earth was going to die. That's the moment. >> It sounds a bit rough, but from an investment point of view, you're uh >> that's crazy though. like how do you know like how do you how do you have the now to do it at that point? >> That's it's almost the psychology will

01:11:24 - 01:12:15

help you like you knowing or feeling this is terrible at that time. >> You got to see some signs that there's a discount like you don't do it if the market hasn't reacted right when the market's reacted cuz most people are going to kind of play it a bit safer and go like you got to be financially ready and capable at that time. And remember like at the time there's a recession, banks reduce liquidity. So you're going to find it hard to get bank loans. You're not going to get that 80% loan

01:11:50 - 01:12:46

that you would have that day. It's probably going to be reduced to 50 or or no debt. So that's where the cash investors like say in the GFC when that happened. A lot of fund managers started 2010. That's two years after when the B because they were cashed up and they bought the towers at 40% discount and then the property market recovered two or three years after they made a shitload of equity and they recycled it. Their investors loved them. So then they built personal brands or company got

01:12:18 - 01:13:11

credit out of it. >> Like right now we don't have that opportunity. We're just kind of fighting the rising tide which is still good. But >> yeah, that's if there is a bad time then just keep enough for that. And yeah, if if it sounds horrible, uh that's probably a good time to get in. >> Okay. Now, when someone says to you, "Dude, why aren't you happy? You've got this massive portfolio. Your businesses are killing it. Why do you need more?" >> It's an easy one because anyone that's

01:12:44 - 01:13:38

ever reached a goal in life realizes like it was the journey that was the fun. The money goal was uh really underwhelming to be honest. And it's it's the journey getting there. Like I the one thing I always kind of pity is imagine you're a trust fund kid and you're given 100 million >> like how do you improve your life from there like you know turn it to a billion maybe or if you just sit on it and spend it and deplete it every year like that would not feel fulfilling. >> Business is is fun if you let it be. So

01:13:11 - 01:14:03

I've sort of made sure I don't completely snow myself under with work and that's what I used to like used to love doing the 10:00 nights and starting at 5 6 a.m. But that's um that's what you pull back on. So you can kind of then be a little bit more efficient. >> Yeah. Do you look at business as a game? >> Yeah, for sure. In terms of the game, like I'd love seeing a competitor do well so I can try to beat them at it. So it's kind of like the competitive street

01:13:37 - 01:14:21

goes like cuz business can be can be war in a friendly way, but like >> everyone's like trying to steal what you've done, you know? There's a lot of that and that's you know if you got that mentality you can kind of go all right well that's motivation way more fun than money. like you know what once you got that sorted >> it's like how do we just get better and better and that's why you know >> Roger Federer got so much better because of Nadal there was a second guy pushing

01:14:00 - 01:14:56

him >> um one thing I want to understand that you're doing is you seem to be someone who's been able to create systems fairly easily and then have a team kind of come in and manage it after you >> this is something that most founders struggle with is how to build a system that they can walk out of and go and create another system um now Michael Eerber has great book about this called the E-Myth and uh it really helped me in my business trying to understand that in order to grow a business. He had this

01:14:27 - 01:15:22

notion that you need to hire about five people to replace yourself. >> Yeah. >> Not one but five. What what frameworks do you have that you've been able to leverage your team to come in and take over from you so you can move into the next venture? So the obvious one is the operation man. have a really good ops person who drives things and that's like that's a pretty tough job too cuz it's like you're fighting against costs and dealing with all the messy parts of the

01:14:54 - 01:15:37

business. If you can find someone especially if there's salary to grow the business like yours, they're the most valuable asset. >> So an ops manager is like the go-to. >> No ops, but then you've got like a growth manager or a sales man something GM, whatever you want to call it. >> Someone who's like super commercial and then someone who likes to fight the problems. >> Yeah. So someone who can go out and generate. So, when you're looking for these people, what do you look for? What

01:15:15 - 01:16:05

are the traits? Um, what are the job titles? What are the things that every business owner who's trying to replace themselves should look for? How do you find them? It's hard. They're unicorns themselves. And that's probably, I guess, the whole where the market is. Everyone's focused on creating your own business, but there's like a really good opportunity for like two IC's to do well benefit off, you know, individual guys like yourself doing things and and then, you know, come under the wing. you got a

01:15:41 - 01:16:31

head start and you might end up with equity in a different business like down the track, but like it's a running start into the chaotic world of entrepreneurship without having to take any of the financial risk yourself. >> Okay. Do you think that some business owners can get too lazy? Like let's say they've done well for a couple years, they've got a good tailwind, money's rolling in, why risk it? >> Really all do. It's like it's a stage of life. Like you know people have their

01:16:05 - 01:16:56

kids and then they've made their money. It's like and then all the people you associate yourself with are doing even less. So it's like all right do I need to then create this next >> it's like stage of life a lot. So you almost need you know some young or hungry blood or you know something to push that next level. >> But I'm obsessed with people who have high agency and you strike me as someone who's obsessed >> enjoying the game you know trying to find a new angle or new way to do

01:16:31 - 01:17:29

something. What about this is creating an obsession for you? And like why are you taking so much high agency and trying to do all of this? Maybe it's the perception. It's a lot harder, but like I'm making much bigger decisions quicker, taking more risk. So like yeah, there's probably more of that rather than just grunt work, I guess. So, and that's one of the things I don't like. Like the whole working hard, like you got to work smart, not hard, you know? That's something I've really kind of drilled

01:17:00 - 01:17:49

down. So, I'm not sitting there just doing things unless I know there's a direct impact. Like, we're here today. You know, you're a massive podcast. There's going to be benefit. We'll meet people out of this. People reach out. Um, would you just do every podcast you get on? No chance. So, you got to just like limit your time and then I don't know, you just you enjoy your week. So, as long as I enjoy it, I'll just keep keep I know it sounds really basic, but all these business I've created, I I

01:17:25 - 01:18:07

knew they would work. So, it's like why not? It's I don't know why. I don't know. There's no no nothing more fancy than that. >> Oh, I love that about you, dude. You're looking at this like >> no-brainer, like pretty straightforward. Let's let's make it happen. >> And I I think there's there's a >> there's a confidence that you have that a lot of business owners >> don't have. Like it's it's honestly, dude, it's pretty rare for someone to be

01:17:46 - 01:18:29

like, it's not a big deal. Let's get after it. >> So, yeah, I don't know. It's within my scope of knowledge. So, that's why it does feel so sure. And um >> even the renewables one, like it's Yeah, there's there's no risk there. Even if there's no buyer, at the end of the day, it's a cash flow machine. So, >> do you do you live with your businesses like truly believing? Nope. It's pretty straightforward. It's pretty easy and it's pretty fun.

01:18:07 - 01:18:54

>> Yeah. And even if it goes south, then you just have to put in a bit bit of effort like to fix it. You know, like, you know, we launched a a wealth creation business in terms of like financial advice and all that. And you think, all right, let's say no one wants the product, then we got to start talking about it. We've got to then start networking off the current lead. So you can fix the lead flow. Actually, that's a big part of my job, just working out where the leads need to go.

01:18:31 - 01:19:23

So we tweak marketing for every business. Like New Zealand, we created the first commercial buyers agency there because there was no demand there, but there was no competitors. So we had to go in and educate the market and go, "Look, residential can be a bit if from a cash flow point of view. What do you you think about commercial?" And I'd see the comments online and they're like, "Only invest in commercial if you want to go broke." like they were so educated like about it like there's no

01:18:56 - 01:19:51

capital growth. Uh they all go vacant for 3 years like and you had to explain to them like yeah well when's your local Worth gone broke? You know when's your that industrial complex has got zero vacancies in it and then you start educating them and now all of a sudden there's leads coming through every every few hours in that area and it's a small market. So there's still grunt work involved, but it's kind of more strategic marketing and yeah, but you just got to have a good product and I

01:19:24 - 01:20:05

think all of our jobs or companies have good products, so we'll always win through. >> So sometimes you look at a market as like I can improve it. >> I can make it more efficient. And other times you're like, I'm going to go in first. I'm going to create a demand. >> Yeah. >> Through education. >> Yeah. And that's there that's what we did for the international side of things. When someone's trying to be first in the market and they know they

01:19:44 - 01:20:37

have to educate a portion, does fear creep in for you or are you like no, I've done my homework. I I I just got to get these people to wrap their head around it. Yeah. The only thing I thought about is like I wonder how long it'll take. So it's kind of just like an effort game. Like so again, you got to be financially ready to go I wonder how many months it's going to take for people to cotton on that this works. And um yeah, it took about 3 months. That wasn't bad, but you know, we were used

01:20:10 - 01:20:59

to instant results in Australia and uh but yeah, I flew over there, we did seminars, like we did all the usual stuff you, you know, get people talking, got in media articles, and now it's it's >> Dude, I love how easy you make it sound. Like I'm like, how do I get involved? You know, like you're making this sound super fun and reasonable. >> Um I think that's that's a lot of business is just trying to help people understand it. It's not this big scary >> crazy thing. Sometimes it's just taking

01:20:35 - 01:21:22

complex stuff and breaking it down and making it palatable. I've really enjoyed talking to you about this. It's been a ton of fun. I think I I'm just enjoying your journey. I've I've read through your story and what you've been able to accomplish in 10 years and I'm super excited about what's around the corner for you with renewable energy. Um I worked in energy as a sales rep for a long time. It's it's a space that needs a shakeup and there's a couple of people

01:20:58 - 01:21:48

monopolizing the market. Um, but it's been a ton of fun just unpacking some of this with you today and getting a better understanding as to, you know, how others can kind of think like this for themselves. >> Yeah. Yeah. No, I think the the opportunity to start business is a never been better, but like yeah, just look at it from different viewpoints and, you know, whether it's like working for as a 2IC or going into the boring business type stuff like just be a little bit different to the masses. But yeah, play

01:21:24 - 01:22:02

the percentages. Like that's the only thing I think about. How to not lose money by doing something so big and so out of your comfort zone. It's going to blow you up. Yeah. None of it simple and there's a lot of people that should stay as employees cuz that's going to be a safe bet if you're in the right job because everyone wants to be an entrepreneur. But >> yeah. >> Um but yeah, I don't know. The world's your oyster if you know how to look at it that way.

01:21:43 - 01:22:27

>> If people want to learn more about this, where should they go? >> Like obviously this podcast covered a huge amount, but just probably our website rethinkgroup.com.au. You'll see all the breakdowns of the renewable energy business. We've got books on commercial property and stuff like that as well. So, we can include all those. >> Yeah, we'll put all the links in chat for anyone who wants to learn more about this or reach out to you. Um but um genuinely like thank you so much for

01:22:05 - 01:22:20

joining us. It's been a pleasure. We'd love to have you back. >> No, really appreciate it. Great to be here. [Music]

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