Weinman has set up an incubator in the truest sense of the word, buying a huge mansion in Melbourne where all 14 companies are based and where up-and-coming entrepreneurs can grow their businesses on the back of Deasil’s infrastructure. Weinman claims not to know the total revenue of the group, but we’re tipping it’s well over $100 million.
Today Weinman talks about the art of turbo-charging growth, why people are more important than products and why competitive industries are the best ones to target.
Tell us a bit about the mansion, it sounds like a very interesting setup you’ve got going there.
Well have you ever seen the Addams Family? You rang? Well that’s what this place is like.
It’s phenomenal. It’s this huge mansion which is on two acres and it’s got like 26 rooms and it’s basically setup as an office. The structure is that each of the different groups of businesses in this – as you know there’s 14 in the group – have have their own area. We’ve even got a shed at the back, a building shed that houses three businesses and 20 odd people.
What was your sort of thinking?
I’ve always ever had normal corporate offices, because traditionally I’ve run one business at a time. But because we’ve now got investments in so many different companies, we decided to bring all the partners into the one building where we could all work under the one roof. Some of the other businesses are in other locations, but the partners are all in this building.
How does that work? I know there would be some synergies between the companies, but how do the guys from Waax get on with the recruitment guys?
The truth is you wouldn’t know who works in which business in here because culturally every business is identical. So there’s the same type of partner, there’s the same type of management structure.
Deasil actually manages all these businesses. My background was in building companies to float them or sell them, but a few years ago when the market was dry and the GFC hit, I wasn’t really interested in building companies myself anymore because I’ve done that seven times.
I decided that what I’d do is start investing in people with a certain type of profile: a young entrepreneurial-type person that has great vision but hasn’t got either the funding or the wherewithal. As you know most companies get the funding but by the time they’ve finally set up the infrastructure, they’ve run out of money.
So what I decided to do, having been taken over so many times, I decided I would not buy people’s businesses but I would grow the businesses with them as a shareholder. So instead of putting millions of dollars into a business and finding a CFO and a CEO and a marketing manager and all this, Deasil had its own infrastructure that ran all these previous companies that I used to own. I’ve got best of breed: I had an operations manager, a director of operations, internal PR, publicity, marketing, graphic design, operations, finance. We had it all under the one roof so when a new business started up what we had was an infrastructure and a board that could run a $100 million business without that business incurring the expense of all these people. So we put in human capital rather than financial capital.
How do you get involved in these businesses?
I’ll give you an example of how a business starts. We’re just about to launch a new business now in home automation. So how does that happen? Well, try getting someone to come in and set up your house with home automation. It’s impossible. You’re dealing with boffins who don’t hear what budgets are. It is like every start-up I’ve ever been involved with – no barriers to entry, you deal with people that have no business acumen but they’re exceptional in terms of technology. The problem is they actually don’t understand what the consumer wants. So instead of asking someone what do they really want and what do they want to spend, they come with the Rolls Royce.
After that experience we rang two other companies and we tried to get a bottom of the rung type firm that do low-end houses and nobody returned phone calls. So I woke up that morning, I took my IT manager who’s a really smart guy and said tomorrow, we’re going into the home automation business. It was literally out of frustration in a market where people just don’t know what the consumer wants.
So now we specialise in iPads and iPhones. We’re going to be able to run people’s homes for a quarter of the price.
So to get that business off the ground, did you go out and find someone that was already working in that sector?
Yes, my IT manager who has now hired someone to replace him. I’m now partnering with him in a new business. This business is going to go corporate, we’re going to import from overseas technology that’s going to do the job for a quarter of the price and we’re going to be able to bring an affordable home solution to what at the moment is obscene pricing.
So what will the head of that business do within your group structure?
Good question. Basically what’s going to happen now is we have an infrastructure from day one. We have a company which is called Ascenda which imports. That’s one of our companies where they import from overseas and they’ve got offices all over the developing countries like India, Mexico, China. So we’re going to set up an arm that’s going to import this technology. That will be one division that does that. There’ll be another one that does home automation and there will be another one that’s going to be selling this technology to electricians who at the moment simply get paid an hourly rate to install wiring. But we’re going to up-skill the electricians to be able to do this wiring at a quarter of the price of going to these home automation companies and those electricians will become distributors.
And the head of that business will be concentrating on putting all that stuff in place while not having to worry about the back end and back office stuff.
Correct. So from day one the guy has got a board behind him, he’s got an entire infrastructure behind him, he can import, he can export, he can install, he’s got a team of people that can do that and that starts from day one. Now that is the model that we’ve been doing now for all the other companies. Where Deasil simply gives that person an entire infrastructure from day one and then he can just go and build the business and not just worry about the back end.
And so whose business is it?
We always own 51% of the company and the partner owns 49%.