Reaching the über-rich ranks before you turn 40 has generated several urban myths about what it takes to get there. JAMES THOMSON reveals the truth about our young stinking rich entrepreneurs.
By James Thomson
There’s only one thing more inspiring (and that will make you more envious) than a successful and wealthy entrepreneur – that’s a young, rich entrepreneur.
Compiling a fortune of tens of millions of dollars before you turn 41 is no mean feat, but that is exactly what people like Paul Bassat and Matthew Rockman (founders of online classified company Seek), Richard Bell (founder of $400 million telecommunications company Reverse Corp) and Sherman M (founder of the finance company Liberty) have managed to do.
But the Young Rich are a different breed.
Here are the top 10 surprises uncovered among a few of the attributes shared by Australia’s young rich.
1. They are clever beyond their years.
Not so: they are naïve.
Sometimes being young and thinking you are bulletproof is a good thing. If you were about to start a new business, common sense would scare you away from the retail and technology sectors – barriers to entry are extremely low (any mug can start selling t-shirts at a market or start a website from home), and these industries are typically very crowded. Yet many of Australia’s most successful young entrepreneurs operate retail or technology companies. When they started their business, they were naïve enough to believe their business model or product could survive the cut-throat competition of a crowded market. They were right.
2. They do it alone.
Not so: the young rich are exceptionally good at finding partners.
An increasing number of young entrepreneurs have recognised that sharing the load is sometimes the best way to build a business. Partnerships between old friends, husbands and wives, siblings and work colleagues are commonplace on BRW’s Young Rich list. Christine and Richard Matta are a great example. The perfume counters in the pharmacies Richard owned were struggling, so he bought in his wife to improve things. In a few months they had a booming new perfume business called Perfume Connection.
3. They shun the limelight and prefer not to discuss their success.
Not so: they are masters of spin.
Where many older entrepreneurs prefer to build their businesses in anonymity, young entrepreneurs know that a business needs to stand out if it is going to have any hope of attracting investors and customers. Cosmetics king Napoleon Perdis has made himself into a make-up artist to the stars to sell his brand, and Craig Gore promotes his financial services business Wright Pattern Shakespeare by sponsoring V8 Supercars. Some people actually become the human embodiment of their brands, such as mobile phone retailer “Crazy” John Ilhan and hotelier Mark Alexander-Eber, who used his nickname Pubboy as the name of his company.
4. They use technology to create new innovations.
Not so: they often do nothing more than take technology and apply it.
So many young entrepreneurs have become rich by figuring out how to use technology – and particularly the internet – to revolutionise existing industries. The way Bassat and Rockman’s Seek has revolutionised the classified recruitment advertising market in the last five years is astonishing. Or take Kelli Fox, who has used the internet to take her astrology services to a much wider audience and made almost $30 million in the process.
5. They come up with one good idea.
Not so: often with the Young Rich these days, it is perseverance not a good idea that gets them on the list.
The dot-com boom killed so many businesses, but it didn’t kill the spirit of every web entrepreneur. David Gold worked for Looksmart before starting online retailer dStore in 1999. It was sold for $3 million a year later after eating $35 million of investors’ cash and Gold has sacked. But he has kept fighting; starting and selling a string companies, including Azure Wireless. He is now worth about $23 million.
6. They are based in major cities and start with good networks.
Not so: Young entrepreneurs can come from a variety of backgrounds.
Nigel and Tania Austin started a clothing store called Cotton On in the regional Victorian town of Geelong in 1994. Nothing revolutionary about that, but the way they spotted a niche for relatively inexpensive youth fashion basics (like t-shirts, polo shirts and shorts) has allowed them to expand the chain throughout Australia and into New Zealand and Singapore. The value of the chain is about $100 million.
7. They go it alone.
Not so: the new generation of the Young Rich seek a lot of help; hence the rise of the business coach and mentor.
Younger entrepreneurs seem to be much more willing to take on board advice and help than some of their older peers. The Seek founders cleverly bought in James Packer’s Publishing & Broadcasting Limited as an investor, which has helped open numerous doors for the company. Property developer Shaun Bonett (who owns Precision Group and is worth $300 million) and Peter Mavridis (founder of IT provider S-Central) have set up advisory boards to aid the development of their business.
8. They are arrogant and get rich on the labour of others.
Not so: they value staff and go out of their way to reward them.
Some young entrepreneurs go to extraordinary lengths to repay loyal staff. John Ilhan took most of his workforce to Queensland for a holiday earlier this year. Rowena Szeszeran-McEvoy and Kerry McEvoy (who run the Australia Institute of Fitness training colleges) have given key staff Ferraris and Porsches.
9. They live the high life and party hard.
Not so: many of these young entrepreneurs make enormous sacrifices and work extremely hard.
Wealth never comes without hard work, and young entrepreneurs make extraordinary sacrifices when their peers are out enjoying their youth. Take Queensland property developers Chris and Virginia Anderson, who are worth more than $60 million. They arrived in Australia from New Zealand with just $1400 and once worked 90 days straight over Christmas.
10. Entrepreneurs get rich by creating a brilliant new innovation.
Not so: try having natural talent.
The best way to get fabulously wealthy at a very young age is to be born with lots of natural ability and become a world-famous actor, singer or athlete. Nicole Kidman, Harry Kewell and Kylie Minogue have all become fabulously wealthy thanks to their unique talents. Sounds a bit easier than all that sacrifice stuff, doesn’t it?
James Thomson is the former Young Rich List and Rich 200 editor at BRW, and will now write regularly about wealthy entrepreneurs for SmartCompany.