Nathan Tinkler

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Diversity is good, except as a business model

12:25AM | Monday, 2 December

When you were young, your grandfather always warned you not to put all your eggs in one basket. Well, when it comes to launching a business, your grandpa was wrong – and here’s why.   Back in the 1970s and 1980s, not putting your eggs in one industry basket was the business wisdom of the day. The end product was the diversified conglomerate.   In the US, Gulf and Western, a predecessor to Paramount Pictures, also sold clothing (Kayser-Roth), auto parts (APS), zinc, sugar, financial services, video games (Sega), bedding (Simmons) and tool manufacturing services (Thomas Ryder and Sons). They also owned a stadium (Madison Square Garden) and a couple of sports teams (the New York Rangers and New York Knicks).   Aside from oil, BP got itself into petrochemicals (including some it bought off Union Carbide), coal, minerals, seeds, fertiliser, livestock feed and sold pet food under the Purina brand.   In Australia, the worst offender was Pacific Dunlop. Among many other things, it sold clothing and footwear (Pacific Brands), rubber gloves (Ansell), tyres, auto parts, pacemakers, cochlear implants, tyres, dairy products (Yoplait, Peters), processed vegetables (Edgell, Birds Eye), baked goods (Four n’ Twenty Pies), tyres, fibre optic cables, healthcare products, bedding and ran auto stores.   Then there was Mayne Nickless. They were a trucking and air freight company that also offered pathology labs, IT and payroll services, computer networks (Maynenet), security services (MSS), non-prescription medications (including Cenovis and Nature's Own), ran retail pharmacies (Terry White and Chemmart) and owned 25% of Optus.   And when it comes to Christopher Skase’s Qintex and Bond Corporation, the less said the better.   Of course, there are good reasons why diversified companies usually end in tears. Just ask former coal, horse racing and rugby league mogul Nathan Tinkler.   Looking at these lists, many of these products don’t have the same customers, meaning there’s little benefit in cross selling or upselling products. There was really little way Mayne Nickless could have cross-sold next-day home delivery with a 24-hour pay TV sports channel on Optus Vision. And here’s a Four n’ Twenty pie – do you want a pacemaker with that?   Many of these products don’t share any common ingredients. While pet foods sometimes use questionable ingredients, you hope BP’s dog food didn’t share too many ingredients with its motor oil.   There’s also little advantage when it comes to branding. After a century of marketing “Dunlop” as a brand of tough rubber, would you really want a nice bowl of Dunlop ice cream? With sprinkles?   And underperforming businesses can fly under the radar with cross-subsidies for inefficient business models, where the management of a standalone company would be forced to act. There’s a reason why Christopher Skase’s three-time wooden spoon winning AFL team, the Brisbane Bears, were nicknamed the Koalas from Carrara.   Meanwhile, while there are plenty of executives who could effectively manage a medical implants firm market ice cream to 12-year-olds, the pool of people who have experience with both is a lot narrower.   It’s better to have a highly focused management team overseeing one business than it is to have a big bureaucracy overseeing a clutch of unrelated, poorly performing businesses.   Now don’t get me wrong. It’s great to be ambitious, to expand your business and to grow. But remember what your company’s core competencies are. Focus on doing what your business does well and then expand on it – but don’t go chasing millions in an industry you know little about!   So are you thinking of growing your business? If so, think long and hard about what you’re good at before you choose a path for growth. After all, you don’t want to end up like Bond Corporation!   Get it done – today!

Tinkler out but most made a killing: Secrets of the Young Rich

9:01AM | Thursday, 19 September

It often surprises casual observers that the annual BRW Young Rich edition counts the 100 youngest self-made entrepreneurs under 40.   After all, in most industries, awards for ‘rising stars’ and the like cut out at 25 or 30.   The reason BRW has to give people 40 years to shine is simple: hardly any businesspeople make a killing by 30. A list cutting off there would be dominated by sports stars and celebrities. And for a business publication, that wouldn’t interest its readers as much.   Almost all of the Young Rich 2013, unveiled in the magazine’s flagship edition out this morning, are aged from 30 to 40. The youngest person on the list, MotoGP rider Casey Stoner, is aged 27.   SmartCompany spent a fascinating morning dissecting the latest list. Here’s what Australia’s youngest millionaires have in common.   Life’s work   Most of the Young Rich are entrepreneurs, who started companies and over years helped grow them.   Apart from the sports stars and celebrities, there are few employees on the Young Rich.   Thanks to Nathan Tinkler dropping off the list this year, there are now two more. Todd Hannigan and Tom Todd made their $84 million joint fortune by leading Nathan Tinkler’s Aston Resources before it listed. In 2011 they lost their jobs, but were given six months’ pay and a whole lot of stock in the process. They sold their stock before things got rocky for the sector.   This must be especially galling for Tinkler. BRW doesn’t think his assets exceed his debts. He didn’t make the $18 million cut-off, leaving him entirely off this year’s list. Around this time in 2011, Tinkler was valued at $1.13 billion.   Most of the Young Rich have had a good year. Exactly half increased their wealth this year, while only 16 lost wealth. The rest were more or less steady.   Tech tricks   The full Rich 200 list, for which there is no age limit, is dominated by property developers. But the Young Rich has few of those.   Over one in three (34) of the Young Rich made their money in technology, of which 22 were web entrepreneurs. In the top 10, eight started technology companies.   These include Atlassian founders Mike Cannon-Brookes and Scott Farquhar, steady at number one with a joint fortune of $550 million. They were pegged at $480 million a year ago.   The fastest-rising names in the top 10 are Ruslan Kogan, of Kogan.com, who more than doubled his fortune to $315 million, and Freelancer.com chief Matt Barrie, who’s risen into the top 10 with $185 million (he was pegged at $50 million last year). Both companies are looking at listing on the ASX in the near future, which could see their founders get a lot richer if all goes well.   Reinvesting the profits   If so, they’d be some of the few Young Rich-listers to turn their business success into serious disposable income. For most of the Young Rich, their wealth is ‘paper money’. They own large stakes in highly successful businesses. If those businesses list or are sold, they can cash in some of that ownership.   Until then though, many of the Young Rich are fanatical enough to keep most of their wealth tied up in the one thing.   For example, at Kogan.com, the online electronics retailer, shareholders Kogan and David Shafer reinvest the profits every year. Shafer told BRW their remuneration was on an “as needs” basis.   “Building something is much more exciting,” he said.   Perhaps this need to reinvest profits is driven by Australia’s low venture capital spend. According to a recent PwC report, there is less venture capital available in Australia, relative to our population, than in Israel, the US, Norway, Switzerland, Demark,  Britain, or France.   When capital to expand isn’t readily available, revenue can be the best source of funds.   Slim pickings for women   As always with Australian rich lists, there are few women wealthy enough to make the cut-off.   Only seven women make the Young Rich, of which the wealthiest is Carolyn Creswell ($55 million), of Carman’s Fine Foods. The next wealthiest is Erica Baxter ($40 million), who is in the process of finalising her divorce from rich list-fixture James Packer, which could see her secure another $100 million according to recent reports.   Other women on the list are Lilly Haikin ($40 million held jointly), who bought chocolate café chain Max Brenner to Australia, PageUp People founder Karen Cariss ($25 million held jointly), golfer Karrie Webb ($22 million), MyBudget founder Tammy May ($20 million), and model Miranda Kerr ($18 million).   This story first appeared on SmartCompany.

THE NEWS WRAP: Speculation Chinese mining giant will buy Tinkler’s Whitehaven stake

3:16AM | Friday, 15 March

There is renewed speculation Chinese miner Shenhua Group could buy Nathan Tinkler’s 19.4% stake in Whitehaven Coal.

THE NEWS WRAP: Senior Labor MP calls on Swan to rethink budget surplus aim

3:34AM | Monday, 11 March

A senior Labor MP has called on the Federal Government to “give up” its pledge to return the budget to surplus, claiming that the Australian public would understand if there was another deficit.

THE NEWS WRAP: Health food entrepreneur Carolyn Creswell takes out Business Woman of the Year crown

3:34AM | Monday, 11 March

‘Muesli queen’ Carolyn Creswell has been named the Telstra Australian Business Woman of the Year at an awards ceremony last night, 20 years after spending $1,000 to get her venture up and running.

Five start-up lessons from the Young Rich List

9:16PM | Thursday, 27 September

This year’s BRW Young Rich List may be striking due to the dip in overall wealth of the top 100, including a $700 million plummet by mining mogul Nathan Tinker, but there are encouraging signs for start-ups.

2012 BRW Young Rich List – eight standouts from a tech dominated year

9:05AM | Thursday, 27 September

The 2012 BRW Young Rich List has a strong start-up and tech flavor, with Atlassian founders Mike Cannon-Brookes and Scott Farquhar heading the rankings.

THE NEWS WRAP: Tinkler tumbles as Atlassian pair shoot to the top of BRW Young Rich List

9:18PM | Wednesday, 26 September

Mike Cannon-Brookes and Scott Farquhar, founders of tech success story Atlassian, have toppled miner Nathan Tinkler to head BRW’s Young Rich List.

Catch of the Day debut on BRW Rich List with $240 million fortune

5:36AM | Thursday, 24 May

The founders of Smart50 entrant Catch of the Day, Gabby and Hezi Leibovich, have been revealed as being among the country's richest people, with a fortune of $240 million, according to the latest figures from BRW.

Read the rich list

5:42AM | Thursday, 24 May

This article first appeared May 26, 2011.   A nice and easy one for you today. Go down the street, walk into the newsagency and buy the BRW Rich 200.

THE NEWS WRAP: Ridout hits out at Greens’ “ideological” stance

4:26PM | Monday, 16 April

New Reserve Bank of Australia board member Heather Ridout has accused the Greens of having a “hard-nosed, ideological stance” that threatens investment, jobs and living ­standards.

Geelong named best-performing regional office market

6:44AM | Thursday, 2 June

The Victorian city of Geelong has emerged as the best performing office market among Australia’s regional cities, suggesting there are growth opportunities for new businesses.

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