Lifecycle: Ground Floor Collaboration
Lifecycle: Culmination
BRW. 10 April 2008
Page 60
TWO INNOVATORS DEVELOP A SELF-SUSTAINING WEB COMMUNITY.
Michelle Gilmore and Christie Coleman, Ground Floor Collaboration
Position: Founders
Milestones:
2006: Ground Floor Gallery opens in Sydney
2007: Development begins for Ground Floor Collaboration site
2007: Ground Floor Collaboration goes live
If your employer resists new ideas, start your own show. That’s what gallery owners Christie Coleman, left, and Michelle Gilmore did when they opened Sydney’s Ground Floor Gallery in 2006.
Their floor space was tiny, and they had to call on friends to help renovate it. But six weeks after signing the lease, they had rounded up 12 local fashion, jewellery and object designers to show and retail their work.
They were soon inundated with designers, and it quickly became clear that what exhibitors wanted as much as show space was advice on how to run their businesses.
It echoed industrial designer Gilmore’s own frustration. “Early on, I found I was always coming to Christie and asking her for business advice because I’d never learnt that at university,” she says. “I knew how to be a designer, but I had no idea how to write a business plan. Most designers need help to understand business and get some experience.”
Gilmore’s idea for coping with the influx was simple: go online with business support for designers. So Ground Floor Gallery became Ground Floor Collaboration, launching in December 2007. Its first stage was a free online service for creative talents to profile themselves and their skills and for prospective employers to source talent for full−time employment and project work.
“One of our core goals is commercialising talent,” Coleman, a former operations executive, says. “We are definitely not afraid of money. We actually like it. There’s all this creative talent in Australia, and there are a lot of people providing grants but not a lot of people talking about how to make money.”
“In the industrial age there were factories for production and roads to take goods to market,” she says. “So, how do you take creative goods to market? That’s what Ground Floor Collaboration is. We’ve had so much success putting people in contact, we’re growing exponentially.”
Jobs and profiles are being created in all Australian states, as well as Japan, Spain and South America, and the site accommodates public relations and marketing positions as well as graphic, web, software and fashion design.
Gilmore and Coleman estimate that job−searching and networking will ultimately represent only 25 per cent of the site’s capabilities, and they are preparing for the second stage of the Collaboration project.
It will come in June this year when a cluster of “community” open−source projects goes live. Also planned is the introduction of aggregating software that would allow decentralised freelance designers to work simultaneously on projects, with the fee distribution based on contributions.
The two anticipate that within six months they will act only as technical facilitators for the site, with the new infrastructure creating a community of talent to replace them as business mentors. “We won’t compromise the ideals of the site,” Gilmore says. “But it’s time for us to step back once we’ve built the tools.”
SARAH NEILL
A Model Profession
The Business End, Engineering: A Model Profession
BRW. 03 April 2008
Page 57
THE SHORTAGE OF ENGINEERS IS SO DIRE THAT INDUSTRY BODIES ARE CHASING PRIMARY SCHOOL CHILDREN.
The next crop of engineers with the potential to effectively counteract Australia’s dire skills shortage may not have taken a single high school science class yet. Engineering bodies are trying to find new ways to engage the next generations of engineering talent − including focusing on primary school students.
“One of the issues for our industry has been the move away from what are seen as the ‘hard’ maths and sciences and towards the humanities over a long period of time,” the chief executive of the Association of Consulting Engineers Australia, Megan Motto, says.
“We’d like to see the whole process of that turned around right from the primary school age. We would suggest that the teaching of maths and science needs to be a little more innovative.”
While university graduate numbers have remained relatively stable over the past decade, the demand for private−sector engineering expertise has continued to rise steadily. Motto says that increasing the number of engineers working in Australia under section 457 guest−worker visas and the skilled migration program to bridge this gap is a vital short−term priority, but the most important step will be for Australia to lay the foundation to secure higher graduate numbers in the field over the coming decades.
The Re−Engineering Australia Forum is working to hook primary students on engineering. The group already runs the successful F1 in Schools program, where teenage students design carbon dioxide−powered miniature formula one racing cars. Each year’s competition involves 300,000 Australian teenagers and others from
overseas, and lets them use industry−standard engineering software to design their entries.
REA launched Junior F1 this year as an introduction to F1 in Schools, aiming this time at the imagination of primary−level students. Children from the age of five work with Cosmic Blobs, a three−dimensional design program that allows them to manipulate shapes to design formula one vehicles and place them in virtual environments.
In Junior F1, students are able to see and hold their designs. REA invites children to email their designs for the vehicles and returns a scale model manufactured with the REA’s own prototyping equipment. For most it will be a rare first−hand experience of the connection between the digital design process and a finished product.
Motto agrees that this understanding of the practical aspect of engineering is central to attracting children to the industry. “One of the great benefits of engineering as opposed to most of the other professional services is that you can actually see what you did at the end of the day. You can walk through the door of the building; you can cross over the bridge. It’s a very tangible career.”
The ACEA has already begun its push to demystify engineering as a career to secondary school students, launching the 20−minute Design Your World film on DVD last year to show teenagers what an engineer can produce. “Most kids know what a doctor is, they know what a lawyer is, they even know what a forensic scientist is,
but they still don’t really know what an engineer is,” Motto says. “It’s a great misconception in schools that engineering is about being down a mineshaft, being a train driver.”
At least one copy of the DVD sits in every secondary school in Australia, but Motto says that to succeed in producing more engineers, this kind of education needs to be complemented by initiatives at the primary school level.
ACEA is also keen to redress the reduction in practical science and maths activities in the average Australian primary school. “Ultimately, we’d like to see more experimental learning to get children enthused,” she says. “We’d even like to see more parental involvement in the teaching of science. The same way you have a reading group once a week, we’d like to see parents come in and assist with supervising the kids in experimental learning.”
Motto sees this as vital, and it will be the central theme of the ACEA’s discussion and lobby work with school and parent groups in the second half of this year. “The number one influencer of subject selection and career choice is still parental,” she says.
Motto is satisfied with the response the program is getting from primary school students, but proof of success is at least five to 10 years away. “The response has been really fabulous, but the real test of the matter will be if it translates to subject selection and whether people are taking more science subjects and then going into engineering at university.”
SARAH NEILL
Lifecycle: Metalicus
Lifecycle: Stretch
BRW. 6 March 2008
Page 73
QUIRKY AND POPULAR FASHION BRAND PLANS OVERSEAS EXPANSION
Melma Hamersfeld, Metalicus
Position: Founder
Milestones:
1992: Produces prototype garments in stocking fabric
2000: Adds stretch wool and cotton garments
2004: Melbourne concept store opens
2007: Brand acquired by PAS Group
Metalicus is a brand built on an unconventional idea: outerwear made from stocking fabric. Now the steady growth in popularity and sales of these unusual garments during the past 15 years has attracted private equity investors.
The PAS Group bought the business in November 2007, adding to its existing stable of apparel brands, and 2008 will see the brand taking steps towards faster growth and further international expansons.
Founder and designer Melma Hamersfeld produced the first Metalicus garments in 1992, convinced there was potential in two-way stretch fabric.
“When I put it on I knew it was something I would always want to wear,” she says. “It would be the first piece that you would put on in the morning and I just knew that long-term, it was going to be an absolute winner.”
The garments’ limited hanger appeal made it essential to nurture relationships with retailers, agents and distributors. “I knew customers had to be able to see and sear the products,” Hamersfeld says. “You just have to get one piece on people and then they’re hooked.”
Now the brand sells through five dedicated stores in New South Wales and Victoria. Its flagship store in Melbourne opened in December 2007 and PAS plans to open another flagship store in each Australian state, and one in London.
The fashion label produces its signature body-skimming garments in myriad colours in cotton, viscose, wool and meryl microfibre as well as the original “stocking” nylon Bodytight fabric.
Although the Bodytight fabric can now be manufactured overseas, Metalicus continues to make most product ranges in Australia.
The label works with only two mills on their other fabrics, collaborating closely to create fabrics that meet their designers’ specifications, and in 2007 a dedicated research and development manager was appointed to continue the process. Designs are garment-dyed post-manufacture to ensure exact tones.
Hamersfeld predicts that the PAS Group acquisition means that the brand’s growth is ready to accelerate.
Metalicus currently sells through more than 400 stores domestically, and more than 200 internationally. Turnover is increasing by a steady average of 50 per cent annually. The original Bodytight range sells alongside the Mini Metalicus, Miss Metalicus and Basics ranges.
Metalicus has also signed a new deal with Neiman Marcus in the United States, and new stockists will come on board, particularly in the brand’s primary export markets: Canada, the United Kingdom and the US.
Hamersfeld is content to take on a creative consultant role and directorship as she entrusts the label to the PAS Group, which has already had success with fashion brands including Review and Fiorelli.
“The business is booming and I think it’s the right time to leave,” Hamersfeld says. “I’ve wanted overseas to embrace and understand it and that’s how I’m leaving it.”
“Why wouldn’t you be happy?”
SARAH NEILL
All in the Firm
The Business End, Business Services: All in the Firm
BRW. February 21 2008
Page 57
LEGAL PARTNERS MUCT BE PREPARED TO ACT AS MENTORS TO DEVELOP STAFF RELATIONSHIPS AND ENCOURAGE CAREER DEVELOPMENT.
Legal brilliance alone may no longer be a golden ticket to partnership in Australia’s law firms. The role of partner in contemporary law firms now demands a mix of management and mentoring as well as legal practice.
“When I started in the law more than 20 years ago, you were a successful partner if you were able to foster outstanding relationships with clients, and if you were an excellent lawyer,” Freehills managing partner Peter Butler says. “Those things are still true, but there’s another level now, which is the need to be able to foster and develop relationships with staff.”
This amounts to a big challenge in the well−developed Australian market, where partners already operate at high levels of legal competence and deal with intense competition for clients.
For Freehills, the expanded definition of partnership mirrors a larger shift in organisational culture. The firm seeks explicitly to foster “outstanding” experiences for staff in the workplace as well as for clients.
“Staff attrition is one big focus,” Butler says. “We go to a lot of trouble to recruit people at university level and laterally, and it’s terribly expensive and damaging to the culture of the organisation to lose too many.”
Partners need to be able to offer graduate recruits and solicitors mentorship in legal specialties and, more generally, to encourage career development both theoretical and practical. Solicitors shadow partners at client meetings without amassing chargeable hours to strengthen their own relationships with clients and to learn by observation.
Staff attrition rates have fallen by 5 per cent since Freehills launched its vision two years ago. Greater support at partner level has also altered the pattern of attrition, with fewer staff choosing to leave in their first two years. Those who do depart do so later, most often on a leave of absence to gain experience in law firms overseas for a predetermined time.
Partners with more developed management and leadership skills are able to shoulder higher levels of leverage, especially valuable given the link between increased leverage rates and increased profitability for the firm as a whole.
Butler notes that Freehills operates with four solicitors to each partner, up from about 3.5 in 2006, a rate which doesn’t compromise the time that partners can devote to their practice, solicitors or direct contact with clients.
The new role adds another dimension to the process of partner selection, demanding senior associates display legal excellence as well the ability to relate well to clients and to engage with staff as a coach, teacher or supervisor.
New partners at Freehills are able to develop that natural aptitude in a formalised partner development program, comprising courses focusing on leadership and management skills. Almost all 218 partners have completed the largest of these: the two−day Chrysalis course explores the role of emotional intelligence as a complement to intellect in promoting success.
For Freehills, the need to source staff with the potential to fill the wider role of partner influences the first rung of the interview process; newly hired staff need to demonstrate the potential to grow into all aspects of partnership.
Butler believes these talents should be nurtured well before a solicitor applies for a graduate position. “I’d love to see more content at a tertiary education level that allowed young lawyers or aspiring lawyers to develop skills in the areas we now know are critical: emotional intelligence, dialogue skills, ability to persuade, interpersonal skills,” he says.
The evolving role of partners in the firm will continue to benefit business, Butler adds.If the plan is fully realised, “I know that from a competitive point of view we will be the best by far. “But, equally important, the culture in this workplace will be outstanding and the demand for that sort of environment can only be a good thing.”
SARAH NEILL
i-D Magazine
Review: i-D Magazine
Two Thousand February 20 2008
February is when i-D puts an issue together just for the boys. This one is packed with menswear editorials from trench coats to pyjamas, and interviews with ‘men’s men’ like actor Javier Bardem and food face Fergus Henderson. Read about clever men making clothes (designers Thom Brown and Simon Neil Barrett) and beautiful men wearing clothes (the new crop of male models), men skating, men taking photographs, men spinning records and men with beards (i-D says they’re back in fashion, duh).
It’s a return to form after a few lackluster issues. And it has a lingerie cover, which kicks it over the bland covers on shelf.
SARAH NEILL
Published online here.
Punk House - Interiors in Anarchy
Review: Punk House - Interiors in Anarchy, edited by Thurston Moore
Two Thousand February 15 2008
Sometimes home is just a place to sleep and cook and assemble ikea furniture. Sometimes home is peppered with stacks of fake human skulls, or four wood-lined walls in Oregon named the Fuckpit.
Timothy Findlen and Abby Banks spent three months driving across the United States staying with any punk who would take them in to see what happens when you close your eyes and take one big step away from the mainstream.
In between drinking forties and playing dodgy bars for gas money they collected a book of interior photos. Opening it is a hilarious, beautiful and disgusting reminder of how much there is in the world (and down the street) you haven’t seen.
SARAH NEILL
Published online here.
Tech Heads
Fast 100 Profile: Tech Heads
BRW. October 25 - November 28 2007
Pages 70-76
THE I.T. SECTOR HAS PROVEN TO BE AN ATTRACTIVE PLACE FOR START-UP ENTREPRENEURS.
IT is booming and new and creative business models are flourishing as a result. There are 29 technology and communications companies on the list, including 18 debutants, making it the list’s biggest sector. Many of the IT entrepreneurs on the Fast 100 are on to their second or third business ventures, having sold previous start−ups. They include Distribution Central’s Scott Frew, who sold his first distribution business, Lan Systems, to South African IT giant Datatec for $30 million in 2000, just before the dotcom bubble burst, and Telcoinabox’s Damian Kay, who sold his Your Telecom business to Australian telco Commander Communications last year.
Company: Itcom Australia
Rank: 2
Founders/chief executive: Graeme Ross, Damien Ross, Gary Lorden
Revenue: $4.80 million
Growth: 280.4%
Graeme Ross was primed for retirement. After a stellar 13−year run operating his own information technology recruitment firm, the 60−year−old had scaled back the company to two−and−a−half staff and was ready to go fishing. In discussion with two young recruitment professionals one day about the inadequacy of contractor management firms, Ross was lured into ramping up again, this time with two young partners to handle the grunt work.
In July 2006, Ross poured $300,000 into new office space and equipment. Had he known how explosive the firm’s growth would be − Itcom hired 13 people in as many months − Ross would have leased bigger premises, more phones and more computers. Six months later, he invested another $150,000 to expand the operation. “Moving during a growth spurt is painful,” he says. “In hindsight, I would have overstated the amount of space so we could grow into it.”
The management trio complement each other. Ross has the networks and kudos to draw the industry’s old hands. The younger partners, his son Damien, aged 33, and Gary Lorden, aged 30, understand what makes the fickle generation Y tick. Ross provides the financial backing and management expertise, while Damien and Gary handle the operational and sales side. “This model wouldn’t have been as effective if the information technology and telecommunications sector wasn’t booming again,” Ross says. “That said, we’re in a very competitive market and you have to differentiate yourself.”
Itcom has a register of about 100 active contractors. Ross says a combination of a global economy and IT being a portable career makes winning and retaining good staff difficult. He is obsessive about accounting details, citing errors with contractors’ pay as the fastest way to unravel a hard−earned reputation.
Overseas expansion is also on Itcom’s radar, in response to growing demand to handle clients’ requests for IT staff across international markets. Ironically, finding staff has become Itcom’s biggest challenge. “We discuss work ethics with potential hires before even broaching the subject of money.” Ross says he would rather slow the growth down than abandon his business values.
Company: Brennan Software
Development Rank: 5
Founder/chief executive: Dave Stevens
Revenue: $1.36 million
Growth: 197.5%
Almost every business faces unexpected hurdles in its start−up and growth stages. For Brennan Software Development founder Dave Stevens, it was a lack of attention to cash−flow management.
But surviving and learning from early mistakes and adhering to a firm vision have paid handsome dividends for Stevens’ Queensland IT services company, which ranked 5 on this year’s BRW Fast 100, up from 28 last year. Sister company and internet service provider Brennan Voice & Data also features on the Fast 100 this year, ranked 70.
Brennan Software Development was founded in 1997 with a focus on providing business solutions, rather than hardware and software, to mid−market firms of between five and 50 staff.
While working as a contract software trainer, Stevens sensed that medium−size clients were being overlooked by large service providers and were dissatisfied with the level of service that smaller firms provided. “I knew there was a huge untapped market out there,” Stevens says. “There was a screaming need.”
“We’re driven by what the market tells us in terms of what we offer, but we’re also a mid−market company,” Stevens says. “We’re growing fast and, as we discover new requirements for ourselves, we design solutions for our clients and then roll them out.”
While organic growth remains a high priority, more strategic acquisitions are also planned for the next 12 months, bringing in new geographical coverage, products and capabilities to the group. In early October, Brennan bought Queensland telephony service TSA Communications. The acquisition will lift the group’s annual turnover by $5 million and add another 1000 customers.
“We’re more focused now on being a healthy business with a single vision,” he says. “We were already successful, but for me that was just the tip of the iceberg. There’s still so much more to do.”
Company: Paycorp
Rank: 6
Founder/chief executive: Adrian Roche
Revenue: $5.41 million
Growth: 185.2%
As managing director of Paycorp, Adrian Roche heads up a business providing a combination of electronic payment processing, billing and business continuity services, and dealing with more than $6.5 billion worth of payments a year. Achieving that growth in only six years was made possible by Roche’s belief from the outset that his business needed to be prepared for anything.
With no technology experience but a background in financial services and capital markets, Roche was uncertain about the potential challenges facing a start−up in information technology, particularly for a mid−size company with designs on big business and financial institutions. “My vision has always been to operate like a large publicly listed company. My experience in management gave me the foresight to say that we needed to be ready for anything and we need to have all the right systems and processes in place,” including ISO:9001 accreditation (which specifies how to implement quality management systems that meet regulatory or customer standards).
In 2001, Paycorp released its first product, RentPay.com.au, an electronic payment system for real estate agents and tenants. Paycorp chose to license the software platform needed to support the web portal, to draw on more experienced software developers’ skills and avoid losing valuable time and funding developing in−house.
The product needed to be adaptable to new industry applications as they were identified and new markets opened up. “I had seen the mistakes that others had made building complex software applications for one industry vertical, but not being able to apply it across a number of industries,” Roche says. “My objective was to start with the RentPay product, but I also believed there had to be other circumstances where we could apply this kind of solution.”
Paycorp now employs 25 full−time staff and 50 contractors. The business model first tested with RentPay, using the core software platform as a payment hub supporting a customised application or web portal to suit the client, has been used to create products for the travel, education, telecommunications and banking sectors. The multi−currency application GlobalPay was born from collaboration with international travel company Travelex, and StudentPay was created to meet the needs of education providers.
Roche expects Paycorp to continue growing quickly and exponentially. Key management staff bought out the original investors in 2006 to ensure that the business was free to concentrate on developing new products and new markets, rather than growing towards an exit strategy. Paycorp also rebranded in 2005 to reflect the range of services offered more accurately; RentPay.com.au still supports tens of thousands of clients, but is dwarfed by the more invisible services Paycorp provides to corporate clients. Maintaining that brand will always be critical in the payments industry.
Roche looks forward to Paycorp maintaining its rate of growth and becoming the dominant electronic payment−processing provider in Australasia in the next three years. “We’ve been in the industry for so long, people trust us. They know the discipline and the professionalism that we apply to what we do.”
Company: Telcoinabox
Rank: 7
Founders/chief executive: Damian Kay, Morgan Duncan, Damien Gould
Revenue: $20.10 million
Growth: 183.2%
That the complex world of telecommunications would one day be simplified and compressed into a franchise model is almost unthinkable. Yet that is precisely what Telcoinabox has done.
The three−year−old wholesaler is marketing itself alongside Bakers Delight and Pets Paradise to prospective franchisees as a high−margin option for people who are good at sales and know zilch about telecommunications. “Our average margin [on sales] is 35 per cent at the moment,” founder Damian Kay says. “We could see margin erosion of 33 per cent in this business and still make a profit.”
Telcoinabox has about 20 different suppliers from which it buys everything from office phones to call time for mobile and landlines, broadband access and wireless data cards. Franchisees buy in for $50,000, which gets them training, products, a billing and customer management system, credit facilities (such as BPay and Visa), a laptop, and an MYOB accounting package with ready−made templates.
“All franchisees have to do is get customers, keep the customers and collect the money,” Kay says. “We shield them from all the industry crap and take a clip on everything they sell.” Telcoinabox gets a fee on all the facilities franchisees use. It pays Westpac bank 0.87 per cent for the use of its credit facility, for example, and sells it to franchisees for 1.6 per cent.
It also charges them a 2.5 per cent fee for using its million−dollar computerised billing system. The company has 80 franchisees operating around the country, none of which operate under the Telcoinabox brand. Some are particularly successful at mining niches, such as pubs and clubs, or charities. Recruiting quality franchisees is not easy. “We make no apologies for the rigorous process we put potential franchisees through, as poor performers end up costing us money in the long run,” Kay says.
Telcoinabox itself has grown to 40 staff. In February last year, the wholesaler started offering its range to experienced service providers in the telecom market. This proved a hit and the division now accounts for 30 per cent of revenue. Kay is mildly concerned about copycats, but says Telcoinabox has acquired a number of rivals over the past two years, in an effort to eliminate competition and achieve scale. He believes it has a big enough head start to deter challengers.
After two years of long working days, Kay and fellow Telcoinabox founders Morgan Duncan and Damien Gould have a new challenge: handing the day−to−day operations to a senior management team so they can assume a strategic advisory role. “We’ve seen a number of businesses fail in this process, so we are mentoring our chosen managers over a 12−month period to take over day−to−day control of the business.”
Company: Distribution Central
Rank: 8
Founder/chief executive: Scott Frew
Revenue: $28.53 million
Growth: 169.0%
Scott Frew and his crew are at it again. In 2000, Frew sold his computer distribution business, Lan Systems, for $30 million to South African giant Datatec.
In addition to Frew fattening his wallet, Lan Systems’ senior management team also held equity in the business and made money from the sale. Frew took off to Europe, sat on a few company boards, and has now stormed back into the Australian IT distribution game, flanked by his former lieutenants, to set up Distribution Central.
But IT distribution has changed. It used to be about one of two things: time−and−place delivery or value−added services. Time−and−place is a game of logistics − having the right amount, of the right product, in the right place, at the right time.
Value−added service requires a degree of higher brain function. It includes, for example, steering customers through 100 variants of Microsoft software licences towards the best one. Excelling at one of these models is not enough any more, Frew says. “Technology is so complex these days you have to do both. For the average Joe on the street, technology is easier to use, but getting it to that point is much more complex [for the integrators building the systems].”
Distribution Central picked three areas of computing to specialise in: security, storage and networks. In three years, it has grown to 40 staff and signed 18 suppliers, of which 85 per cent hold exclusive distribution agreements with Distribution Central. Marketing director Nick Verykios says a big−name manufacturer is primed to sign an exclusive arrangement that will double Distribution Central’s income.
The company also plans to branch into software distribution and Frew is toying with the idea of a public listing. Frew describes his staff as “the only differentiator you have”. Having learnt his lesson at Lan Systems, Frew has given all senior managers 10 per cent equity in the company. He’s also out shopping for eight new recruits.
AGNES KING AND SARAH NEILL.
A Fortune in Fashion
Profile: Bruno Schiavi
BRW. September 27-October 31 2007
Pages 48-49
THE WORLD’S THE LIMIT FOR THE ENTREPRENEUR WHO SELLS EXACTLY WHAT PEOPLE WANT, BUT SUCCESS REQUIRES PERSISTING WITH A MEASURED STRATEGY - AND STRICT CONTROL.
Bruno Schiavi knows how scary rapid growth can be. United States retail giant Wal−Mart Stores wanted 100,000 units of his first design, the pocket sock, and Schiavi couldn’t believe it. “I almost fell off my seat,” he says. “I thought [the buyer] was saying 100 units. But he kept saying, ‘no, 100 thousand’ in his American accent.” Armed only with prototypes, Schiavi’s real hurdle was supply. His next thought: “How the hell am I going to make it?”
With no savings, Schiavi begged for start−up capital from friends and relatives. He enlisted the help of his mother, Anca Schiavi, to secure a loan, then travelled to China to negotiate with manufacturers. The Wal−Mart order for 100,000 pocket socks was followed by another order for 300,000 units and, within months, Schiavi’s quirky product had made it from his mother’s garage into more than 3000 stores across the US.
Like many apparent strokes of good fortune, the breakthrough Wal−Mart order was born of years of persistence. In the two years before his trip to the US, Schiavi had pitched his product to every large retail chain and department store in Australia − four times each − and was rejected each time. His US success finally won over Australian retailers in 1998 and gave him the confidence to give up the latest in a string of day jobs that included working in hotels, insurance firms and retail stores.
Schiavi loves fashion, and he has a talent for understanding exactly what consumers want. The pocket sock,for loose coins or keys, was inspired by trips to the gym. Simply buying a pair of undies inspired his underwear line, MensFit, launched in 2003. Good−quality US brands were available in Australia, but marked up accordingly, and Schiavi knew first hand that “a guy who’s 25 doesn’t really have $35 to spend on a pair of jocks”.
In 2002, he launched the anabella lingerie line, based on the famous Victoria’s Secret model, incorporating luxury fabrics such as Egyptian and Italian lace, but selling with the minimal overheads of an online store. Initial production runs were exhausted within two weeks.
Annual revenue for Schiavi’s Jupi Corp is now more than $19 million, but Schiavi learned an important lesson from his business’s flying start. Rapid expansion is tempting in the short term, but in the fashion industry it can be a death knell. Jupi’s growth has been carefully controlled over the past nine years.
According to Schiavi, ramping up production with inadequate quality control is an easy way to destroy opportunities in an industry where maintaining a brand is vital. “Yes, you have to have good price points, you have to have good marketing behind it, and you have to have a great PR strategy,” he says. “But it has to be a total package. When standards slip, the consumer will know.”
Schiavi has his mother Anca, who is also his business partner, to thank for avoiding that trap. She is entrusted with the meticulous work of quality assurance, which leaves him free to focus on the design and marketing
aspects of Jupi.
Controlling growth has other advantages. Schiavi employs only 15 staff in Australia and six in the US, and he says his customers respond to dealing with a core group of staff. “We don’t have to go through 11 people to get a decision, we can do it straight away.”
Schiavi is also cautious when it comes to partnering. He has collaborated with Delta Goodrem since 2004 on the Delta by anabella range, with Priscilla Presley on a range of homewares and bed linen, and with plastic surgeon Robert Rey (from the US reality television series Dr. 90210) on a new line of “shapewear” or body−slimming clothing.
But he had no qualms about rejecting the chance to design a clothing line for Justin Timberlake. “You have to learn in this industry that saying ‘no’ to opportunities is an amazing thing,” he says. “To me, it’s always about being in control of what you’re doing, and making sure that you can cope with what you’re doing. For that particular project, it was just putting someone’s name on it. That I just call ‘licensing’.”
He expects the same dedication and involvement from his high−profile partners as he is willing to give. Rey flies with Schiavi to Florida every month to record a four−hour television segment used to promote their range on the US Home Shopping Network. Goodrem sleeps in the new range of sleepwear she has designed with Schiavi to ensure it’s comfortable.
The time seems right for further expansion within the US market. The Dr Rey’s Instant Shapewear line will be launched in more than 800 Sears department stores this year, and Schiavi plans to add another 11 staff to his US office to cope with the growth.
He expects turnover to reach $50 million in the next financial year and is investigating selling existing lines into new markets, including Brazil. That growth means he will continue to split his time between Los Angeles and his home town of Sydney.
Schiavi is eager to discuss his business but disinterested in discussing wealth, preferring to mention his family, his gratitude to his colleagues and his gaggle of “children”, made up of his nine fashion lines and his much−loved dogs.
“I think you define success by how happy you are, to be honest,” he says. “My Dad died very young of cancer, and I learned a great lesson from it. No matter how much money you have, you really just have to enjoy life.”
Bruno Schiavi
AGE: 35
Born: Bucharest, Romania
Lives: Los Angeles
Wealth: $19 million
Source of wealth: Jupi Corp
Secrets of success: Be open−minded. Every rejection or setback should challenge you to find an alternative way to succeed.
Interests: Astrology, feng shui
Brand Recognition
Lifecycle: Expansion
BRW. August 23-29 2007
Page 80
DAVID HUNDT, CHIEF EXECUTIVE, COUNTOURS
Building a successful franchise requires delicate talents. The Contours franchise has more than doubled its turnover in the past year, but David Hundt knows that maintaining profitability involves constantly redefining how a growing business is run. “We’re still very much in our infancy,” he says.
Hundt is chief executive of the franchise group that brought the Australian and New Zealand rights to the women-only fitness centre centre Contours Express franchise in 2004. The first studio opened the following March in Bendigo. The group’s success since then has exceeded Hundt’s initial expectations, which he says were, at the time, ambitious. “It was a bit pie in the sky to begin with,” he admits of his initial goal of opening 300 studios within three years.
With 189 studios sold, and 112 already in operation, Hundt’s vision seems more attainable. “The process is only becoming easier as the brand becomes more recognised,” he says. Hundt estimates that the revenue for the Australasia Franchise Group as a whole in Australia for the 2007 financial year will be almost $20 million, an increase of 160 per cent on the 2006 figure of $7.7 million.
The reason, Hundt says, is the simplicity of the business model. “We have a very specific niche market.”
The women-only operation offers a 29-minute workout on a circuit of weight-bearing equipment, and nutrition information, but not the add-on services found in larger health clubs, like spas, child care or diet plans. The studios draw a core clientele of women aged 25 to 54, attracted to a routine that takes up the minimum of time, and an environment that is free of the glamour and intimidating atmosphere of some larger gyms.
Hundt is not content to rely on the franchise’s increased brand awareness and impressive performance to date. The launch of the chain in New Zealand has been delayed by the process of rebranding, and he has plans to secure and maximise the franchise’s profitability in Australia.
One step is to automate the functions where possible, to ensure a scalable model that doesn’t rely on ever-increasing staff numbers. The search also continues for alternative revenue streams for franchisees. New product lines include in-studio advertising, a range of vitamin and mineral supplements through an alliance with Herron Pharmaceuticals, and a protein supplement.
These developments are the product of negotiation with franchisees to ensure they support the additions, and that these new product lines don’t compromise the simplicity that attracts women to Contours. The heart of the business is still the quick, effective, non-intimidating workout for women.
“We don’t want to become a 7-11 where we have shelves full of products but people don’t know what we really offer,” Hundt explains. “Our retention figures have been exceptional and we hope that continues in the short and long term.”
SARAH NEILL
