It’s been a long year for Australia’s wealthy young entrepreneurs, as the release of last week’s BRW’s Young Rich list shows.
Last year’s list was released on September 25, just weeks before the collapse of Lehman Brothers and the onset of the biggest financial crisis since the Great Depression. Little wonder then that the total wealth of the 100 members of the list has fallen from $6.032 billion to $5.8 billion and the cut-off for the list has dropped from $20 million to $25 million.
There are spectacular crashes, including Gold Coast entrepreneur Matthew Perrin, whose $150 million fortune was reduced to a few thousand bucks after he went bankrupt. And online payments entrepreneur Daniel Tzvetkoff, who was listed with business partner Sam Sciacca at $120 million last year, but is now out of business.
Bad news aside, the list is, as always, a fantastic collection of young entrepreneurs, all of whom who have made their fortunes without the help of an inheritance.
Leading the pack is Adelaide developer Ross Makris, who has taken advantage of the reasonably robust state of the South Australian commercial property market to increase his fortune from $350 million to $420 million.
Second is London-based fund manager Greg Coffey with an estimated fortune of $390 million, followed by miner-turned-racehorse-owner Nathan Tinkler, who has dropped from $441 million to $366 million on this year’s list.
As always, the new faces provide the most interest, and BRW has done particularly well to find 22 debutants in the difficult climate.
The biggest debut is made by British-based money manager Lee Robinson, who we spotted earlier this year on the Sunday Times rich list. Robinson is hardly a well-known name in Australia, but he is a rising star in London’s funds management sector. Last year, investment banking giant Goldman Sachs took a 20% stake in Robinson’s fund manager Trafalgar Asset Managers, valuing his stake at around $128 million. He joins with $150 million this year.
The Young Rich raises one big question – what are the secrets of making a fortune before you turn 40?
After a few years spent observing young entrepreneurs, I would put hard work, passion and a high-risk tolerance high on the list. But here are a few more trends from this year’s Young Rich.
The number of entrepreneurs from the financial services sector has dropped from 14 to 12 this year, but their prominence shows that money management remains one of the best paths to big wealth – even in the middle of a financial crisis.
Coffey and Robinson, who are joined in the top 10 by Hilton Nathanson (with a fortune of $365 million), should do even better this year as battered investors slowly return to the markets.
Retail is always a popular category on the Young Rich for a very simple reason – the barriers to entry are very low. But you’ve got to do something different. Take Nigel and Tania Austin, who are worth $156 million and whose Cotton On chain now has more than 450 stores after adding 150 in the last 12 months. Leveraging the disposable and fast-moving nature of casual youth fashion, the pair have built an empire around offering a reasonably-priced range that is constantly changing with trends.
It’s also worth noting Ross Makris’ fortune is based around shopping centres – if you can’t fill shops, owning them is a great option.
Fashion designers and cosmetics entrepreneurs are a mainstay of the list. It’s hardly surprising, as these sectors are dominated by young, good-looking and vibrant people, and the barriers to entry are reasonably low – anyone can start designing clothes from their garage. Of course, the key to building a fortune is longevity and being able to move with trends.
Natalie Bloom of Bloom Cosmetics, who is worth $29 million, is a great example of this, having been on the list since it started in 2003. The founders of the Sass & Bide fashion label, Sarah-Jane Clarke and Heidi Middleton, have been on the list since 2004 and have a combined fortune of $36 million.
The rise of the iPhone (and the App Store established with it) has created something of a second dot-com boom, this time focused around the mobile phone. This trend is evident on the Young Rich list, with the $107 million of Perth-based entrepreneur Eugeni Tsvetnenko, who has made his fortune from premium mobile services (and, incidentally, flew rapper Snoop Dog out to play at his wife’s 29th birthday). Ben Keighran, founder of mobile social messaging company Bluepulse, is now involved with another mobile social messenger service called Aardvark. He is valued at $28 million.
Despite the challenges faced by the commercial property sector, property remains one of the most popular sectors among Young Rich members, including Ross Makris, Shaun Bonnet (who is fifth on the list with a fortune of $360 million) and newcomers such as Perth developer Ronnie Elhaj, who joins the list with a $22 million fortune.
What is it about property that attracts young entrepreneurs? Perhaps it’s the ability to start small and keep building. There are many stories of developers (and even builders) who start with one property, sell that at a profit, borrow some more money, buy two properties, sell them, buy a small shopping centre – and so on.
One of the best ways to get very wealthy very young is through a career in entertainment or sport. Just ask Cate Blanchett, one of the wealthiest women on the list with a fortune of $58 million, or Lleyton Hewitt, who has turned a lucrative tennis career into a $40 million fortune. Of course, this path isn’t open to everyone – natural talent, athleticism and good looks are key.
There are 20 members of the Young Rich list based overseas, mainly concentrated in North America (particularly in Silicon Valley and Hollywood) and London. It’s a simple equation for these expats – bigger populations mean bigger markets and more chance to strike it rich.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
