Philip Weinman

And is there an exit strategy from day one for you guys?

There always is for me. But I’m actually maturing now. I’m not in a rush to exit businesses like I used to be. I’ve got very profitable businesses, they’re all growing exponentially and I’ve got great partners, because in the past I used to have to do this myself. So what I’ve basically done now is got these really smart people, I give them equity in the business without them having to put their money in and it is my responsibility to fund it.

And they are the ones that don’t sleep at night now. I’ve got no failures, they’re all running well. Some require more of my time than others. Some don’t require any of my time because they’re good operators.

Are most of the ideas you pursue based on personal experience.

Yes, I’ll give you another example of a business we set up called The Drilling Group. What do I know about drilling? Not very much, but when there was a water shortage I had a very expensive garden and my garden was dying and I went into the market and I tried to find a firm that could do my water bore. Well, I couldn’t even get anyone to return a phone call and when I finally found someone that would, they told me that they could come and see me in two years.

So my ears pricked up and I said this is absurd, I’m going to lose my garden, I need to find something. So I went to a guy who had just started out and he’d invested $100,000 in a rig. He had to borrow money from his family, I went to him and said look, I’m happy to buy your rig off you, give me your money back and let’s go partners. He then did my bore the next day. Within a month we were running a large business. I only got into it because I was so frustrated at the lack of service.

If you look at my history, it’s always been in industries which have fairly inadequate service levels. I tend to go into businesses which are highly competitive with very little barriers to entry. Most people look for the opposite but I’m happy to always back our culture over traditional cultures. As long as we answer a phone call on the day we get it, we’re probably going to be successful in this country.

What do you look for when someone approaches you? Is it the person? It doesn’t seem like the technology bothers you too much.

The person. Never the business. Never the product. It’s the person, because I have always believed that a good operator will make money in any business as long as they have got the right culture. The truth is there are so many things going on in this country, so many competitive industries that if someone came along tomorrow and said I want to open up a bar, and this person had the culture to run a bar, I’d open up a bar. If someone came to me and said they wanted to open up a restaurant and they’ve got what it takes to run a restaurant, I don’t care what the business is as long as the person has the right culture to fit into my culture.

It is purely based around people. I know you think it is crazy but it is purely based around people. There are not that many great people out there and when you find someone who is passionate about what they do, and I take away all the risk, you ask most people if they would like to be in their own business and they say yes.

Did you ever get it wrong?

Yes. I did get it wrong with one partnership. And that partnership was basically my very, very first thing that I did before the crash. I went into partnership with someone I didn’t know. I put in a lot of money, the personality of the person was totally different to me in all ways and I ended up having to buy him out.

How do you divide your time between all the businesses?

It was an issue, because they’re all built on love. So what I did, I built an infrastructure around me of really smart, young people who deal with these people rather than me so if there’s a PR issue, my PR person will deal with them. If there’s an issue with finance, my finance people will deal with them. So the only time they ever talk to me is on a high level, like, what do you think about hiring these five people from this company?  I’ll make that call but in the day to day, I’ve got zero involvement.

What’s your feeling on how big Deasil group could be. You’ve got 14 companies now, could you go to 30?

What I’m doing now is I’m consolidating them. Look, I’ve got one business at the moment where it’s a good business, it’s making money but not a lot. So what I’m doing is I’m selling my share back to the owner and he’s going to own 100%. And he’s still staying in this building, he’s still part of the family, but he owns it. It’s just not big enough potential growth for me to stay in. So rather than me sitting there as a 51% stakeholder in a small business, you know my vision has always been fast growth companies. So if the business can’t grow at exponential rates, at least 100% a year, then it’s not a business that I stay in.

And will that be the way you decide when to exit these things?

Spot on. The good news is that if I want to sell, and it’s usually me wanting to sell, they get first right to buy my share before I go to the market. And because they’re making money because they’re already a 49% stakeholder, they usually have sufficient income to be able to do that. Whereas in the past the only people I could ever sell to was third party because I owned it all.

I guess business credit squeeze has been great for you because there are lots of opportunities out there, but do you look around and see there are some companies that should be getting support from banks and just are not.

Banks aren’t lending, simple. You can’t get money as a business. Basically banks are valuing businesses at nothing which means if you want to run a business today and you want an overdraft facility your chances of getting funding are virtually nil. The only way you’re going to get money today is through debtor finance and so what happens is most businesses today can’t grow.

But I’ve only ever made money in bad times not good times. I look through the history of my businesses, they’ve always done well when everyone else has gone bad.

Does the credit climate give you concerns about the wider economy, outside your group of course?

Which hat do you want me to wear? As a businessman when the GFC hit, I came back to work. I had retired. When the GFC hit I was doing a talk and I said this is the happiest day of my life because while you guys are firing, I’m hiring, because I can’t get these people in good times. So while all these people are going, I’m picking them up for nothing on my terms.

So what happens in the next 12 months as the skills shortages return?

Lucky for me I’ve got good people now and now everyone wants to work for this group, so it’s much easier for me to attract people in an existing business that has already has a great track record in the marketplace than to try and attract someone as a start-up.

And our model is very simple, we don’t pay the highest salaries, we pay fair but we don’t pay over the top. We pay people in profit share and shares of business, if they deliver. And they are the type of people that we attract. We don’t attract the people that want the big salaries. They just don’t fit our culture and that’s not a problem. There’s nothing wrong with people wanting big salaries, we just don’t attract people like that because we want people to have a stake in the business and that’s why we can grow at the rate we do.

Can you give us a sense of the sort of turnover of the entire group?

I wouldn’t have a clue, I promise I’m not avoiding you. If I actually sat down I could work it out. But every business is a standalone business so we don’t consolidate our group and because we’ve got shareholders in each individual business, there is no consolidated reporting because Diesal doesn’t own all of these businesses, they’re management companies only and my personal investment vehicle owns the business. So that’s why I wouldn’t have a clue of our consolidated revenue is but I do know our property group is going to turnover in excess of $100 million just on the properties we’re developing now.

Now people are going to be reading this saying I need to get in touch with this man, he’s going to make my dreams come true. Is there still room in the house or the stables?

We do have a team of analysts that work here. What is happening is we are getting accounting firms calling us up, entrepreneurs calling us up and what we do is we pass the first meeting onto a team of people who look at the personality types, not the business, the personality types. If they are a personality type that gets our way of doing things, then I get to meet the people. I did a couple of talks a year ago and obviously we got a lot of enquiries and I just had to say I’m not able to do anything at the moment. Unless someone is exceptional that comes and sees us, I just won’t invest. I don’t need to.

But you’re still on the lookout for that exceptional person?

If you knew an exceptional person, I would see them tomorrow. And you’ve got to appreciate from me this is the ultimate because I’ve always run my own businesses and to have all these young people so energetic. You need to come in here to understand why I get excited. It’s just a buzz to see what can you do with a person who normally would have just sat in a corporate just working and now in their own business. It’s pretty exciting.