Rich Kids

2 Jodee’s Rocket

I did it all off my own bat. I went to a private school, my parents are wealthy, but I borrowed money from the bank, not my father.

Jodee Rich on Imagineering, Daily Telegraph, 1987

In 1986, shortly after Imagineering went public, Jodee Rich found himself on the BRW Rich List. At the tender age of 26, he was judged to be worth $23 million, prompting one breathless scribe to claim that he was ‘the youngest and richest self-made millionaire this side of the Indian Ocean’.

In interviews with journalists, he was eager to point out that he had done it all himself. He boasted that he had started the company with $20,000 from his fish tank earnings and a $30,000 bank loan. ‘I did it all off my own bat’, he told the Daily Telegraph in early 1987. ‘I went to a private school, my parents are wealthy, but I borrowed money from the bank, not my father.’

In fact, this was not strictly true, because young Jodee’s rocket had been helped into orbit by Rich family companies, which had lent him money and guaranteed repayment of Imagineering’s enormous overdraft. The first two years had seen the company lose $130,000 and come close to failure, and Steven’s help had almost certainly been critical to its survival.

That is not to say that Jodee didn’t deserve most of the credit for Imagineering’s meteoric rise. It was his idea, his energy that got it moving, and his talent and nerve that made it such a success. But most of the credit was clearly not enough for Jodee. As to why he needed to claim he had done it without help, Rodney Adler believes that all boys with powerful fathers want to show they can do it on their own. ‘We all feel a special pressure to prove ourselves’, he says, ‘and Jodee is no exception’. For the record, Jodee says Adler’s explanation is ‘absolutely wrong’.

Twenty years on, it is hard to remember what the world looked like when Imagineering set up shop in 1981, but it was certainly very different from today. The Apple Mac had only just been invented, the IBM PC was still two years away from being launched in Australia, and most computers were huge machines that filled a room. At this stage, Microsoft was only a minnow, and Lotus, the software giant which developed 1-2-3, did not even exist. The revolution was waiting to happen.

Despite the opportunities to build an empire and make a fortune, as many computer entrepreneurs did, Imagineering was never going to be a Microsoft, nor Jodee a Bill Gates. For all its success and acclaim, Imagineering would always be more of a Harvey Norman: a distributor of other people’s products—and a good one—rather than a high-tech creator of its own.

In the first 18 months, the new business had a pretty rough ride. It lost a pile of money and looked like it might go bust. But when the micro-computer boom arrived in 1983, the Australian market began to grow at 40 to 50 per cent a year, and it was impossible to go wrong. According to Dan Keller, who joined Imagineering as a salesman a few months after IBM launched its PC, ‘Things were really hectic. You would have five or six calls banked up at a time, and you could make as many sales as you could take phone calls. Every month it was doubling’. Keller’s record was 230 calls in one day. ‘It was extremely intense’, he says, ‘but there was a great vibe, a great buzz, and Jodee was like the Messiah. He had the vision, and we believed in him’.

Many still talk about their days at Imagineering as the most exciting time of their life, and Keller was certainly not alone in finding Jodee an inspiration. But many also had mixed feelings. One woman who joined the company in the mid-1980s regards him as the most challenging person she ever worked for, but also remembers the downside: ‘He was a very difficult person to stand up to, he had a short wick, and he didn’t entertain fools at all. He was a deeply flawed individual, a misfit’. According to Keller, ‘He liked to make an example of people from time to time. You were either in the in-crowd or you weren’t, and he always let you know’.

But Jodee’s style inspired commitment, either through fear or loyalty, and most were happy to put in long hours and work at weekends. Jodee did so too. He would often be seen in the office at seven or eight o’clock at night dressed in shorts and a T-shirt, after a spell at the gym.

When the boom arrived, Imagineering quickly stole a march on its rivals by securing exclusive rights to the top-selling American software products. The first of these was a spreadsheet program called VisiCalc, which had been developed by students at Harvard and was then the only product of its kind on the market. VisiCalc already had an Australian distributor, but this did not stop Jodee jumping on a plane to San Francisco and marching in to see its manufacturer. For the next six months, he told Visi Corp’s boss, Gerry Diamond, that Imagineering would do a far better job than his existing Australian agent. Finally the man gave in. Jodee was given sole rights to sell VisiCalc in Australia, which meant that every retailer in the country would now have to buy it from him.

It helped that Jodee’s father owned a travel business, which meant he got free flights, but it was far more important that he had the nerve to do such a thing. As one of his friends at the time observed, ‘Jodee played it cutthroat. He did everything in a big way and he spoke the US suppliers’ language. They lapped it up’.

Those who came knocking on Imagineering’s door—for VisiCalc or anything else—found a different Jodee, who was warm, welcoming and eager to help. ‘He had that hustler style, but I liked him’, says Joe De Simone, who ran an up-and-coming Melbourne computer dealership and flew up to Sydney to talk to the company after it had been going for about 18 months. ‘You walked in the door and immediately knew they wanted your business. They made you feel special.’

The team at Imagineering not only tried harder than their rivals, they were also prepared to take risks. When De Simone asked for some software on trial, to see how good it was, they packed him off with $30,000 worth and wished him luck. Soon he was putting orders their way, along with everyone else, and the company was growing like mad.

Having notched up sales of $1.6 million in its first year, Imagineering topped $5 million the next. By mid-1984, sales had again doubled, to $10 million, and it was making a profit—a healthy $500,000 after tax.

By this time Imagineering had opened an office in New Zealand, was employing 45 people, and was on the way to having 1,500 dealers in Australia. It also had a computerised sales and ordering system, which allowed it to promise customers who placed orders by 3.00pm, that they would have their goods by 10.00am the next day.

When business threatened to flag, Jodee’s quick thinking kept Imagineering ahead of the pack. In 1984, with sales of VisiCalc tailing off, he set about snaffling the new top seller, Lotus 1-2-3, which was being handled in Australia by a rival company, Sourceware. Hoping to win their business with a direct approach, he caught a flight to Boston and presented himself at Lotus HQ, where he sat around for six hours waiting to see the chief. His mission ended in failure because no one was prepared to see him, but he was told that two executives would be in Australia in six weeks time and he could raise the matter with them.

He discovered that one of the executives was an Italian from Chicago called Chuck Digate. Over the next few weeks he phoned Digate’s secretary constantly, eventually to be told that the executive was on his way to Australia and would be stopping in New Zealand on the way.

Once again, Jodee didn’t lose any time. He found out that Digate was staying at the Sheraton Hotel in Auckland, pitched up in the lobby and took him out to dinner, where he waxed lyrical about Imagineering and what a great company it was. By the time Digate and his sidekick landed in Sydney they were ready to sign up. And any doubts they may have harboured were soon dispelled. They were met at the airport by a BMW bearing the number plate 123, which Jodee had bought for the occasion, and whisked to Imagineering’s offices in Ultimo where they were greeted by the entire team, waving Lotus banners. ‘We got the deal’, says Jodee, ‘because we were committed and we pitched hard’.

There was just one small problem. The Lotus executives wanted Jodee to share the business with Sourceware because they reckoned the company and its gentle American managing director, Doug Ruttan, had done a decent job. Jodee told them this really wasn’t an option.

Poor Sourceware, with its modest office suite in Chatswood, had no answer to the sort of campaign Jodee was waging. ‘We were a small outfit and there was no way we could compete with that sort of financial backing and tactical sophistication’, Ruttan told BRW. ‘We were gazumped well and truly.’

The Lotus coup was followed soon afterwards by a similar capture of Ashton Tate, which manufactured a hugely popular database program called dBase III. When Ashton Tate came to Sydney to appoint an exclusive distributor, they made it clear that the highest bid would win. Jodee promised to outgun and outspend the existing agent, Arcom Pacific, who went into receivership six months later.

By the end of 1985, Imagineering was so far ahead of its competitors that it had staked out half the Australian market. Sales had doubled in a year—yet again—and profits had done even better. The company had outlets in Hong Kong and Singapore, plus an office in Los Angeles keeping an eye on new products and trends in the market.

After four years, Jodee now had a business that could be sold to others, and an opportunity to make some money. In December 1985 Imagineering was floated on the Australian Stock Exchange in a deal valuing the company at $12 million. The Rich Family Trust pocketed $4.8 million after selling 40 per cent of the shares, while another family company, Beaulieu Holdings, retained the other 60 per cent. Soon afterwards, Jodee made his debut on the BRW Rich List as its youngest member, aged 26.

Imagineering itself got no cash from the deal, but its stock exchange listing would allow Jodee and Steven to ask their new shareholders for money in the future. And a look at the balance sheet suggested it would have to do this, if it wanted to keep on growing. Despite its sales and profit growth there was remarkably little in the bank, and virtually nothing in the way of assets, except ‘goodwill’. The punters buying the stock for 50 cents a share were getting net tangible assets of just 3 cents, and lots of promise.

There had been a bit of bother in setting the sale price. The brokers Ord Minett, who underwrote the issue by promising to buy the shares if no one else wanted to, had agreed to value the company at 12 times its 1985 earnings. But when the 1985 figures came in, the profit fell well short of the magic $1 million that Jodee had set his heart on.

Shenanigans or not, the buyers had nothing to complain about, because the shares soon took off like shooting stars, doubling within a year of the float and doubling again within the following four months. The company was topping every sales target that Rich set for it. He was talking big, and delivering even more.

The press had decided, with that easy way of theirs, that the boy must be a genius, just as his mother had always said. And Jodee was happy to agree. In interviews, he was bold, brash and supremely confident. ‘I’ve always felt good about myself’, he told one journalist. ‘I guess that’s helped me through the bad times.’ Whatever they were.

However, some noticed he was a little bit odd, and felt he didn’t quite ring true. Even the Daily Telegraph, which rarely goes beyond the golly-gosh approach to Great Aussie Success Stories, noted in 1987:

Although he is a very personable young man, there’s something slightly stilted about him. He sits very still. His voice is very quiet. Before he answers any question he gives a wide engaging smile. Apart from that smile, his face remains almost expressionless.

It was a reaction that people would have time and again over the next 15 years.

The Telegraph’s profiler, Fran Hernon, recounted a story from a young woman who had sat next to him at a society ball and also found him strange. ‘He talked a lot about cars and he made it really obvious that he had a lot of money’, the woman reported, ‘not in an arrogant way, but as if that made him a better person’. Hernon clearly didn’t like him much, but tried to give him the benefit of the doubt, concluding: ‘Maybe Rich is young enough not to have learned how to be humble. Maybe he is simply shy’.

Channel 9’s Helen Dalley, who was then writing for Australian Business, didn’t appear to warm to him either. In one of the earliest profiles, written in 1984, she observed:

Nothing breeds ego and pride like success. Of his riches he says: ‘I’ve probably made my first million—maybe I have, maybe I haven’t—but it’s not the money that turns me on’. What does turn him on, he says, is the parry and thrust, the negotiating, making software a household word—and women. ‘I love getting a good sale and enjoying a lovely lady’, he says. Flamboyant in life as in business, Rich drives to the Thredbo ski fields throughout winter in his silver BMW with the computerised radar detector under the bonnet. ‘This car is an ego trip, but I feel I’ve earned it.’

Two years later Jodee’s ego trip had obviously become even more powerful, because he had traded up to a Porsche 944 Turbo. His executives also had boys’ toys. The car park at Imagineering was full of BMWs, Porsches and Mercedes, with number plates like APPLE and IMAGIN. One day a red Ferrari made an appearance—which was not seen as a clever move. It didn’t do to out-horse the boss.

Jodee was keen to claim he didn’t care about such stuff. ‘People think that all you do is drive fast cars and eat out a lot’, he told the Telegraph, ‘but it’s not that way at all. The things I most enjoy are the simple things in life’.

He had confided to Helen Dalley that he was still a boy at heart. ‘I’m like an average 14-year-old. I love dancing at Rogues. I love eating out and the movies.’

But 14 and average were two things he was not. Nor was Imagineering an ordinary company. Jodee was a fan of Californian philosophies like est and Insight, which laud the power of positive thinking, so the company had teams and champions, and brass gongs that were rung when a sale was made. In theory there were no hierarchies, and limitless possibilities for the ‘Imagineers’ who worked there. Jodee delighted in telling the story of a 16-year-old employee who shook his hand and told him he wanted his job one day—a homily he would still be repeating 15 years later.

Jodee’s democratic zeal even extended to refusing to be branded a whiz kid. ‘That implies that other people can’t do what I have done’, he told one journalist in 1988. ‘But they can.’ It was as if 28-year-old multimillionaires were just two a penny.

Jodee was also responsible for motivational weekends, where everyone could get to know each other, and themselves. On one occasion in the Blue Mountains, all the managers were made to abseil off the top of a cliff, with Jodee egging them on by saying: ‘A company that jumps together stays together’. On another, they sat round a room and had to say something about themselves—then had to listen while the group leader tore each person apart on the basis of what they had said.

Dan Keller recalls one speaker at a management love-in talking about the importance of not wasting other people’s time, after which Jodee introduced a rule that the last person to turn up to a management meeting—late—would have to shine everybody else’s shoes. He included himself in the deal, and it worked wonders.

Till then, Jodee had been notorious for not arriving on time. Rob Stirling, who ran a company called Datascape that distributed computer printers, tells how Jodee would be running late for talks on a business deal and ring up to ask: ‘What sort of paddle pops do you want?’. When he arrived, he wouldn’t apologise, just hand paddle pops around to everyone, and they would all sit around sucking them in negotiations. ‘It was a trick, a magician’s trick’, says Stirling, who witnessed it on several occasions. ‘He had lots of these tricks. They were designed to take the upper hand.’

At one such meeting, Jodee made Stirling a generous offer. Just before the deal was to be signed, he rang up to say that he needed to come in and see him again to talk it over. He arrived, gave Rob a paddle pop and said, ‘The deal’s off’.

‘I was really angry’, says Stirling. ‘All I wanted to do was shove the paddle pop up his arse, but you know, I had this wet thing in my mouth. It’s hard to feel powerful when you’re sucking on a paddle pop.’

The tricks didn’t stop Stirling from joining Imagineering soon afterwards, and their magic obviously worked. By August 1986 the company’s sales had doubled again, beating all forecasts, and the future seemed limitless. They had opened new offices in Wellington, Brisbane and Taipei, and they had moved to bigger and better ones in Sydney, Melbourne, Hong Kong and Los Angeles. The company was selling software to Grace Bros, Myer, K-Mart and Dick Smith, and had been named International Dealer of the Year by 3Com, the American company that now makes the Palm Pilot.

They were also getting even further ahead of their rivals by winning yet more contracts with top US suppliers. As usual, they pitched for new business with flair and extravagance, as one of Jodee’s competitors inadvertently discovered at a trade show. As the rival stood there, looking a little lost, a young man came up to him to say, ‘We’ll pick you up and take you to the airport, and there’ll be a private jet to take you down to the snow’. Sadly, the promise was never followed through. An Imagineering rep had mistaken him for a visiting executive from a big US software developer.

Jodee also knew how to play tough when it was needed. For several months Rob Stirling talked to the Japanese printer company Fujitsu in the hope of selling their products. After doing things gently and politely, he had still not managed to make them decide. Jodee resolved to have them in for a meeting, at which he would try to get them over the line. According to Stirling, two Japanese gentlemen duly came to the new HQ at Rosebery, in the old industrial heart of Sydney, to be asked whether they were ready to sign. ‘They said, “Well, there are a couple of things we’d just like to clear up”. And Jodee said, “Well, I think you’ve fucked with us long enough. If you’re not going to sign, then fuck off”, or words to that effect. There was a stunned silence, and then they apologised and signed up.’

Another version of this story has a different punch line. According to one of Imagineering’s managers, ‘Jodee was his usual self. He had his hands in his pockets, was playing with his pen, looking at the ceiling, while these guys were dressed in suits, sitting upright, very formal. Suddenly out of the blue he says, “In order to know what diseases I’ve got, I need to know who’s fucking me”. There was commotion. The interpreter suddenly started interpreting madly, everyone looked embarrassed, and the meeting came to an abrupt end’. But once again, Jodee got the business. Later he would retell the story and fall about laughing.

There was a constant stream of visiting suppliers from the USA and Japan who needed to be entertained. One of Jodee’s competitors was impressed to see him out on the town with Bill Gates, who was a guru in the industry even then. Jodee now admits he was trying to grab Microsoft’s business from its local distributor.

But often Rich left the carousing to others. When the vice president of sales and marketing from one of the industry’s big names came out, threatening to terminate his company’s deal, Jodee called a young Imagineer into his office to brief him on the visit. He expected to hear about their commercial relationship, but instead, he says today: ‘Jodee closed his office door and started talking about this guy, saying, “He’s a bit of a party boy, he’s quite a nocturnal person, and he enjoys going out hard. And you need to know something else, he likes cock”. I nearly fell off my chair, I was completely shocked. Jodee tried to calm me down. He said, “I’m not suggesting you do anything about it but I’m sure he’d enjoy the company of a good-looking young guy like you”. I said to him, “Before I explode, are you saying you want me to distract this guy by introducing him to fags?”. He smiled at me and said, “You got it”’.

The 1980s, of course, is still famous as the decade of excess, and in this regard Imagineering could compete with the best. Its Sydney parties at the Regent Hotel and Rogues nightclub were always more lavish than anyone else’s, and the company’s extravaganzas at Jupiter’s Casino on the Gold Coast were the stuff of legend. Known as High Rollers, because they rewarded dealers who had made large amounts of money for Imagineering, these events were famous throughout the industry. If there was one invitation you wanted to get, it was this one, and since it could only be earned by hitting sales targets, it was a great way to get products moving. The formula was simple: charter a couple of jumbos and fly 500 or 600 people from Sydney and Melbourne up to the Gold Coast for a weekend of free accommodation, free food, free booze and free fun.

At the time the computer industry was notorious for its testosterone-charged young men, so there were always plenty of attractive young women on show. There were soapie stars and models to present the sales awards—which is what the party was about—and, for those who went parasailing, there were bikini-clad blondes (complete with ‘Safety Instructor’ sashes) to strap people in for their flights. Most who earned the right to go were young, single and out for a good time. When sun, surf and stimulants were added to that cocktail, it was no surprise that the parties were wild.

‘It was biblical, Cecil B de Mille, a weekend of debauchery’, says one man who still marvels at the memory. ‘An obscene amount of money was spent on it. You would spend the day at the beach, then there would be a formal dinner in the evening. And afterwards you would get down and have fun. All the big software manufacturers would leave plastic bags in your room, called “care packages”. Inside were combs, toothbrushes, trinkets, playing cards and the companies’ badges, and then there were condoms and lubricants. There were also little hazelnuts that looked whole, but when you cracked them open, there were condoms inside.’

The beauty of the High Rollers concept was that Imagineering’s suppliers could be persuaded to pay for almost everything. You would go to the Ashton Tate pool party for cocktails, then to the Persist Memory Boards dinner, and at bedtime there would be an IBM mint on your pillow. In the morning, you’d go down to breakfast and be greeted by a vendor’s tablecloth. On the boat trips, the name of the sponsor would be all over the side. It was two or three days of advertising nirvana. ‘It made the sponsorship at the Atlanta Olympics look like child’s play’, says Joe De Simone.

The last High Rollers happened in 1988. It was the end of an era. According to its organiser, Stefan Wasinski, it was then the biggest party in Australian history. Imagineering chartered five jets to fly people up to Queensland and had marching bands on the tarmac to greet them. Wasinski is convinced it was worth it, and is adamant that it boosted sales by millions.

And without it, of course, we would not have that famous picture, taken at Jupiter’s, of Jodee and Maxine Rich in their shiny red devil suits.