Chapter 21
From startup to wind down
Have you ever gone from a million miles an hour to zero, in a matter of minutes?
That’s what happened to me and it wasn’t fun. Going from being totally consumed by my work, to having nothing to do, was debilitating – I was pretty close to depression. I can understand why some elite athletes sink into a deep depression after retiring. It had been essential for me to make a change: I was really burnt out and I badly needed a break. But I hadn’t realised that the impact of leaving the company I had founded would be so severe.
The DiData guys had asked me to stay on as non-executive chairman, but I couldn’t – I would have found it impossible to be ‘half-pregnant’ after being so hands-on as a founding CEO. It would not have been fair on the new CEOs for me to be around, potentially undermining their authority. I know that I am not the type of person who would have been able to tell someone who had worked with me for a long period of time, ‘Sorry, mate, that’s not my job. You need to speak to Steve, Ross or my brother Jon.’
I had been sitting on the board of Fairfax for about two years prior to leaving DiData – and I hated every minute of that experience. Although I worked with some amazing people, sitting on the board of a large public company was not for me. I had committed to three years – and the day that came up, I tendered my resignation. Dave Gonski, one of Australia’s finest, asked me to stay, but I told him that if I got hit by a bus the share price of Fairfax wouldn’t go up one cent, nor would it go down one cent – because I added absolutely no value. My strength is building teams and creating a can-do culture in smaller companies, not reading reams of documents in a monthly board pack. I didn’t feel that I could influence outcomes sitting around a board table. I’m not suggesting that others can’t, but for me personally it just didn’t work. It was a great lesson to me that life after Com Tech/DiData wouldn’t involve sitting on six large company boards.
There are so many books and podcasts on happiness available out there, but it was my uncle Shollie – a special man – who gave me some very sage advice. He said that if you want to be happy in your life, you simply need:
I needed something to do!
A year after I left Com Tech, I became executive chairman of a small company called Holly, assisting the CEO, Lance Berks. After six months, Lance said, ‘I can’t thank you enough for helping me,’ and I replied, ‘Lance, I can’t thank you enough for helping me.’ This was my purpose. Once again, I was able to make a difference, only this time I wasn’t the main guy – that was Lance. At Com Tech, if I had toothache on Monday I would go to the dentist on Saturday. I naively believed that people would think I had lost my commitment if I was seen leaving work early. It was stupid. Nobody would have cared. At Holly, I could make a difference without being the CEO, and I loved it. This was my future. I loved mentoring founders – sometimes with some equity and often just because I loved making a difference and working with people I wanted to work with.
That’s what I have done since 2002. I’ve worked in many diverse industries, including software for the fast-food industry, a marketplace for fast-moving consumer goods, small-business loans, online insurance, online car sales, augmented reality, cyber security, construction technology, HR tech and even an online diamond exchange – boy, do I wish I hadn’t done that one.
When investing, first and foremost I always evaluate the founder. Then I look at the problem they are solving. Lastly, I assess how big an opportunity it represents. The founder has the domain expertise, and hopefully I can add value through my experience of building a fast-growing company. Finally, age has its benefits.
Prior to setting up a VC fund, where my business partners and I manage other people’s money, I didn’t even care about the opportunity or market potential – I only cared about wanting to add value to a founder. Any return would have simply been a bonus.
I’ve failed twice when I backed the wrong founder, even though I knew I should never have invested in the first place. I’ve also failed when I didn’t back the right founder, just because I didn’t like the valuation. My biggest failure was not backing Nick Molnar, founder of Afterpay. We had just invested in Zip Money at a $2 million valuation. Nick was raising $6 million at a $20 million pre-money valuation. I told him that if he had the cash at that valuation he should grab it – and if he didn’t, then come back and see me. To make things worse, I told Nick (who I’ve known since he was a kid) that he reminded me of a young David Shein – who I obviously didn’t think much of, because I didn’t back him. Afterpay has since been acquired by US-based Square for $39 billion – boy that hurts! It was an expensive lesson: always pay a premium for an exceptional founder. If there is any consolation, Zip is worth about $5 billion today (my first unicorn as a venture capitalist) and the return is better than it would have been had I invested in Afterpay. As my dad taught me, your profit is made in the buying, not in the selling. However, I could have and should have done both.
Having dabbled in startups for 15 years, along with my business partner Geoff Levy, it was time to formalise things. Together, we set up a venture capital fund: Our Innovation. OIF has been built on what we refer to as the three ‘F’s.
Founders We know how tough it is to be a founder and we will do whatever it takes to help our founders realise their dreams, in addition to just writing a cheque. We sincerely regard our founders as our customers.
Fund Our other customers are our investors, who have entrusted us to manage their money, and we owe it to them to get a great return on their investment. However, we would rather make a 5x return with a happy founder than make 7x and say, ‘boy, did we screw the founder!’
Fun We’re a fund without a d. We invest in founders that we want to partner with. Our formula is simple – back exceptional founders who are easy to work with. Life’s too short to work with people who aren’t aligned with your cultural values.
I hope that I can continue to add value to my partners, to our investors and, importantly, to our fearless founders, for many more years to come.
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If you want to be happy in your life, you simply need: