Welcome to the mentor. I'm Mark Boris, David short you're the managing directman, and I guess the founder of short Ink I n C short Ink, formerly the owner of a Shorties liquor too. Welcome to the mentor. Mate, Thanks Mike, our mutual friend has got us here together. He's seeing your praises. So, David, were you called Shorty at school? I was, well, you're a big dude. You're about six ft two. What are You're a pretty tall bastard. More person the street and I said, who's this big guy?
And here walking wait waiting to get in. So you developed, well, can you go back to that time when you first thought to yourself about Shorties as a as a business idea? Like what we where did you think to yourself that this is as potential to make a lot of dough and maybe one day I'll sell it. I mean, I'm always curious to find out people's mindset when they come up with an idea. What sparks the idea?
Yeah, okay, Well I've been selling corporate booze for Porter's Edgecliffe for a couple of years.
Well what does that mean? Porters and porters?
But Porter's Edgecliffe at the time, in nineteen ninety eight to two two thousand, or for ten years before that, was a great corporate retailer. So they are supplying McQuary bank right the law firms and merchant banks all their
beverage needs. And I got a job there as a delivery driver and then worked there for a couple of years, then went traveling and I was actually traveling through Turkey when September eleven happened, living in a treehouse and I got an email from a cousin saying, Hey, we've got the Australian Hotel and they just opened up cargo bar. Do you want to come back and do that corporate.
Liquor stuff for the Australian Hotel for.
The Australian Hotel out of the Australian Hotel and the Rocks. And then a couple of probably a year later than that, BW Wes brought Porter's Edgecliff and all of a sudden we had a really good business. So, like you know, we sort of boomed and picked up a lot of those existing clients that I used to manage and.
Then well do so if you just stop you there from them, Dzer because BWS dash Porters lost those clients.
Yeah, so BWS moved the bottle shop into the shopping center. Right they got that, they brought the liquor license and they stopped doing the corporate.
Oh, they stopped doing it. Yeah, so that opened up for you guys.
That created a little niche and it gave us a bit of a momentum to start picking up clients. And then soon after that we had an opportunity to open a bottle shop out at Road Shopping Center, which was the first Shorties in two thousand and four with the Walkers that we were very excited about. But it was probably my lesson in learning how to run a business.
Because when you say the Walks, you doing Wark Corporation. Good corporation. Yeah.
So Walkers built Road Shopping Center in that precinct and we excitingly took a bottle shop there. That was it's pretty hard work in a shopping center when no one turned up for the first a year or so, and that sort of drove me. By that stage, you know, I'd borrowed one hundred and five grand off my brother in law and my sister and it was like, you know, I got to make this work. Three or four years later.
After that, it was like, let's go back and do corporate sales because the original plan was to open one bottle shop every year for ten years, and we decided not to do that. And I took a warehouse least six hundred meters from the city in Ultimo in two thousand and eight, and that was probably when I got
some real momentum. The GFC happened and a lot of corporate businesses like De Lute started saying, you know, we want to do all our entertaining in house, and they employed Michelin chefs and you know they it became a really good business. So what looked like could have been a disaster, we sort of went from one or two million revenue in one year to ten million in two years.
Well, what was your back if you go back to early days when let's see, when you open up the business in the bottle shop in roads shopping center, what was your business model? Like people can come to me, get my staff, they'd just walk into to the bottle shop by the bird's walk out. Was that your model or was your business model something more than that? Prior to that, it was all deliveries. Yeah, and you were going out of customers and saying what it would you
like to buy? Email and maybe saying this is some specials we got on. It was more like sort of like digital marketing a little bit, but by email or some.
Other or even back in the day we had an ad pages, right, so you know under beverages bottle shops now you know, saying corporate liquor supply, right. And we always sort of built the business by taking photos of the lobby and then we'd call call those businesses that were in each building, organize the time to meet the person that would organize the beverages off them bottle of champagne if they'd give us fifteen minutes, and you know, nine times out of ten would pick up the account.
So what did you take photographs to lobby for of all the different businesses in there? So we're thick the of the lobby board.
Yeah, figured if we're already going to that building, would take a photo of the lobby board and then try and secure all the businesses in each building. And you know, over twenty years we ended up picking up sixty five percent of the businesses in Sydney CBD.
That's funny and that's what I often refer to was wearing out the shoe leather and the old days. Ye had no digital marketing as such back in that period anyway, heartily, the old days actually is only twenty eight years ago. But the way you did was knocking on people's door and go and seeing them and doing a demo or talk them into it or explain the benefits and then follow up the old school follow up, you know, back
on the phone to them, not even text. Everything was like actual communication, actual communication, like old school communication and door knocking.
It's exactly how we built it.
So that was your model. So what is to get You did some retail. Wedge also did corporate corporate.
Stuff, and then a good client would be someone that would order one thousand to one and a half thousand dollars every week and then one week. Once we built the relationship with them, we'd invite them to wine tastings, like if the chef to Carve of Don Pererion was out, would do forty five minute master class so they could come in and try a couple of wines or try a couple of great don perions or penfolds, and then still get home for dinner and be home with their families.
So we did a lot of relationship building, We did a lot of events within the corporate and we tried to solve their problem. So this person was often using three or four or five different suppliers, and we were pretty much the complete beverage supplier for these corporate clients.
That means water, soft.
Drink, water, butcher juice, you know, then all their fine wines, all their beers.
How did you work out what the office should be like? Did you work it out? Because I mean, obviously you'd had a lot of experience in the corporate world, corporate the liquor world, so to speak. But did you do it by trial and error or did you sort of survey them and say what is it you need from someone like me and our business to become like a one stop shop? And I hate that bloody phrase, but like as basically you're one stop shop when it comes to beverages generally yep.
Well, we would ask the customers what they wanted and would actually look at any other beverage that going into that building as leakage. So we're trying and collect that we'ld go to a deal with a supplier. Often it was easier for them to deliver it to us and then we could sell it to the client. So you know, we were trying pick a core range and then pick stuff that would sell, and then that would be what
we would offer. But you know, we went through all sorts of different things over the years, aboriginal water for some of the big four accounting firms because I had to support supply nation cardboard water, you know, environmentally free sugar free drinks. A lot of the big tech companies were inspired by what they're using in San Francisco. So I was like, you know, sugar free waters from France
and all sorts of different things. So we're very reactive with what they wanted and that was our point of difference.
So be but to have that point of difference in terms of relevant relevancy, I mean, how do you how did you remain market relevant? In other words, how did you know what was going on in San Francisco or how did you find this stuff out?
That would be part like So our key clients would meet with them regularly every three months and there would be an agenda and it would be like, what else would you like, how can we make your work?
You would you tell them that, by the way, in all the startups in San Francisco, they're drinking water from our Lady of Lords and blessing themselves before they have it. Or or did they tell you we want the water from our Lady of Lords. I think it was both.
You know, would ask them what they're what they're trying to do, especially around sustainability. Do you know whether they wanted to get away from plastic.
Bottles, because that's that's important because they're relevant, So you know, sustainability is relevant relative to the cardboard carton, not in a plastic.
Bottle, having non our college drinks at a function.
Yes, or hydrogen water like what they do these days. People haven't put hydrogen water. Somehow they make it high. I don't know how they do it, but whatever it is, But how did you keep on top of the good? I mean, are you a prolific reader or a prolific viewer of some station on television or some station on YouTube that's telling what the new, greatest and latest is. We'll just ask the customers.
Yeah, would really just push the customers and you know, would consolidated all our customers, would meet.
With them all and from them. And when you say we So we.
Had a sales team that grew from just me, you know, to the end we had sort of five or six full time salespeople.
And had and in terms of choosing your sales team, because you got your business up to be sure, he is leaged to be quite available business. But obviously that comes off the back of revenue, and the revenue comes off the back of orders, and orders comes off the back of these discussions, and these discussions come off the back of having the right salespeople which you chose, and then you're got to train them. So what was your process, like, how did you recruit a salesperson? Did you recruit them
in your own image? You know, like I know this works for me, so I want people who like that, or did you yeah, how did you go about recruitment?
Definitely didn't recruit them in my image, but we do. We recruited people that have been working in hospitality, a lot of people that have been working, you know, five nights a week, working in wedding venues or working Saturdays and Sundays. Hospitality was always a good one because founds what the customers needs were people that wanted to get
an intro into sales. So do you know we could give them sales train and give them exposure to the corporate clients, teach them how to do a sales agenda, manage the manage the clients. So that's how we predominantly picked up clients, you know, passion for wine with secondary So long as they're interested in it, we could teach them all that. We could teach them about the product, but they had to have an energy and you know, be prepared to knock on those doors.
As you said, it's a tough gig, and salesmen selling an idea selling the wine is probably not really what they're doing is probably more selling the whole concept. How did you how did you? I mean, do you map out a training program? Did you build a training program? These are the steps or these are the things I want you to be good out and these are things that are going to train you at. Yeah.
Over the years and over the years we got better salespeople too that came in and helped lead the team and they brought different different structures to it. We had a really good chairman for a long time that introduced a lot of sales skills. He had done a lot of sales training and previous jobs. So we had a
very clear the business had a clear plan. Do you know for the last fifteen years, we've had a strategy on what we're doing, how we're going to achieve it, and then really clear KPIs with the sales team, and they were sort of given a portfolio of clients and was their job to grow them. We lost very few clients.
So because I often talk about this reducing stuff to writing as opposed to just you calling your five sales guys. You're sitting there in charge them, for example, and you talk for two hours and everybody no one takes the notes.
There are no summarison made after it. There's no takeaway that they can put into a folder, you know, which might have a mental thought, which might have clips in it, which you can sort of say, this is last week's meeting, and so that then they've got nothing to refer to. I mean I often make two talks and I can talk to three or for a bit there, and virtually no one's writes them down, And I think, why are you here if you're not going to write a note?
Yeah, Well that would infuriate me, especially if they went and saw a client didn't take notes. So if they if they're going to take fifteen to twenty minutes of the client's time, we want an agenda.
We went climb was to see that.
Yeah, we want to keep that on record too. So if they leave, or if there's a new person or the account get shifted to someone else, you can see the change because often the point of contact would change it a corporate client, but not the you know, not the account manager or vice versa. So do you know we wanted that history of being able to see, you know, what they've been asking for, what they're what they're looking for to, you know, to make their workplace better. And
often they were looking at us for guidance. Yeah, you know, because they don't want the booths turning up late on a Friday. They want to pick a beer that you know, everyone enjoys drinking, or if the CEOs of organizing a really special event, they want great booths. So do you know they trust us?
Yeah, it's because trust is an interesting concept. Brand is interesting when it comes to trust, and trust is interesting when it comes to brand, Like but why do I trust you? I trust you because I know you will be on time you say you're going to be at two o'clock. You be the two o'clock. I know, I know you from last time. Familiarity, Like I don't want
to see a different dude every time or girl. I want to know that your content is good, Like you know you have valuable insights into the content that you will share with me. You can say you know you're a Deloitte and you want to be able to say listen KPMG without giving any name. Way, like one of your competitors, there's a style. But one of your competitors has been buying a lot of is that they found.
It's very successful. Were they're bigger clients. Giving them, you know, a French wine instead of an Australian wine, or giving an Australian wine instead of a French wine, or giving them a low soul fights wine or a low whatever wine or a non preservative no preservative wine has gone down a treat with their clients. That's what builds trust because you give me something valuable, Yeah.
One hundred percent, and then you take that one step further and we'll build a lot of experiences that we're doing so our supplies. We'd do strategy sessions with our supplies about how we could retail their product with excellence and more. Ennessy is an example. Would work out how
we could retail Verve and Molt with excellence. That might be on Melbourne Cup Day in these corporate offices, you know, setting them up as bars with Berkeley Co Bars or Womb champagne bars with the glasses, the branded glasses, with a price for the best dressed. And from that we would hit up the supplies and go what's Verv's brand name, like, don't give all your marketing material away to the fancy
bars in the city. We've actually got you know, five hundred thousand people for two or three drinks on a Thursday or Friday afternoon before they go into the bars. So we had we had a big influence around. You know, we got a lot of brand money from the supplies to activate these events.
So so you sort of in marketing, you did their marketing for them, particularly like the big Unfortunately big corpors aren't great at marketing generally speaking, particularly internally. It's nearly like a HR exercise firm, like I'm doing something for my Cup Day, could be Christmas, could be a birthday, could be whatever. An anniversary of the firm being a thing, or could be celebrating some big acquisition, or they could have sold something, or they could have had a great
financial year and blah blah blah. You know, it could be a town hall, you know, because a lot of these organizations have town halls, particularly in the quarries and all the sorts of people of the world. The big banks are doing the all the time because they staff need updates. The staff needs to know I work here every day, But what the hell's going on? What are you guys doing? Like do we make money this year?
You know? You know, how how are we going relative to our competition, because you know, competition Australias pretty fierce. So and liquor alcohol or beverages just generally this say, beverages is an important part of the Australian fabric in terms of celebration, but it's also an important part of the fabric of like, let's networking, knowing your colleagues at
a workplace. If you've got one drink and I'm a twm to get blind drunk, I'm talking just a drink, even if it's a half a drink, it sort of helps. I'm one of those people. I mean, I don't really drink, but I will have a glass of something in my hand because it just makes me feel more relaxed in my conversation without even drinking it. It's sort of like having something to do with my hands, if you know what I mean. It takes the awkwardness away from me.
And we always found that we get. The feedback we got was that the Friday drinks and those Christmas parties was the opportunity for the mail room person to talk to the CEO and get a pulse for what what's happening in the company. And that was the beauty of the events that we did. Whether it was for one of the banks entertaining one of the accounting companies, or
vice versa. We often were the icebreaker. So we would often put on an event that would go or a wine tasting or a really simple experience where they could meet someone, you know, iconic in the industry, or we could teach them how to make a cocktail. I could try a couple of different beers and then we would disappear, and you know, their weight stuff would take over.
It was interesting. I wonder. I mean, you may or may not know the answers, But I just often wondered whether Australia has a lot more of this going on than say, in the USA. I mean, is that a thing, because.
Yeah, I believe so, and I think Sydney had a lot of it. I when the Friday drinks and the Thursday drinks have really wound down since COVID.
Yeah, is that right? So our timing, well, no one goes to work on Friday. No one goes to work on Friday. I don't mean that facetiously. I mean it's seriously because my mate, my cousine, Shanes a restaurant across the ref and he said to me the new Friday when they were people go for drink afterwords? Now Thursday, yeah? Or Wednesday? Yeah? Or no? Maybe he said Wednesday. Maybe that's what it is. So that's that's the new Friday.
There's another night of the week where everybody goes and has a few drinks.
So, you know, we found that Tuesday, Wednesday, Thursdays were a lot more we were doing a lot more events in the last three or four years. Prior to that it was and we did expand down in Melbourne. But we found that it was a really Sydney centric thing too, because you've got these beautiful officers overlooking the harbor and
they wanted to activate these spaces. And they can activate the spaces by clients walking in there and having a look in the waiting room, but when they're really doing events and when they're really doing presentations, it's where they could amplify the event, like and as you said, having a glass in the hand, it sort of opened up the clients and they could engage with them.
But sort of yeah, it's sort of like and it's interesting you tapped into this, but it's sort of like what do you call it? A neutralizer? So like you're the I'm the receptionist and you're the MD, and I've got a drinking you've got we've both got something the same, something like immediately I've sort of come up to your level. You've come down to my level, which are where you
want both ways. And I don't feel as I still might be intimidated, but I not as no one as intimidated or would If I'm just walking along the corridor and I saw you go past, I know it's an opportunity and you're you've got your rice breaker there, you're the MD and me the reception. I can see your eyes breaking. And by the way, you might be a pretty normal person, like you know, you're not a going to you know, not going to break my back or anything,
you know what I mean. Like you just you're there. I can see you with a drink. You look normal, you know what I Meanly, so I'm thinking about you. It's very interesting you tapped into that psychology. So your business where, Why did you and when did you decide that you were going to sell it? What was the circum circumstance around that.
I actually had no plan to selling it, And to be honest with you, we I had a plant to grow. I've got a domain name wine dot com do you and I'd taken out a plan to private equity around do you know? Really targeting the twenty nineteen there was one and a half million Chinese tourists coming to the market. A lot of them were going out to wineries, and then there was selling wine back into China and one of them came back and said, look, I'm not interested
in that, but I really like shorties. And then the very next day Woolworth's turned up and Rick hired a master of wine who had been a mentor of mine for many years. He was the master of wine within Endeavor, and he brought someone along and he said, you know, would you be interested in a joint venture? Can we supply you or you know, can we buy your business? And I was a bit shocked. I was like, wow, yeah,
we can explore that. And so that leaded into three or four conversations, and then you know, one day the MD came down and so he came down for a forty five minute talk at you know, seven thirty in the morning and left three hours later, and he really
liked it. And then that was Steve don Hu and then that Saturday Bradmandcci came into the office and again for half an hour and ended up spending a couple of hours there was on his hands and knees crawling around the warehouse looking at all these rare wines that we had, and we sort of hit it off, and we showed them all our customers, We showed them all the account plans that we had, and they worked out
that would crack the code. We'd worked out how to deliver Booze into the city effectively and efficiently with ten vans, and same day so.
You got logistics right. We got the logistics right.
We had you know, that's Tay fifteen hundred square meters right heart of the city. And we could not just do the corporates. We could do the fiftieth Birthdays were supplying all the boats, and you know, we had a business that at that stage we're going, okay, lex scale this. You know, the belief was that they could scale it to one hundred million dollars. So when they sort of proposed that, I got really excited.
So we as an investor, they said that as they were coming as an investor.
Yeah, they came in, took an eighteen percent shareholding eighteen eighty eight, and I retained twenty percent, and my Auntie was purchased out, and we're given unique negative control rights to run the business. So we couldn't get so you know, that stage, we couldn't get sucked into the business and you know, have the p and all destroyed by processes and the matrix, which was you know, at that stage,
super exciting. So we sort of did that on Christmas Eve of twenty nineteen, and then I presented to the whole Endeavor leadership group about two hundred people down in Luna Park on tenth of March, and then a week later we got destroyed by COVID. We had ten vans
out in the road. Eight of them came back full, and I remember one of them came back and I was like, what do you mean you can't deliver this to one Martin place, to mcquarie bank, And I was like, jumped in the van, went there and it was exodus.
Everyone was leaving the.
City with their chairs, their computers, and you know that moment, the plan and the partnership agreement we had was just you know, that was it?
Like I just lost by twenty percent and I didn't know you lost it.
I felt like, you know, the business plan that we had, like we just lost all customers. I didn't know when they're coming.
Already they had already brought him for eighty percent. I'd brought in for eighty.
Percent, but I didn't really know what that meant at that stage. We hadn't had a board meeting, do you know, so it was all pretty fluid.
When I say, can I ask a quick quick question when they brought in for ety percent, did they buy eighty percent off you? Or do they invest in the company for eighty percent.
They brought eighty percent of the shares, so you cashed out forty percent, yeah, efectfully. And at that stage I was a forty five percent shareholder, so I'd sold out twenty five percent and my aunty had sold.
Yeah yeah, yeah, but you and your idey a cash out and they kept you on the hook, so to speak, for twenty and to run the business effectively. And then did they were there any state stages on the payments, your installment that you did they do the deal by instormers. You just got one. But I know it was a great deal.
But what their deal was was what I could grow the business to the last year, So it was based on the times earnings on the ebit of I could grow for the last year. So then when everything sort of got hit pretty hard, they're like and then the next.
Day, so that was Friday.
On Saturday, I was there planning things out with Michelice, who was my non executive chairman that i'd brought in it had run the four biggest wine companies in Australia and was the wine Yoda of the industry and just a lovely human. And we had five scenarios and they're all pretty bad. We didn't know how we're going to handle this. And got a call from Brad Bandici and he said, you know, Dave, you're own business with Wilworth. Now you're fine, We'll get through this. Steve Donahue's got
you on next to call. So he called, you know, five minutes later, and I said, Steve, I think I'm going to need half a million dollars just to pay staff, and you know, because we've just set up the new company and it didn't have any money. And he's like, yeah, no problem, Todave. Well we've got this and there's there's plenty of things that you can run. And then you know, two weeks later we got a massive line of credit, like more money than I've ever seen in my life
to run this business. And over the next three or four months they're like, okay, what parts of this business can you improve? And we we we sort of came out with a couple of things and we ended up running. They want us to reinvent gifting, so online and in store. We were given the wedding an event partnership, so Dan Murphy supplies a lot of weddings, but it was a
complete mess. So do you know, people would buy a booze or they wouldn't wouldn't be there for collection, it wouldn't get delivered on time, a lot of it got returned, and then they didn't have a B to B business. So we got those three channels to run. Probably all of them were under all sat under Dan Murphy's right, but it sat under Shorties management. So they see the head of Dan Murphy's Alex at the time, was super supportive.
He goes, we want you to fix these things, go like her, rebuild the team teams and see what you can build these business units into. So then we use the skills from Shorties. So we went out and built relationships with all the Baer wedding venues. There are some wedding venues that have four or five weddings a week, you know, up woods of five hundred weddings a year, and we asked them what they needed, just like we had with Shorties customers, and they wanted to contact. They
didn't want to necessarily deal with us. They wanted up to give their customer our details and then for us to look after the customer, but then get the booze delivered to them. So we would have eleven or twelve phone calls with these clients and then we would finalize the beverage order. Then we'd get it into the local stores,
and then we organized delivery to their wedding venue. Because the endeavored delivery system couldn't do the big two thousand dollars ball quarders delivered on within a three hour window on a Saturday or a Friday or collection from Dan Murphy's. So that was the wedding business we built, and that turned out to be the most profitable business within Dann Murphy's e commerce.
So we built that during COVID.
We started during COVID, and we recruited a whole heap of people that have been working in wedding venues, people that understood the needs of customers, how much to sell someone that's having a wedding, all that, you know, how to do with the bridezillers, bridezillers would be planning six months out, the guys would be ordering the boos a week out, so we understood what their needs were and
you know, that worked really well. And then with B to B clients, we just focused on what we did with shorties, focused on the top thousand of them, ask them what they needed. While were they're coming to shorties, Why were they're coming to Dan Murphy's. And that stage, no one had ask the customer what they why they're doing or what their pressure points were. So we managed to grow them, make them more profitable, show them new
products to increase their basket size. And then gifting was the probably the biggest challenge and the most rewarding one. Was that there was just this issue where you know, one in five gifts never got to live it because it's quite hard to do gifting. So we built a reciprocate led gifting platform for Damn Murphy so you could give hundreds of gifts with just an email address and phone number. And this was during COVID, which was great because no one knew where anyone was living or working.
And then we created a range of product with the supplies. It was unique with multiple elements of value, and we moved really quickly and built an amazing catalog and took that to market and test and learned how we could build a really great gifting platform for Dan Murphy's.
Sounds like you're always looking for additional angles to improve your customer relationship. In other words, based on what the customer wants. Always.
Yeah, that's just native, it's just sort of what we're trying to do. That's how we're growing the business.
But always, always, always, and doing it not by you working out with the customers, but you are. It's not your decision, it's not your deduction, it's what they tell you.
Yeah, and it's just doing the basics properly. Yeah, and doing the basics brilliantly was our focus.
And did you did any So you had to still had your twenty percent retention.
Had the twenty percent share, and then those business units got put into my deal.
Yeah. So like we ended up saying you only have twenty percent of those as well.
Effectively for the in the in the in the event of the earn out.
Right, so then that twenty percent do they ultimately buy you out?
Yeah, they brought me out. So the deal was always to finish sort of in December twenty twenty.
Year one year later or two it was four years later, five year earn out.
It was a four year one and we extended it to five years.
Yep.
During COVIDEP so I got a good runway to actually fix those businesses.
But because of the various initues you took. You're actually able to get other let's call it assets into that to earn our calculation, which are those those other things that you've got out of Dan Murphy's in other places, plus plus the you know, the weddings and the gifting and all that stuff as well, which is something you come up.
With which is amazing, right, which was you know where they got they recut my deal halfway through it, yeah, and they incentivised me to keep going and and we worked like help.
Okay, I'm going to go to the break and come straight back with David dumb because I want to find out what he's doing. Now. That's the most important thing for the purpose of this podcast and the second half of this podcast. So I'm back here now with David short previously famously founder of Shorty's Liquor, but now not involved in our business. But now, David, tell me what it is you are now doing it so you know, and it's quite interesting, but what are you now doing? Tell the audience, Well.
I'm on the hunt for a couple of really good businesses.
So you have a fund, Yeah, I've got a fund. To explain that part first, Yeah, So I've got.
I've got money from my owner, and I've also got multiple people that will back me into a investment.
With investment, we'll invest with.
You, yeah, should we choose to find the right thing. And I'm looking for a wonderful business and like I'm actually looking at targeting. You know, there's a baby boomer avalanche of businesses coming out, so they'll be close.
So that his baby boom is moving out of the business, retiring.
Retiring, so that they're predicting NAB are predicting that close to six hundred thousand businesses will be looking for sale trans actions over the next ten.
Years exits, basic or exits. Yeah.
So it's the biggest wealth transfer of our generation, close to two true dollars worth of businesses.
So if I could just stop there for a second, David, So that's pretty much a rising tide. So that's you know, that's a big supply of assets. It's a rising like a massive demographic and probably structural change causing a big supply or what I call I often call a rising tide. Which is the best place to invest in rising tides because the's people who need exits, because there's a lot of people like in Australia with small small busines owners,
business owners. They're turn sixty five, seventy or whatever, and they're saying, I don't want to do this anymore, but I don't know there's no real buyer for it. I mean, or there is, but as you know they're going to pay me two enough times revenue or something, you know they're not going to give me enough or I've worked my whole life building up this brand, this little reputation,
et cetera. And they would like to and they don't have No some of the family doesn't want to do it because you know they're having less kids, has less kids or no kids, and or a lot of the staff these days don't stay there long enough to sort of take over these businesses anymore because people move around a lot more than staff move around a lot more
than they ever have done before today. As you get a job and you stay there for your whole life, and then the proprietor says, I'm going to retire George, mate, can you afford to buy this business? Ye? And George might buy it out of the revenue of the business and pay run the business basically, but run the business for the previous owner and pay the previous owner like installments out of the revenue of the business that the previous owner built, but that George now runs. Is that
the scenario. That's a scenario.
And you know, there's only thirty five percent of businesses that have got a clear strategy around how they're going to exit and how they're going to succession plan and a lot of people and people are working longer, they're healthier, so they're staying working longer. And what we're looking for is where we're looking for great businesses that we can scale.
So it might be a business that you know, the owner has been probably content on it for ten years, but it's got a great moator around it, it's got a really good team.
When you say, it's harder for as a barrier of entry, it's harder for others to get involved. It's got a competitive advantage.
So we're looking for something that's got a competitive advantage that we can really scale and grow. We could potentially acquire it.
Give an example of an industry that you might might look at.
Well, that's one of the things that like, maybe I will give you an example of an industry I'm not looking at and that's probably the art cohol industry, Like that's shrinking, it's declining.
There's less people really. Yeah, definitely, people don't drink as much.
People aren't drinking as much. People are definitely not drinking as much. This younger generation of people aren't drinking as much. There's they're downsizing how much they drink. They're not drinking on Mondays and Tuesdays, you know, Wednesdays, and you know,
so there's definitely a decline in our rules. Yeah, so I'm probably looking at the industries that are in growth, potentially healthcare, you know, something that I can grab that someone's got an exclusive product, or do you know has got a niche market that's got opportunities for real growth?
And are you looking for businesses that are sort of annuity based, like not like a doing charge, like for example, a plumber, like he will go and you ring up, he does a job, gives you a bill, you don't see him again, hopefully you don't see me again. Whereas let's call it a pesticide company. They sign up and like, I mean, I've done this and I wouldn't even know what it looks like. But he comes every three months.
I don't even know if he does anything, but but he comes over for three months, it's like a newity game. He just turns over. I get ability for three months. He rings my office. Mythe says yeah okay, and he turns up. We join up and he goes does it. And just because rolling it.
Reoccurring reoccurring revenue is really exciting. That's what we kind of have built it, Shorties, but definitely looking for something with reoccurring revenue.
You know, now you don't know, it's funny you should say that, David. I think you turned a transactional is into a recurring revenue a Shorties, because normally our references are we're going to get it's more a transaction, Shoul. We've got to function up. We better buy some booze. But what you did, and you know they might bring up Shorties or someone else, but we'll use you turn that into a relationship where it was just ongoing. You turn that transactional business it's pretty able to do into
a recurring what I call trail business. Like you know, you're earning money without having to think too much about it. You just you're just rolling through a process all the time, over and over again. You have to think about what they want and all that sort of stuff. I get that part, but in terms of the rhythm, it's like every week we turn up to some and so and we deliver twenty bottles of champagne and we late, never late.
Delivered in full on time. With a taxing voice and a lot of the systems we built it shorties were around, you know. We went to de Lute and said, how how would you like us to supply you? And they
wanted the financial controller to sign off on invoices. They want to consolidated invoices, they wanted, you know, we wanted to make it as easy as possible for them from the person who's what is it or the person that pays the bill, you know, and so the person that manages that and give them visibility about what they purchased.
Me well yeah, but also also visibility so it's completely transparent, you know, and you fit within their system.
We fit within their system. And when I first started, like it was roque, there were people doing all sorts of deals with these corporate clients and offering them backhanders. And I can imagine that there was probably twenty little bottle shops running around. There was wineries running around, So we built a system that was fully transparent.
Yeah, that's interesting, and just going forward, I can see you're either reticent to tell me which industries you like, or you're being cagey because you want to don't want anyone to compete with you, or you don't or is it too early?
It's too early, Like I'm actually happy to look at you one hundred, one hundred and fifty businesses and actually find that one find something that I'm going to get really excited about and go, do you know that's something that's.
Also an industry, David Like? So I mean in terms of which is thousands, there's millions of businesses here, really small businesses in particular. But how do you sort of dissect it and sort of say, well, I don't have two million hours, or if it's on average three hours per business, I don't have six million hours unless you have some secret.
Well think the biggest one of the key ones that we're looking at is it's got to be profitable. So we want something that's making one to one and a half million dollars a year. Ye, so private equity, it's too small for private equity, but something that we might
be able to scale. Something that's got real potential to scale, and as I said, something that we can really see an opportunity to apply to, you know, whether it's e commerce or new technology, or maybe there's aii that we can implement that could make the serviceability of the customers more efficient. The retail as no, definitely not retail. Nothing in hospitality, you know, not food and beverages.
But it's not services based. It's product based. Product based, be product based. Yeah, it's not like there's not and there are a few of them around, but there's lead dead VP mowing service for example, whether they and he's done brilliant a business service. This is more product based.
Yeah, more product based, or it could potentially be a service. Like there was a great business another private equity guy brought that was cleaning out council draints and it required a big truck and you know he brought it turning over making four million dollars a year and in three years to turn that around to twenty four million dollars a year. So it's like applying you know, the scale to that. Someone had a really good niche they had a great product. All councils need to clean their store
water drains once a year and twice in autumn. So do you know, so he nailed that part. So like something also that's supplying an industry that isn't going to get disrupted by AI as well, Like so supplying a council or supplying hospitals or those sort of things are really exciting. So yeah, I'm very open to what I'm looking for. And I don't have a particular industry, but what I do want to do is find a business in an industry and then focusing on that.
And is it about is is it also about for example, aggregation, like what is typically referred to as a roll up you know, have you thought about that? Like I go into a newstro, I'm going to roll up all the you know, all the all the wedding venue hire people, and what I'm going to do is they're all good to see if I and they're all good to see and they're all going to achieve marketing officer, what I do is a roll them all up into one and I'll have one CFO, one CEO. Like more of a cost game.
Yeah, and it's more of a long term game too, So like I'm not it's not here to buy and flip. It's something that we can hold for the next ten to fifteen years, you know, use that. Hopefully it's something that's got a great management team, or it will be something that's got a good management team that we can improve and add a new skill to and your dead right, add another business to it, add another product or service to that that can be that will help scale and drive that business.
So because I have quite a few businesses in my day, and one of the things one of the constraints that I've experienced in its culture shift, so maybe cultural integration. And there all been in the same industries that I've been in, and I've often been seduced into thinking I haven't done it, but into thinking I could roll up things in various industries that I'm involved in because I
can save a lot of costs. Maybe not necessarily increase the volume of business, but I can actually increase the price of the same volume because if I now control all the supplies, I can sort of play around with the price a bit. But usually it's a bit of a cost game for me. I'm thinking, well, if they're all we're all running the same cost structures, we only need one lot of cost structure, I can probably save
perhaps elute percent of the costs. But one of my constraint on not having done it, I have made acquisition but not having gone out full roll up is because when I have made acquisitions, I found the cultural integration was very difficult. And what I mean by that is like I bought a business in two thousand and sixteen for a fair bit of money. I knew the business, I know the business back to front, I'm in the game. But it came to CEO, came to c IFO, it
came with all the usual C suite, et cetera. And it was a big revenue, like a very large revenue business. I found the culture of their business relative to the culture of my business the acquirer was a lot different and the integration was very hard for me, and I found over time probably took me. Sounds ridiculous, but I'm obviously learning who took me about seven years to finally integrate it. And the only way I could do it was by moving b belond Because what was holding the
integration back cultural integration. I'm talking about, not business flow, which cultural integration, integration was individuals. People had a different view on they would even though they weren't the proprietor, their teake the view that they were running the business and they had a proprietorial interest in it. They weren't proprietors, but they still had a proprietial interest. You know, they
employed all these people, they knew all these clients. I've sort of come in and bought the whole business, but I didn't know any of their employees. I didn't know any of the clients. And I've thought about it. I thought, well, that's probably fair enough. Like if you're being in the business for twenty years, some of these guys twenty five years, you would feel a bit proprietorialer towards it if you encountered that.
Yet I certainly encountered it when we took over those channels that Dan Murphy's was running. Do you know, so we took it over, and.
How did you deal with something like that?
Well, it was really complicated because we're dealing with we had the authority from the managing director and the sea of the company, but then we had a whole heap of middle management that had fantastic jobs that would do what you know, work remotely, take the kids to school, and picked them up and have you know authority, and well we disrupted them.
Yeah, they don't like it. They didn't like it.
So what we found is, you know, there were certainly people that held us back, but at the end of the day, we just had to work harder to work on that integration to make it work.
And I think you're being modest in terms of making integration work. Sometimes you just have to move people on. Did you find that the only way to break them, not break them, but to have a bridge between the two different styles. Sometimes you just had we had to blow up one of the one of the boundaries.
Some people had to get off the bus.
Yeah. Yeah, and that's not that easy to do because it has a role on effect. I'll people hang, I don't been working for that guy, who's my whole life, or I've been working alongside they go with my whole life, he's my colleague. Who the fuck do you think you are?
Well, that's one of the challenges, right, that's what you've That's definitely what's going to happen if you're the CEO.
And so, you know, business growers. People want to grow the business. Not they're sell organically, but by acquisition, probably need to think about this. There is that it's not easy and in your due diligence, Now you didn't acquire these other arms that Dan Murphy's gave to you, but in the d D process you probably what would you
suggest people need to do. They need to go and interview the second tier of senior people, and what would you do if you better buy one of these businesses you're looking at.
When Brad Bandici came down to shorties and the first thing he said, what would be the three things that you would do afforded buy you? I was like, would go buy a closest competitor, which was the Vintage Blue at the time, would take more space because we had an amazing lease and employ some really good staff.
So the next day I did go out and.
Buy a closest competitor, Vintage Blue, who was like a retail maybe doing four or five million dollars revenue, but they are a roading our margin. They're going into corporate clients and they haven't put their price up on soft drinks for five years and selling them to close. We ended up closing them down and rolling that in and then that lickle license was used for Dan Murphy's in the city. But yeah, we did it and the best staff we kept.
Right and the best staff, the best stuff, and just closed the business down. So basically took that brand away and sort of buried the brand somewhere, and then you took over the clients that brand was dealing with.
Yeah, with the staff, with the staff, with a better product, with a better service range, with a better offering.
Yeah.
And then we closed a really inefficient store in Sydney, and then we use their story in Melbourne to scale Melbourne. So we kept their Melbourne warehouse, used that facility of scale, and then moved into a bigger warehouse.
So if you're looking at a business now, and if someone position of this and they're thinking, well, I'm interested doing the same sort of thing as David was doing. I might be going to buy a business down the road. What are the sort of things that apart from all the usual stuff you've got to do digilius on their leases and all that other stuff and their financials. But at a cultural level, what would you suggest and what would you do? What would you say to people?
Well, I think it's really important that the founder is often key in the business, that the business can relate that can continue to run without the founder, that the staff are to believe in what the product and what they're in their product and also their strategy moving forward, and you know that the business has a competitive mode that you can actually get in there and scale and
actually work and potentially improve that culture. I think one of our strengths of Shorties is we had an amazing culture. So we had a lot of we had team members that have been there for ten years and you know, really brought into that. So bring some of that energy and into that team and improve it.
So if someone's listening to this show, and we did get a lot of business owners just listening to this show and they were thinking about, well, I'm actually at that one of those people. I'm sixty eight. I want to get ready to retire. I love my business, so I wanted to go on the right hands. I'm profitable making one other nod profit year. I'm pretty much qualified. How do they get in contact with David Short, Well, they can jump on short in dot com dot you
there's shortening dot com dot ye. Yeah, We've got a website there that sort of outlines all that criteria. So the business really you can get sort of like not an application, but like it's sort of like an application was an application.
There's contact details in contact with us. We built a we built a website in two days the other day on replet so AI is one of the my passions at the moment that we integrated and we built a business valuation calculator that's just more of a tool and a customer acquisition tool to try and get some of
these businesses in. But that just sort of outlines what criteria we're looking for, you know, it turns about the ebit that we're looking for, some of the industries that we're really keen on, and what businesses do you know, the key points of the businesses that we really love.
It's interesting. Excuse me, that's interesting. You mentioned the people getting a bit of an idea about valuations and people often say to me, how do you work out what something's worth? Well, it's sort of sort of pretty simple, not that we'll sort of pretty simple. If you know what you're let's call it you the branding profit cash profit, and if you know what youve it is that's earnings before before interest and tax, and you know what the
multiplier is for your industry. If you're in an industry that has a multiplier, they need to just work it out and multiply one by the other. That's not the end of it. That's just like an indicative thing. But how do you if you're on your calculator, where do you get because most people would know where to find how to find out what their multiplier is for their industry. How do you do?
So we found that on perplexity and we also got NAB's data and we've got a.
Couple of Perplexity AI as.
A Perplexity AI which is an amazing search engine, and we pumped some data in that we got from the banks and from some of the BIGG accounting firms around what the multiple is. Then we looked at the last three years multiple and see if that business is actually increasing or if it's declining. So it might have been an e commerce business that was booming in which lower modeble doesn't have a will the found if the founder leaves, will that create an issue for the business or affect
the earnings moving forward? Is there a clear strategy or is there a clear opportunity for growth would be probably our key one. Do you know, is there another business that we could potentially acquire and have this as the platform going into the industry plug them in. As you said scale, do you have one CFO one marketing team doing that or is there other products that we could
add to it. So you know, potentially, this is a business that someone's been running and you know they're now playing golf too three days a week, or they're sailing and they're like.
Well, they're not well, they're not well, or they got.
Divorced, got divorced, or their their wife might not be well or their husband's not well, and you know, their life's changing, their kids have moved to Barcelona or doing something different, and they do care about their business. They care about their customers, they can care about their supply chain,
and they care about their staff. And while I say, you know, of course we care about the staff, and you know, if they're doing a good DROB, we want to bring them along because that's part of the business that we're buying. But we look at that and then that will is what you know, It comes up with evaluation because you'll look at the different valuations for the businesses and there's normally a variant you know, between two, between three and five times earnings or if it's e
commerce it might be higher. So that comes up with a rough valuation, which is just a guide because obviously you've got to there and go do due diligence and actually really make sure there is a mote and something that protects the business moving forward.
And have you got many on board, Like in terms of contestants, we've looked at a few.
We've looked at if you haven't found anything super interesting, we've sort of backing a founder and a startup that's doing a really which is a really interesting business. So PTE English exams, so are there's overt English exams, So if you want to get citizenship or for students that need.
To pass soun't.
Stand for Permanent residence PTE, it's that that's just what it's called. And globally they do one point two million exams a year and they charge five hundred dollars US to do an exam and there's multiple people doing five or six or seven of.
These exaw A excuse me, So is this an strain thing?
Yeah, for I think three hundred thousand people in Australia do it, but then people do it in the UK. People do it in Canada and around the world.
And the objective is to.
Get an English to pass an English exam.
The Isles test. Yeah, that type of thing. You've got to be able to speak at read it and write it, I think.
And yeah, there's four components and comprehension competition, but there's no great dummy test. So one of my developer at Shorties has gone off and he was Brazilian and him and his wife all the people, all the Brazilian people were going, how do we pass this exam? And they wrote all these great cheat notes and then with the benefit of AI, you can now build a solution that might have cost you know, two or three million dollars. So we're building a mock test so you can actually subscribe.
So it's like a practice test. It's like a practice test before you sit for the Oles test, which is the one of the ones that the government he uses in terms of making sure that your English adequacy is at a level whereby you can apply for pr Yep, right, I get it. That's interesting. But this is a global thing.
It's a global thing, and half the reason why we're doing it's pretty low cost. He's got a huge passion for it. And we're learning how to use this new technology.
Yeah it's online. So yeah, and that.
Shorty is we spent millions of dollars on websites, which you know now you don't need to do. Yeah, so you know, like shorting dot com. You we built on PERPLEXI in a couple of days. And it's what you know you would have got charged ten fifteen thousand dollars for in the.
Pain we'll take you three months, and.
It would have taken you three months. And to change the color of a button would cost five hundred dollars and take two days. So we're learning how to do that. And that's what you know, which is really fun.
Maybe you should go into that business website building using AI. I just say this will use a I will if you're paying ten, we'll get to do it for five. And because you about one thousand bucks, you do yourself.
Well, I'll tell you what they're as a disruption, there's huge disruption. There's you know, I see massive disruption happening across multiple industries, whether it's design, graphic graph design, web design, and then it goes into most white collar.
Jobs that I mean, I don't really understand the website stuff. But I do know that AI can do a lot of this stuff. I haven't used perplexity I generally speaking, but I know people who do use perplexity I AI. I know people use it perplexity to ask and ask perplexity questions about their life. Well, like this is what I'm confronted with at the moment.
Yeah, Well, the biggest change I'm seeing is Google used to be your landlord to.
Talk to anymore, I go straight to a copilot or something like that.
So, but how people are going to build websites in the future is going to be completely different. Like Google released something last week where you could get this you know, you've got a skirt and will show you what it looks like on you you take photos of amazing. And then there was another one that you know I saw today, like you can put a widget on your website on your browser that blocks all the ads, so the here goes all Google's ads and all the rest of it.
And then it could compare prissing across every website in the world that was on gen Spark. So these things are going to be what your website is going to have to work with all this new technology, and you know, We'll be talking about how you used to spend Google money on Google AdWords, and you know you're actually going to have to improve your site so it actually comes up relevant. It is true, true deception, and I've never seen anything like it in my career.
Everyone keeps talking about it, by the way, and I agree with you. And when we keep talking about it, because we keep hearing about it, we say, oh, yeah, right whatever, But like, is actual real? This is real? This is this is like mental.
It's mental. And I'm lucky enough to be you know, YPO forum with seven other online retailers, and it's what we talk about. We catch up every month for half a day and half of what we're talking about is this and how it's going to affect their global online businesses and how it's going to affect, you know, how they can improve their business, what they can now do. It's truly incredible.
Yeah, I know, well, I remember, if I go back back in the nineties, when the Internet started kicking off hard, people sued to say, any you read a report from Price Waterhouse, one of those sorts of organizations say the internet is going to be is that going to be the greatest revolution of commerce? That we've ever seen in a history. You know, there's going to be a ten
bag of anything we've ever seen before. Then then came out the Internet of Things, and they to say again IBM and price water, but both both wrote reports on the Internet of things, and they said the Internet of things that is like using sensors to connect not not people, but using sensors to connect outcomes from things that they data that they find and coming up with conclusions like we're no human intervention, intervention that will be a ten
bag of what the Internet did. And now they're saying AI will be a ten bager of everything. And I didn't I never believe what they said about an internet. I never believe what they said about the Internet things, but each one of them actually achieve that. And now I believe what they say about AI. I mean, we use AI here for a lot of stuff, like crazy, how it can just replicate me. Yeah, it's scary, Yeah, it's really scary.
And you know, I see it's moving just so quickly, even in the last two months, because.
It's learning all the time. It's getting better and better and better.
It's learning all the time, and the only way to keep up with it is YouTube, you know. So there's a great podcast that I watch religiously which is HubSpot Against the Grain that will teach you how to eliminate your marketing team in thirty minutes, how to do all your creative But you do your creative now, and you can make videos. You can make all this amazing content that used to take days to feel loutch money, yeah
and lot, it's cheap effectively. The best way I heard it explained is we've just found a new continent and there's one point two billion people on it and they've all got honors, degrees and PhDs in every field you can think of, and they have been to work for twenty five cents now.
Yeah, so do you know twenty four hours a day.
Twenty four hours a day or like yeah, they'll get subbed in out, you know, and you can change your specialty. But that's what's effectively been happened. That's what that's what's happened, right, And I don't think anyone's really I think a lot of people haven't grapsed that.
Yeah, because we're still coming to terms with how to use AI because it's sort of overwhelming a little bit. It's quite freey and it's overwhelming. You know, it's interesting sitting here listening to you today, And I actually asked you right at the very beginning. It seems to me that you're always prepared, no mind to think about what's new in terms of learning about and what's relevant. What's new is really good, not a good word, what's relevant,
what's relevant to consumers, and what's relevant to society. And that's probably one of the ways you made in your particular society, that's slither of society that you were dealing with Corporate Australia. You knew that, like as a religion. Now it seems to you're applying the same concept to a broader a broader church. And I think, would you say your strength.
Yeah, I think it is. And liquor was so competitive, and when I look at the underhood of these other businesses, it's like, what, I've been doing this for so long, there's other opportunities.
I was apprenticeship.
That was the apprenticeship, right, and you know, it was a hard apprenticeship and it taught me how to do it and we ended up winning. But yeah, I'm excited about I'm excited about applying that energy to another industry that can really disrupt it. And you know we did do that at Shortias and some of that technology. Would you know, we're the first Microsoft E RP cloud in Australia,
the second one in the world. You know, someone built it for us for pretty much free, one of them and then they end up getting brought out by KPMG and you know, we've we've tested and learned and we're prepared to fail. I think that's probably the thing that drove everyone in Endeavor, Matt, like, we're prepared to file. We had this line of credit. My earn out was on the last year, so like we had a couple of year wrong ways to really experiment and try things.
And in big corporations, people don't. People don't do that. They're focused on their KPIs, they're focused on there in devastate the stip so they don't want to get out of flying becaus and they get their bonuses.
And you know.
Where we were one hundred percent prepared to fire.
That's organizations like that buy organizations like you. Yeah, that's why Generatory brought my business because they could never create my business, they couldn't ever run my business, but they wanted me to stay there but for the GF so it would still be there. But they wanted me to stay there because they knew that they didn't have that flex. Yep. Internally general, you just didn't have the flex because you know,
you're reporting upwards always. It's a global business. You know, they've got to have they've got to hit sholder expectations. They go by a business like mine, and even though they've paid a lot of money for it, but they're going by business like mine, and there's lots of upside in it, you know, and they need people who like me or who are working still working there to Actually they gave me that flex. They just said, Mark, you
go for it. We can't do this a g just you go for it, and that's what we'll give it. That's an amazing opportunity.
Yeah, and you know I wouldn't I wouldn't trade that for anything. That was amazing.
Great learning space.
Awesome learning space. And you know we went in there thinking, oh, these guys want to how to do websites on how to do deliveries and go do yourself. And see Oven said that, he goes, you know, you need to go out there and break things and make it work. And I think Steve Donne, who had a meeting with him every every month, like he missed one of them over the course of five.
Years, he probably loved it.
He loved it, and you know he would want to know what's happening and.
See what you're building in the sand pit. He's all that in the same pit. You're the young boys, got your own sandpit. And Mecano said, you can build lego or whatever you can build if you want. It's like a yes, It's sort of like it's like for him would be a dream you can live through you vicariously. Well, David, I'm really glad we caught up and I wish you the very best for short Nick. I'm dying to know what you ended your first investment will be. Maybe we
can find out when you get there. And good luck to you mate. Great thanks mark H.