AT 24 Simon Kalinowski (pictured) took on an embattled business he knew nothing about. Eight years later Mandalay Technologies is back in the black. Providing data capture services to government institutions, waste management firms and large corporates, he tells Brisbane Business News how turnarounds sound a lot more exciting in books than in reality.
What position was Mandalay in when you arrived?
It was run by someone with a belief in the opportunity of the idea and the business had some success, but it never really achieved the dreams he had hoped for. The losses were significant, in the millions of dollars. When I was interested in the business, I knew nothing. I don’t have an IT background and I knew nothing about the space, but I went from complete ignorance to ownership within two weeks.
I read all the business books about turnarounds and it all reads very simply and exciting in books, but the reality of it is very different. I can remember the first day as a 24-year-old that I sat down in front of nine staff of the (average) age of about 45 who had been in the business many years, looking at me with a degree of cynicism and I was feeling very underprepared for the job.
Can you explain the takeover arrangement?
The reality was that the value of the business from a goodwill perspective was zero, but there was an opportunity there, so the agreement was that for the equity we took control and I would then fund the business on an ongoing basis. I had an amount that I agreed to fund it to and the original intention was that if it didn’t work we would just close the doors. Through a variety of reasons we’ve funded it to about 10 times that, but now we’re starting to believe it was worthwhile.
What’s Mandalay’s niche?
If you look at all the companies the world needs for us to live the way we do, the essential services like the production of roads and the capturing and handling of waste, there’s all these businesses that transact by weight and associated characteristics, so they use a weighbridge technology to capture those details. All those businesses, governments and large corporates, they have all their revenue and operations managed by these niche, low-end simple applications that capture the movement and generate the revenue for their businesses.
How did you change the business and what have you learned?
Early on we didn’t make enough changes fast enough so it’s very easy to be seduced by the half-truths that go on without actually breaking through those to find the real story. And it’s also very easy to try and hold on to things that might be winners, rather than dropping them and focusing on things that will be winners but take more time, so you need courage to make the hard decisions and go the way you need to.
We as a business have probably been through three evolutions of our business model; we’ve been through three evolutions of our staff and we’ve upsized and downsized a couple of times before, finding the right mix of business model and people to have success. In real terms there’s certainly some wealth in the business itself but in actual cash terms we don’t see a lot of it because it just continually gets reinvested in our people and improving our business.
The biggest change is we’ve gone from effectively a zero annuity base to a situation where we have $2 million worth of software annuity on a regular basis. As a result of having that stability our distribution has more than doubled in the last 12 months.
What else do you have on?
We have a TV and video production company called Regent Road, which is based around a talented individual who wants to product quality content. We’ve produced a couple of TV concepts and we will commercialise those in the next year or so and we also produce commercial video for companies. I have a residential mortgage company where we have specialist brokers that work with you to engineer your financial needs and that’s called Blackk Finance Group. I’m also the chair of a charity called Hello Sunday Morning, which is around changing Australia’s dysfunctional drinking culture and behaviour and I’m really passionate about that. I also sit on the foundation for Southern Cross University where I work with raising philanthropy.
Looking back on all of this, what does the term ‘entrepreneurship’ mean to you?
I really struggle with the term entrepreneur because I feel very much that it suggests an inability to follow through on something and see it through to a really strong commercial outcome. Entrepreneurs I think are seen as risk takers, as high-fliers and then they crash, and then the natural consequence of those terms is they then have down periods where they lose it all and go again.
For us as a business and for Mandalay, we’re very keen to be a sustainable part of our customer’s experience, so for an entrepreneur it’s a very personally challenging journey to take, and it’s not one that’s taken lightly; from a human impact perspective you have responsibility for people’s lives. They trust you with your decisions.
What entrepreneurs do have is the courage to step up and swing, but we’re only one part of a whole team of people and all those other people want to be part of something.
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