Tony Falkenstein is an Auckland based entrepreneur, philanthropist and Chief Executive at Just Water International Limited, a business he founded in 1989 and listed on the NZX in 2005. Other business interests include Bartercard NZ, Buro Seating and Boyd Visuals. In 2003 he instigated the establishment of the Onehunga High School Business School and in 2010 Tony was appointed as an Officer of the New Zealand Order of Merit (ONZM) for his services to business.
Richard Liew dishes up 10 questions for Tony, hot off the back of his recent award for New Thinking at the 2012 World Class New Zealand Awards.
RL: You started Just Water in 1989 – how did you first come up with the idea?
TF: I actually started Red Eagle Corporation Ltd, trading as Red Eagle Rent-a-Fax in October 1987, one week after the 1987 sharemarket crash. Two years later I was looking for an office product that I could rent, and thus started Just Water. We bought 6 water coolers and advertised them in a “horror” press ad, “Do your staff drink Gunk? Your water is contaminated etc…” They all were rented out within days, so we realised that we were onto something. Everywhere else in the world office water was delivered in 15 litre bottles – we couldn’t afford to buy a bottling plant and delivery trucks, so our business model was to rent a water cooler, a 15 litre bottle, a filter and a piece of hose, so that the renter could produce his own filtered water.
RL: Many entrepreneurs are told that they need to have a plan to either exit via a public listing or an acquisition, before they even start their businesses. Do you think this is good advice and did you have these goals in mind when you started Just Water?
TF: I think that is good in theory, but most entrepreneurs are just thinking about their new business, not how they exit it. I had been a CEO of a public company, so my intention when starting Red Eagle was to float the company within five years…it took 15 years in reality!
RL: Through your company Red Eagle Corporation you’ve helped build a wide range of businesses over the years – how do you know when you’re on to a good idea?
TF: Some have been good, and some bad, but generally I decide how much I am able, or prepared, to lose on a venture. For example when I went into the fax rental business, the figure was $20,000; in water coolers it was $100,000. Normally you know when you’re onto a really good one very quickly. I knew I was onto a good one in terms of water coolers within a week, because there was such a positive response from customers.
RL: Financial pressure and stress is part and parcel of the entrepreneurial journey – what advice can you offer to young business builders on how to deal with these pressures?
TF: Put some balance in your life. Make sure you eat reasonably healthily, and exercise. I believe in my subconscious working for me, so walking for two hours without your partner, dog or iPod will result in sorting your mind out, and giving you some great ideas. If there is a problem, face it immediately – don’t delay.
RL: Most people will accept that persistence is critical for any entrepreneur – but how do you know the difference between persistence and stubbornness?
TF: Motivators often say things like “Never, ever give up…”, but that is stubborn, and often stupidity. Persistence is focusing on the end game, but always be evaluating your opportunity cost – if the time to get to market lengthens too much, decide whether you would be better off doing something else.
RL: Learning from our mistakes is essential if we are to grow as entrepreneurs. What’s one of the biggest mistakes you’ve made as an entrepreneur and what lessons did you take away from it?
TF: I have made so many big mistakes, but it’s where you are in your entrepreneurial journey, that determines which mistake is biggest. So my biggest is not my most costliest. My biggest was my launch of a brand of watches called Zee Watch, up against Swatch. We sold four times as many Zee Watches as Swatch pre-Christmas, but the plasticiser in the strap had gone brittle and they snapped when the kid put them on their wrist on Christmas Day. My learning – don’t screw down your supplier, especially when there is margin in it – take the most reputable supplier.
RL: The average New Zealand family is going through tough times at the moment with wages barely keeping up with the cost of living – what role do you believe entrepreneurship plays in raising the standard of living for all NZ’ers in the years ahead?
TF: All depressions have been turned around by entrepreneurs – there will be new ones coming along in the next few years who will be the success stories of the future. New Zealanders need to think positively, think creatively and go after their dream.
RL: New Zealand has a high number of new business startups every year but also one of the highest business failure rates in the OECD. Why do you think this is and what can be done to help us grow bigger, internationally successful businesses in the future?
TF: New Zealand has a big opportunity – having ‘business’ in the National Curriculum as an achievement standard is more than most countries have. Most families are families of employees, or possibly small trade businesses. Thus most students don’t know what business is, and certainly don’t realise they could be a successful entrepreneur on a global scale. This is a bit like having to pick the All Blacks out of Invercargill, because nobody else in the country knows how to play rugby. If we put more into business education at secondary and tertiary levels, we could rise above other countries in terms of business nous.
RL: You’re well known for your advocacy for entrepreneurship and business skills being taught in our schools, having set up the Onehunga High Business School, and also sitting on the Young Enterprise Trust Supporters Council. What do you say to those who believe big business is the cause of many of today’s social, environmental and economic problems?
TF: Well I do I think currently the banking and finance sector have tarnished the reputation of big business, but as for big business being the cause of today’s social, environmental and economic problems, that is a myth. For example, without a company like Fonterra, NZ would be in deep trouble. If we want low unemployment, we need companies of all sizes, especially new entrepreneurial companies to survive and prosper and get big. Unfortunately we cannot satisfy everybody, so some of the decisions made will affect the environment, but generally this is monitored by Government.
RL: You’ve already achieved a lot in terms of business success and helping New Zealand and New Zealanders get ahead. What’s your big goal for the next 10 years?
TF: I would like to see if we can be one of the first countries in the world to reduce obesity, and Type 2 diabetes. This is not just a health issue, but an economic one – just Type 2 Diabetes is going to cost the country $2 billion a year by 2016. I am up against the Coca-Cola’s and McDonalds’ of the world in fighting this cause. In terms of business education, I would like to see more young people succeed in business, and am determining how I can do that in a better way..