The latest edition of BRW magazine arrived on my desk last week (I haven’t paid for a subscription in years, so I assume higher circulation helps their advertising revenue). The ‘How the Rich 200 invest’ column (on page 10) features retail industry billionaire Solomon Lew. It talks about Lew’s bricks-and-mortar retailing nous, his prominent campaign for GST to be charged on small online transactions (particularly foreign ones) and the more general topic of online retailing:
‘The failure of Australia’s retail moguls to invest meaningfully in cutting-edge online ventures demonstrates the vast divide between the online and high street retail worlds.’
‘Lew is a bricks and mortar man. Few understand the traditional retail sector better and his expertise has served him well. Despite his focus on traditional walk-in stores, Lew has developed a partial hedge against changing preferences by controlling several different brands, including Just Jeans, Portmans and Smiggle.’
‘Big changes to his investment strategy seem unlikely but never discount a wounded billionaire. Online retailers beware.’
Not worried silly about Solly
If I were an online retailer (and, in a sense, perhaps I am), Solomon Lew wouldn’t be on my worry list. Consider the history of disruptive new business trends. How many of them have been spearheaded by the old guard which is hurt by them?
It isn’t ageing billionaires with a lot to lose by pushing the new trend who typically make an impact. It’s people like Nick Swinmurn, the youthful founder of internet shoe retailer Zappos which was sold to online retail behemoth Amazon in November 2009 for a reported US$1.2bn.
You can see in this interview with Swinmurn the kind of youthful ‘fire in the belly’ that billionaires like Solomon Lew and Gerry Harvey must once have had. But it’s only natural that the passing of years has a dampening effect on such enthusiasm and leads to yesterday’s fiery challenger brand becoming today’s fusty old stick-in-the-mud, ripe for new
competition.
Gates knew best
Respected author Ken Auletta recalls an interview he conducted with Bill Gates back in 1998; ‘when I asked him what he worried about, he didn’t say the obvious, which is “My competitors, Netscape, or Oracle or Apple.” He said “I worry about someone in a garage inventing something that I haven’t thought of.”’
Gates was right, of course. In that very year, there were two guys in a garage starting up a little company which came to be known as Google. Gates – a former firebrand – had become the entrenched ‘old guard’ and seemed to know it.
There’s power in the combination of being possessed of a great idea and having nothing to lose in pursuing it. That power cannot be sustained once a person accumulates enough wealth to worry about the downside as much as the up.
That’s why, when it comes to online retailing, it’s Lew’s and Harvey’s gooses that are cooked, not the other way around, as some magazine authors might have you believe.