Transcription
Naomi Simpson, welcome to Straight Talk. It's about time you come on my show. It's crazy. We've known each other for about a million years. We've spoken lots of things together.
I don't think we need to reference the million years. We're getting wiser, wiser. We've known each other for wiser years or whatever the words are. But welcome and thanks for coming into the studio today.
Good to be here.
It's good timing, too, like to get someone like you in here to talk about some of the stuff we saw on the budget. I'll just park that for a moment, though. But just if we could just introduce you first. So, you know, my first recollection of you is when you did something quite disruptive when you launched Red Balloon.
Which was uh an e-commerce business, but like I don't know if it was described as e-commerce in those days, but um how many years back now we're talking about?
That's 25 years ago.
25 years ago. It's around the same time I did Wizard. Um, around the same time.
Yeah.
And uh, exact, exactly the time I did Wizard actually. I, I, I was 26 years ago I started that. Um, what was disruptive? I mean, we could look at it now and say it's not disruptive, but what was disruptive at the time, Naomi?
Well, um, believe it or not, we were at the very beginning of the internet way back then in 2001. And you know, there was no such things as social media, smartphones, digital cameras, nothing. And um, I think sometimes people wouldn't mind going back to that time, but it was a very simple concept. The fact is that there's a lot of small businesses who find it very expensive to find customers, and that's not changed. You know, it was expensive to go in the Yellow Pages. Well, it's even more expensive now to run performance marketing campaigns and try and build a brand. So, I've been a professional marketer my whole career. I worked in big brands like um Apple, IBM, um Anset, that was an airline and um, so I flipped the model. So instead of um working for each of these small businesses, could I give a brand to a whole industry and take a clip of the ticket rather than just them being a marketing agency? And so, yeah, I flipped the model and the internet enabled that to come to life. Um, which wouldn't have been possible. Uh, and I didn't know, you know, with first marketplace and you know, I had no idea that I was such a trailblazer. I was just putting one foot in front of the other.
Yeah, it might have made a difference if you did know, actually. You might have thought, "Wow, what am I doing here?" Because I would just remind listeners that we had in the '98, '99, what was known as a tech boom. And um, your launch of your product was sort of just off the back of the tech boom. Tech boom, of course, became a tech crash, little as I always do. Um, and you're right, there was no, there was internet, but there was no, uh, the devices didn't, our phones didn't connect to the internet those days. It was all computer, uh, laptops and stuff like that. Apple laptops or I think they were Apple laptops, probably.
They were actually these iMac jelly-shaped things, really. Yeah, those big things. Clunky. And you had a desktop.
They were colorful though.
Yeah, they were colorful. And you couldn't move them. So, you know, they were.
Desktop, you're right.
And uh, so do you remember the moment though, you had this thought? I mean, like, because it doesn't seem disruptive today, but it was disruptive at the time, um, to build a marketplace to just correct me if I'm wrong now, to link up suppliers of or merchants of experiences in your, in the Red Balloon case, with consumers, um, where consumers could choose from a whole lot of experiences instead of just going to one experience provider?
They're all listed. This. So you effectively built a marketplace. Is that right?
And also, um, we gave those, um, experiences authority. So, it, so where did the idea came from? I was a freelance marketer. I'd left my corporate career because I had small children and I wanted some more flexibility in my life. And back in the day, we didn't have any of the things that we now have. And um, then I was listening to my clients who were mainly small businesses, and I realized that what they really wanted, they didn't want marketing. What they wanted was customers.
Yeah.
And so, I, um, one of those clients came to me, and the tech wreck was going on as you'd said, and he was in a tech business. I was doing their marketing for them, and um, he said, "Look, I think they're going to close me down." And he says, "But there's this business concept in the UK called Red Letter Days, and it's a catalog and call center business." And in Australia, we can never do catalog and call centers 'cause the, um, country's too big and the population's too small. And he said, "I wonder if we could do it online." But before we could start this business, um, he was offered to do an management buyout for a dollar of the tech business he was running in Australia. So he went off and did that, and I was kind of left with this. But I remember the moment that I named it Red Balloon. So Red Letter Days was not interested in us in Australia, the antipodes so far away. Um, so it needed to have its a life of its own. And I was literally walking around in our backyard, and I remembered a movie from when I was a child called The Red Balloon.
Oh, wow.
Yeah. And it's about a little boy who lives in Paris, and his best friend's a Red Balloon.
Wow.
It's such a beautiful story. It won an Oscar award. Yeah. So, I thought a red balloon is a symbol of joy and happiness, and um, and I just wanted people to see any red balloon and be reminded of the first red balloon they were given or that they gave, that experience, the emotional connection to being with people and connected. And ironically, all of these years later, when we're so overwhelmed with, um, social channels and the, the messages that are coming at us, there is a real move offline again, you know. So, we come online as Pinterest says, you come online to work out what you're going to do offline.
Yeah, that, that's by the way, that from in my world, that's about exact, that's exactly right. And actually, I'm really glad you explained the, uh, the branding or the name Red Balloon because once you got the name, it's pretty easy to play around with the branding and visual sense.
But the, um, sort of emotion that sits behind it. Um, I never really thought it through because I, you know, I'm not someone who used it, but doesn't matter, just because of.
There's plenty of opportunity.
That's the way I live my life. But, but, but, but, but nonetheless, and what the emotion was, that little bit, that little window into the emotion was very, very good. Why did you decide to make it about experiences though? What's the connection with experiences and what does experiences mean? Like, it doesn't mean just going on a holiday or traveling up and staying up in a, a tiny home in Byron Bay or something. But what were the experiences you decided to put in there?
Even back in the day, when I started the business, we all had too much stuff. And really, what anybody wants is time with their family and friends, the people who are important to them. And often, people want to do something that they've always aspired to do. And it was in listening to customer stories that I understood the impact that we were having on people. So, this man wrote that for his father's 84th birthday, he gave him a flight on the DC3, and he drove him to Bankstown Airport, and he said, "My father was excited like a little boy going to a birthday party." He said, "And when we flew together, watching his joy was amazing." He said, "When I, um, when we were driving home, his father shared with him that as a young man, he'd heard the first DC3 flight on the wireless, and he'd always, always wanted to be on one." He said, "My father is a very quiet man. I'll always remember today as one of the days he spoke." And then you understand why you do it, why I keep doing it. Because that moment of connection, and it's what we need more than anything, is to connect with the people that we love, to create conversations, shared experiences is what gives us. And not all of the experiences are, you know, fun, and they're sometimes exhilarating or exciting or challenging, but that's what makes us human. On the flip side is that because we bring people together, that's what we do. So, we curate, we go out, and there's 4 and a half thousand small businesses that depend on us for customers. And I was speaking to one, ironically, in December 2019, and he said, "Oh, NS, I didn't know we were going to get old together." I said, "Speak for yourself. I'm just getting wiser. That's my line. I stick with wisdom." And he said, "Do you realize that that first year, I had one hot air balloon and 900 passengers?"
Over the year?
In the whole year, had one hot air balloon and 900 passengers. And he said, "In the 20 years since we've been together, I now have 19 balloons and 23,000 passengers." And he said, "And for every single one of them, when they come to the Hunter Valley, they buy accommodation, they go to wineries, they eat at the local restaurants. It's at least $1,000 to our community. We've literally changed the economic impact in our local region. So when we went into COVID, we were able to talk to government about the impact of of driving economic outcomes for regional and rural Australia through small businesses because people don't travel for the sake of travel. They travel because there's something there that they're going to do and experience. So when we can put the experience front and center, we can drive economic outcomes for small businesses throughout Australia.
We spend on average around 26 years of our lives asleep. So if you're going to spend that much time doing something, you may as well get good at it. That's what got me interested in Whoop. Whoop is a wearable device that helps you understand what's actually happening with your body, especially when it comes to sleep, recovery, stress, and overall health. What I like about Whoop is that it takes all that information and it turns it into simple, personalized insights you can actually use. You start to notice how things like travel, late nights, or even eating too late affect the quality of your sleep and how you feel the next day. So, it's not just for athletes. It's for anyone who wants to feel and perform better. To learn more, head to join.woop.com/metored and get one month off your annual Whoop membership.
So, do, do you feel as though then during that period and continuing on today, obviously, because you guys still own it, but, um, do you feel as though that, um, you've had a really big impact on small businesses, just generally, when they can give you that sort of feedback? And, and as a result of that, do you feel, did you ever feel as though to yourself that you should have paid forward your, your luck in your life? I mean, why did you do this? I mean, apart from you obviously made a few bucks out of it, but why did you do this? Was it a pay forward? I want to pay forward my experiences with other people, or did you positively go and say, "I really want to connect the small business community and I want that small business community, for example, in the Hunter Valley, to build ecosystems where not only is the, the balloon business doing the, the hot air balloon business doing well, but people buy accommodation, they go to the pub, they go and visit a winery, they might buy some booze, whatever. They spend petrol money on petrol. Might have to get the car repaired. Hopefully not." But, you know, did you think, what was the process? Did you think it's about a bigger story, or do you just initially think, "No, it's just about putting matching parties together on my marketplace?"
Any startup, it's always just one foot in front of the other. We don't overthink it. I have a passion for small business. Always have. My father had a small business. My sister has a small business. Small business is in our blood. Um, ironically, when I worked for Apple, I was the marketing manager for small business. And when I worked at Anset, I was the marketing manager for business. So, I've always had this kind of B2B approach to my marketing. So, I didn't overthink it. But it was only in listening to customer stories on all sides that you realize the impact you're having. And it is that impact that keeps us going. Purpose comes from knowing you've made the world a better place. But no, I didn't overthink it. Who would have thought that we're now delivering an experience every second, every 16 seconds? That is a customer to a small business that they didn't have to pay one of those monsters. And I shouldn't say Google or Facebook, 'cause of course we all have to do that. But we're the marketing experts. They can be the world's best hot air balloonist, jet boater, macaron maker, whatever the experience is. They can be the world's best at that 'cause they can trust us to deliver them customers. And when we went into COVID, that was our job, just to make sure that they were still there on the other side. It's their livelihoods. COVID is like a gift to some, to some extent, to businesses like yours, because that sense of being a particular, if you're from Victoria, been able to reconnect with your community or reconnect with your family or your friends, somewhere doing something.
Um, what was it, what was the initial effect of COVID on you guys?
Oh, well, everything dropped off a cliff. But as, and this is way before we had JobKeeper and JobSeeker and all the rest of it. Um, but we knew our job is to keep these businesses with customers. And so we went out to our community and we said, "Look, could you invent an experience that was in a box? Could you invent an experience that was delivered virtually?" Um, and we published 250 new experiences in about 3 weeks, really. Because we had 700,000 customers sitting at home with a Red Balloon voucher, bored as, wanting to do something. So it was our job to keep doing that. And so we absolutely focused, "What is our job here? We are shifting the way people experience life." And to do that, you stay really focused on the endgame.
We shift the way our, um, experience suppliers experience life. We, we shift the way consumers or our B2B customers, our corporate customers who use Red Balloon for reward and recognition. We just, that's our job.
And, and when you're, when you put out an APB to all your suppliers and or customers about, um, during COVID period, for example, and you got such a great response in terms of what people could put in a box, what is Naomi Simpson doing at that point? Is she standing, sitting back and letting all her.
Oh my gosh, no.
What is Naomi doing?
We were in a world of panic. Like, you know, I've worked for 20 years in this business, and then all of a sudden, go. So I'd been through the GFC, and people buy experiences in tough times because it's a little bit of lipstick, it makes them feel good. So, it's, you know, not as expensive as taking somebody to the Gold Coast, let's have a have a day out, you know. So we do find that, you know, we found that even in the GFC that we were, we were growing, but this was different 'cause nobody, nobody knew what was going to happen. And so David, who's my business partner, who's the group CEO of the overall Big Red Group, which includes Red Balloon, Adrenaline, Experience Oz, um, Everything New Zealand, um, all of the brands that we represent. He said, "Nomes, need you." And so I went back into the business and I headed up our B2B approach. So all of our corporate went, rolled up my sleeves, got right stuck in, and that gave me an opportunity to speak to our corporate customers and find out what was going on with them.
We were sending care packages out, that type of thing.
Yeah.
Like, is that what you're talking about?
Well, I, I was just getting on the phone and finding out what was going on. And what I did find was, the bigger end of town understood that if, if small business disappears, they don't have any customers. Like, it's an ecosystem, and small business is the backbone of this country. And so I found that many of our corporate clients, they got the link between, you buy a Red Balloon voucher, that's a customer for a small business. And so that, in fact, quite a tragic story there was, um, so Toby, who's one of my colleagues, um, it was coming up to the first year. And of course, Victoria had a hell of a time. And he made a corporate sale for one of these experiences in a box, which was an international chocolate tasting. Sounds pretty good to me. Anyway, uh, and he made this $40,000 order. And I said, "Oh, with all the leg. Yeah, 40 grand worth of international chocolate tastings." And, um, and I said, "Oh, you better call and make sure the logistics and all of that sort of thing." Anyway, he called this woman. She's based in Victoria, in Melbourne. And he picked up the phone, goes, "Hi, Toby from Red Balloon. Just got this order. Just want to check on the logistics." And she burst into tears. And she said, "I've just called the administrator." He goes, "Well, can you uncall them because I really want to deliver this." It literally saved her business.
Wow. That's what businesses need is customers.
And they need someone to connect them.
Yeah. Because it's too expensive to find them on their own.
Yeah. Like the complexity of the channels and the mix and the data. It's hard.
So we do, we're their marketing company.
You're the draw point.
Yeah.
You're sort of like Woolworths online, so to speak.
Oh, no. No. No. Well, in terms of, in terms of products, like, but you're, you're obviously offering services and products, but.
You do the marketing and people come to your shelves to see what it is.
It doesn't cost them anything. We just take a clip of the ticket. We're an agency.
So, that is variable cost.
Yeah. So, if they don't sell anything, it doesn't cost them anything. But their job is to make sure the experience is excellent. And because we have such buying power, we get additional stuff for our customers, you know, value adds and exclusives and everything on the way through. So, there's a benefit from buying for Red Balloon. You're going to pay the same as if you went direct, but there is a benefit. And that's because we send them so much business. We say, "You look after the experience and we'll deliver you customers." And it's also why the review process is really important to us because we're not there on the day. So we read them, we look at them, and if if somebody's getting, you know, not good reviews, they're going to get unpublished pretty quickly.
We just taken off.
Yeah, of course.
Yeah.
And then we work with them and say, "What's going on?" It's actually a funny story. Don't know if I should tell you this. This isn't in the public domain, but there was an experience supplier who al an amazing, very unique experience that also provided lunch, and repeatedly we were getting feedback, "Amazing experience. Lunch disgusting. Wouldn't feed it to my dogs, you know, blah, blah, blah." And we're like, "Oh, right. What's going on here?" They get unpublished, and the team goes out and talks to them and says, "Now, what's going on?" They said, "Oh, so there's a problem with the food." And, and he goes, "I know there's a problem with the food." He goes, "It's my brother-in-law. So, you're telling me I have to fire him?" And we go, "Yes, you have to fire him." He goes, "Great." So, you know, so actually having that loop, you know, helped him make a a decision in his own business. He knew it was bad.
So, so you, you, you actually go up there and then help the vendor.
Absolutely.
Or the merchant, let's call it the merchant.
Because we know what's going on. Like, we've got all the trend data. We like, we've literally invented experiences where we know something is selling really well in one state. Well, can you open it, um, in another state? Can you open it in another location? Yeah, absolutely. We are absolutely driving growth and we are driving employment growth.
How many, how many, uh, small businesses would you have on? I mean, I was going to ask you how many have you had since you started this off in the 25 years ago, but.
I wouldn't know.
Now, how many would you have there at any one time?
Right now, there's probably across all of our platforms, at least 4 and a half thousand small businesses that we.
Across Australia and New Zealand.
Australia and New Zealand.
Yeah. And, um, and when you think about it, when I think about it, um, you would be a very good proxy to find out how small businesses are going.
I know.
At any one time.
Absolutely. Absolutely. We are a conduit directly to small businesses. In fact, that's what I write about all the time and I blog about is because we are on such a journey of change right now. I've never seen more change in my whole life. I'm just back from a marketing AI summit in, um, San Francisco, and marketing has never changed more than it has in the last 18 months.
Could you explain that?
So, um, the speed of change and our ability to execute. And it's like, it's cyclical. So, we used to come up with an idea, we'd execute a campaign maybe over a particular period, but, um, that would take 3 or 4 weeks to execute. So, what happened back in the day, we were all generalists when it came to marketing. So, we would run full campaigns. We'd be brand managers and we'd run all the campaigns and we'd have different sorts of elements. Then what happened in business is they all became specialists in our organization, and they're all specialists. So, you've got a, um, a performance marketing, you've got a search marketing, you've got your CRM, you've got your merchandising, you've got. So, if you want to run an end-to-end campaign, you got to get all of those ducks in a line, and it's slow. So, the whole point about the AI revolution when it comes to marketing is that the data is feeding the execution, and you've gone from having these generalists to re-gaining the confidence over full campaign execution from top to bottom. That's one of the changes going on in marketing.
And how will that affect, say, your business now? I mean, how will you employ that into your business? What you learned in the US? Well, for instance, let's say there's three inbound tourists who are interested in skydiving. If I've got enough.
So, three inquiries.
No, there's just three people out there in the wilderness.
Out there. You haven't got to.
That are interested in this particular experience.
That you don't know. You don't know.
I don't know them.
Yeah.
But if I have access to that data of their intention, then I can serve them something about skydiving in Australia. But I don't want to serve a 100,000 people something about skydiving in Australia because it's a very specific experience. So, that's also, so it's like this marketing economist. It's this cycle, and it's the data is informing, um, informing their execution of any given campaign.
So, do you get, you have to somehow, you're going to scrape something to find out who those three people are?
Yes.
Yeah. Using AI.
I love that word, "scrape." No, it's intention data. You know, we got to, that's, but that's, that is what is now possible.
And also to have it visual and produce that, um, customized conversation. So, your suppliers and or dash vendors, you can sort of, your role is to sell that information to them, get more of those suppliers onto your website so you can actually broaden out the experience for those three customers too.
Well, it depends which website we're talking about. Because Red Balloon, we really look at who's the best in the market, the exclusive nature of what we do for them because we want to make sure they're, they're very successful.
So, you're going to curate that?
Yeah, we absolutely. That's why people come to us.
Okay. Not anybody's on just you.
We got an 11-point checklist on the quality approval, and we've got our, um, staff picks, and we've got our, um, yeah, absolutely.
Reviews, etc.
All of that. That's why they come to us 'cause we know what we're doing. Been doing it for a long time.
Yeah. Yeah. So, you, you're going to, Red Balloon curates this for its c, for its consumer customer at the end of the day.
Yeah. So, it, what is AI going to do in terms of efficiency apart from that example you just gave me? What is, what are they saying in the United States, that which is that's the center of all this, that's where all the new innovation is? What are they saying in terms of efficiency and productivity because we have this big productivity problem here in Australia, and the US is way ahead of us in terms of productivity growth when I look at the, um, numbers that get published relative to our productivity numbers? What are they saying over there relative to, uh, what AI is going to do for their productivity environments?
So, when think about AI. First of all, it's not a tech application. It is a fundamental shift in, um, in how we behave. And so, at the moment, one of the things I'm writing about a lot is the humanness of AI. So, intelligence implies that there's some level of cognition. There's not. So, so we need to add that cognition, and that is the human element. So, at the moment, this is kind of the general, and I literally just published a blog this morning on it. This is kind of how it goes. People are like, "Oh, I can do this so much faster. I can write one whole, uh, article and I can get this done." They're calling that "schlop." So, schlop is that you're just producing volumes of content without any real human or, um, uniqueness to it. Slop. So, I can do a lot of things faster. Whatever it is, I can do my expense return finally without, you know, scraping through every single spreadsheet. But in business, you might just be speeding up bad processes. You have always done those spreadsheets, so you're just doing them faster. And then you put an agent over the top of it, and now it's automated a bad process. So, really, as business leaders, we have to look at what is our overall strategy, what did we say we needed to get done, and then apply an AI thinking program to that. And the best way to do that is to understand what people love about their jobs and what they loathe about their jobs. And it's a really interesting, um, case study in the US, um, that I've been talking about, which is a bank. And they know that one of their pillars was growth, one of their pillars was customer, another one, people. But how we get most growth from our existing customers? Who has the most contact with our customers? It's our contact centers. Contact center won't touch AI. They'll do anything not to touch it because they're fearful they're going to lose their jobs. Fair enough. So, they start this program and they're going, "Well, what do you hate? What do you love?" And if we could get rid of the hate, what do you hate? Oh, I hate filling in a ticket. Hate having to fill up the form. Hate having to do this. What do you love? I love chatting to customers online. So, when they looked at that and then developed, um, the, uh, platform to support, what is it that humans do beautifully? Judgment, design, creativity. That's what we do. We do emotional connection. We do relationships. A computer doesn't do that. Technology doesn't do that. So, it enables those people to do what they're absolutely best at. Since they've launched that, they haven't had one team member leave. So, the people pillar also got an outcome. And they've also increased their sales because they're real people talking to real people.
They're spending more time doing what they love.
They're doing what they love, but they're also.
And that's efficient.
That's, that is efficient.
So, um, so, so the execution, the everybody's just at the moment flapping around and so excited, but it will settle down. And I truly believe we're actually going to create more jobs and more opportunity. Um, every wave is. But we're in an absolute time of flux right now as everybody works out what does this mean? What does this mean for my business model? Why am I still relevant? How am I going to find customers? So, we're in a time of flux, and it'll take a while to come out of it.
And, and it's going to take a while to sort of allay the fears that people think that their job's going to be gone.
Mhm.
Um, and.
And, and to just reskill people. So, you know, I was talking about the marketing example before, and, you know, now we need to bring people on this journey. They're still smart people who understand consumer, um, experience, and it's just a matter of of having them realize that they can now take 100% accountability for a full campaign.
So, where, where are your blogs, Naomi? So, people might want to watch that and read, listen to those. Are they, they listen or read or listen, read or watch?
Well, I've got naomiesimpson.com.
No P, of course, in Simpson.
Um, which is where all my blogs are, but they can also just follow me on LinkedIn. Um, because I always announce when I've got a new blog there. My newsletters on LinkedIn, and I've got a podcast.
Have you now?
Yeah.
And what's it called?
Handpicked.
Handpicked.
And that's where I talk about these particular issues that I'm just trying to solve for, and then I share it with everybody.
Awesome.
Yeah. Yeah. It's funny how people like you and I, like, we get this sense that, uh.
Isn't it great? We find stuff out and we want to share it with everybody.
Have an opportunity to share what we find out because most people don't get the opportunity to so much stuff.
And so I had stopped writing, and then about May last year, so, you know, a good year ago, um, somebody said, "Nomes, if you stop writing, who are we going to trust?" Apart from, but, but no, they need trusted voices. They need somebody who, who's done the deep thinking to look at the implications. Um, and so, so that's why I started writing again, started speaking again, started, um, uh, doing my podcast again, 'cause I kind of gone into this non-executive career of being a board director, whereas actually, I think people need trusted voices. They need us. So, it's a Naomi, N A O M I, Simpson, without a P, dot com. Or just.com.
Just.com.
And, uh, and the other, the podcast is called again.
Handpicked.
Handpicked. And where's that on Spotify, everywhere, all the usual things?
Naomi Simpson, yeah.
Can I just, uh, I can't waste an opportunity to talk to you about the budget, um, if you don't mind. Um, and we're not, neither one of us are being political, but let's just reflect on the federal budget that's just come out. I'm not sure when this show will be published, but you know, it'll be still relevant even if it's published in a week from today. Um, what do you think about the federal budget? Let's talk about, uh, for a start, uh, discretionary trust just structures, like how many people.
Let me roll it back a bit first. Okay. I'm really clear about my opinion of what's going on in the budget, and I'm happy to share that with you if you can hear that. I am all set to rock and roll on this. Look, I studied economics, so I get some understanding of how the levers work. What I see in this budget is they're trying to do too much, too quickly. And pulling all the levers at once means we won't know what's working, and it will put the economy into a state of fear.
We do not want our businesses in a state of fear when they're going through so much to change, right? They're already going, "Oh my gosh, what does this mean for my business?" And now on the other side, am I going to make any money? So, too much, too quickly. So, so having a, you know, CGT, negative gearing, testamentary trust, all of those sorts of things, it's too much. Just why the hurry? They've been given a runway, and yet they're trying to do it all in one budget. I think that is very unwise for the Australian people. That is not a political statement.
So, maybe what you're saying though, if I could just be clear on that, you're saying that too much, too fast, but more importantly, the net effect on the small business community, at least the ones that you're talking to, um, is that they're completely confused and now flammix.
It's completely overwhelmed, completely overwhelmed, overwhelmed, completely. Like, are you telling me I've worked my whole life and blah, blah, blah? Anyway, let's just roll it back. And they said, "This is for housing. We need to get young people into housing." If you dig deep into that budget, actually, there's 35,000 less houses going to be built this year than last year. Why is this so? So, if you're not fixing the structural issues of what is wrong with the construction industry? So, in Victoria, it costs you more to build an apartment than you can sell it for. And that is because it costs 18% more this year than last year to build one.
Wow.
Why is this so? Have you looked at the regulations? Like, just getting an approval means your holding costs are probably five years. So, they've got to look at the structural things. The other thing is that, um, Airbnb has had a huge impact on entry-level properties. So, people in my generation, we bought a little flat. That was our first thing. And then as soon as we either partnered with somebody or we got married or we had a baby, we moved to the next one and we sold that one, put the equity from that in the new one. Now, they keep it and they put it on Airbnb, and so it's taken out of our community. It's not rented to our community, nor is it, um, providing, you know, a, a first home for somebody else. So, there's some really structural things that I think if they don't look at the structural stuff, all it's going to do is be an impost on people. Um, look, I could get really quite wound up about this. Let me just say a few other things as.
But let's get wound up, 'cause I want to get wound up. I am wound up.
But it's not political. I'm just thinking about the structural stuff. So, first of, another thing on on the CGT, for instance, to tax investment over consumption is to be a disincentive for investment. So, every, um, western country with CGT always has the tax rate at a less rate because they've already paid the consumption tax, the income tax on the way in. So, you're double taxing, which is an absolute disincentive for people to invest, which means they may as well consume. We have four offspring. One of them thinks he's just going to spend everything. And I'm like, "Are you never going to own a home?" And he goes, "Don't see why." So, so he's just consuming, which of course is driving inflation because there's no incentive. The other thing is many young people, because they can't get into the home market, are investing in Bitcoin or stock market or they've got their small investment portfolios.
Small business.
Yeah. Which is now a disincentive for them to do that. So, I again, I just don't think doing all of these things at the same time is wise. You know, if we think about how the Japanese think or the Chinese think, they have a 100-year strategy. If we want to move to a different sort of tax system, don't do it all at once. Just give us time to catch up with you.
What do you think about the narrative that we're doing all these things because we want to fix this intergenerational inequity? In other words, Naomi's got all the assets, and her kids, probably not your kids, but kids between 20 and 30 are not going to have any of the assets. Therefore, there is an intergenerational inequity. You've got too much. They're not enough.
Yeah, but Mark, I came from nothing.
Yeah, but what do you think about that narrative?
Well, but the reason why I have what I have now is 'cause I worked really hard for a long time. I invested in myself, in my education, and back in the day when I was at university, thank you Gough Whitlam, I got a free education, and I never would have gone to university without that. So, I believe in investing in education because that's what drives growth in an economy. And so, education is going through unbelievable change. So, just keeping putting imposts on universities and tertiary institutions also is not the right thing to do. So, the reason why I could get ahead was I had aspiration that has been taken away. I had an incentive to do so. So, yes, if you invest, and the other thing is the sweat equity. I didn't pay myself for the first 10 years. In fact, I'm not sure I still pay myself. You know, it like, if I had have got a job, I probably would have been better off. And so, you know, you don't, they, they don't pick that up anywhere. That was that was an input to the growth of of the businesses. I'm think I'm ranting now, Mark.
No, you're not. Because because I think you're a perfect example of what we won't get.
No.
For the future, and we won't have Red Balloon.
No. Look, so.
Type businesses.
No. Because I, I was on a university board, the University of Melbourne Business and Economics Faculty, for 10 years. And the reason why I was on it was because 70% of undergraduates wanted to own their own business, and they see me as a role model. Well, if she can do it, how do I get that done? She could tell us that road to get that done. And so now it's like, you know what, it's pretty risky starting your own business. And you know what else this has shown us is they can just change the rules anytime they like. So, you know what, I might just go and get myself a job. Or, and so where does innovation come from? Where does the investment come? You want us to build factories and manufacturing? Why? How could we? What? You know, that so, so they're asking us to onshore in this deglobalization key infrastructure, and we're going, "But how?" Like, and the other thing is that Australia doesn't operate in isolation, and people have a choice. And we are going to get a brain drain. You want to start a business? Maybe I'll go and find another jurisdiction.
I go to New Zealand.
Yeah. Apparently.
No capital gains tax.
Not a bad place.
Or Singapore.
I'll go Singapore. Much lower rate. We'll go to the US, 15%.
Yeah.
Like, uh, and which, by the way, everybody's doing well. But could I just drag you a little bit into the politics? I mean, just a little bit, just a little bit. Okay. And, uh, and you can push back if you want, but.
Do you think when young kids put up a meme showing Albanese and they do it in a sort of semi-respectful, funny way of, um, them having to share the proceeds of the sale of the business with, um, the government. And they put, you know, put Albanese's photo up there, but it's a caricature of him, or it's not a real photo, like it's a, they play around with them. And the response that the Prime Minister says is, "Look, I just want to thank very much for picking a good photograph of me, you know, young people, and that's your business." Um, do you think they, what they think, "Oh, you just dismissed my, uh, my objection?"
But it's patronizing.
Yeah. Patronizing me. Yeah.
Yeah. Because they're giving him real valid feedback on how this occurs.
But in a, they're fairly respectful. They're not sort of doing the finger to him. They're actually playing, being playful.
Yeah.
But at the same time, there's there's a real problem there. There really is a problem.
And, and, and also, I just am fearful any government who actually doesn't understand how commerce works, just how business works. I don't know. You know, I, I came from nothing, like literally nothing. And, um, I, I would be fearful if people didn't think that it was worth having a crack anymore. That's what it was to be Australian. Give it a crack. You know, we invented the Hills Hoist and Google Maps.
Wi-Fi.
Yeah. We invented them all. We're a country of innovation. We had to be a country of innovation because we're so far from anywhere. And now they're saying, "Oh, don't bother." That's how it occurs to us. And, you know, when we look at economies that have done well in attracting innovation, Israel, um, Ireland, uh, so many of the countries that have just, all they've done is, they haven't, the government hasn't invested in those businesses, but all they've done is give them tax breaks. So, but they're paying tax in payroll tax, they're employing people, there's plenty of other tax they're still paying. So, I just, we, we're operating in this myopic view that we're operating in isolation, and we're not. And so, people will have a choice. And I do think that what allowed me to get ahead has been taken away from my kids' generation.
If I go back 25 years or 26 years and said to you, in today's environment, if you were, you know, you, your much younger self, but you knew, you know, you're going to get the tax the hell out of it. Do you reckon you would have, might have, might you have said, "Look, I'm not going to do this?"
I don't know. But, uh, one of my.
Because I think that's what they're saying. No, I think they're saying, "Yeah, but you, you, you'll cop it, sweet. You, the name, the name is of the world, the mar of the world. Do it."
They'll do it anyway, 'cause they're always going to do it.
But I don't think so. I don't know whether it would in Denmark in the '80s. It's a very long time ago.
And their tax rate was 70%. Um, you know, in their top income tax rate, and, and whatever. And I didn't understand the whole of their tax system, but I did know that was a disincentive to working hard. And, uh, I also know that the, you know, the luxury car tax was like 200% or something. And I remember thinking, "He wouldn't want to drive a luxury car here." And, and, and so I do think it's a disincentive. And I think that, um, given the world isn't so much change anyway, putting yourself out on a limb, I, I, I just, I, I think people will make choices.
Do you think the government's brain dead or or.
I just don't think they have commercial experience. Come and sit in our office for a couple of days. See how hard it is to make a sale. See what we fight against every day, which is the faceless algorithm. That's what we fight every day. We cannot even see our foe. And understand the fear in which it is to be a business owner. People look to us for safety and security. And it is very hard. And because of the work we've done for such a long time, we have created incredible employment, not just in our own business, but through our, our ecosystem.
And they all pay payroll tax.
They all pay.
They collect the income tax. They pay the super stuff.
And guess what? They pay GST and collect it and pay consumption tax. We don't want tax. We want to encourage people to invest in our nation. Invest in growth to create more jobs that right now we're in a state of flux.
I hope Jim Charmer's or the camera picked up for Jim Charas those piercing blue eyes as you were saying that because you're very convincing. But I'm serious, Jim. You have to have a look at this. No, but that that's the point. They're not consulting with people like you or me or anybody. Look, sit and watch what it is like to find a customer, keep a customer, serve a customer, have them come back.
You're still doing it like me.
We're still doing it.
But but but what do you feel? Cuz I I get quite annoyed then when I see Paul Keing come up and say the people like you and me who are saying these things. Well, we're the typical rich older people who have um I come in with his words, but but you know, we're basically being and and gorging ourselves on the uh the luxury of all these various capital gains tax discounts, etc. Like you, I come from nothing and I and I've battled every minute of every day and I'm still doing it in my businesses. I mean, I've got thousands of people work for me and I feel responsible for every one of them. Every one of them.
There's also no set and forget ever in business. No, you wake up one day, you thought you were going to know what your day was going to look like. Didn't look like that. That's not what it's like. And something can come from left field anywhere.
I I I really believe that if um people could work in a small business. I've one of my first jobs was in a dry cleaner. It was Dennis Dry Cleaner in Campwell Victoria. And they uh it was a 50-year-old business. And you know if you want to understand uh like I got such a lesson in life about just cleaning people's clothes you know and I think that that fundamental of just seeing how the dollar transfers through an enterprise and how little there is left. So I just sit in our shoes for a minute. I mean really sit in our shoes.
Yeah. We don't we don't actually have a meeting with us actually come out and that that's the problem. The problem is the politicians who are formulating all these sort of policies which they probably think are really important ideologically but they they're making decisions based on ideology uh which doesn't have any any contact or any relevance to actually the reality. Reality is important part. Well, look, let me let me say they they do it, I believe, with the the best interest at heart, but I don't think that they're fully informed. And back to my first point, they're just doing too much too quickly. What about change changing it by a few percent? Instead of being so dramatic about it, maybe that's got something to do with the fact that um they don't want to go to election and do anything else down the track or they're going to get asked about these things. So maybe they're thinking there's enough time between here and the date of the next election that it might these things might get forgotten about and that we and it could be a miscalculation but that we will forget about it and I don't think it's going to that old mate me either.
I I got one final question just it's slightly lighter slightly lighter but you know equally um inspirational and motivational for people who are listening if you look back at your career what do you think and it's probably hard to do what is one of the greatest milestones that you have ever encountered.
Um so there are things in life that just keep delivering the more time goes on the more you appreciate them 75 years of penfold graange once tasted never forgotten. Let's keep going. Red balloon early days, the f the um the millionth customer. Oh wow. Just, you know, now we serve millions of customers a year. But when we got to that million milestone and people had heard of Red Balloon more than they hadn't, that that was amazing. Like really amazing just that that first million. Yeah.
But that would have been extremely satisfying. It took 10 years.
10 years.
And now we do that in like not not months but yeah now the velocity is so wonderful. Um and building that but that was just a milestone of my gosh I think we're going to make it. And I guess that's one of the things we never really have. If you start your own show you remember your first customer. You remember when there was none, no customers and at any point somebody could take the whole thing away and we are always in that fear.
Jerry Harvey told me exactly the same thing one day. He said to me that what he fears most is something what what's going to happen that he doesn't even know what's going to happen. It could just take everything away.
Yeah. And uh you know someone as successful as he's been. And by the way, I think the same way cuz when you've come from nothing, you always think something's going to happen. Someone's going to come and take it all away.
Yeah. Nomi Simpson, thanks uh you know, you're in the you're in the experiences business, but importantly, thanks for sharing your personal experience with our audience. It's been really good, really great to catch up with you again.
Great to see you. Thanks for having me, Mark.