Stephen Tindall

Speech by NDU Retail Secretary Maxine Gay to the Council of Trade Unions' 'Unions and Productivity' conference, 18 March 2009

Stephen Tindall is facing one of the most difficult decisions of his life. Should he surrender control of his retailing empire? Only one thing is certain - regardless of his decision, he has plenty of other challenges to keep him busy, as KARYN SCHERER discovers

T he view from the 20th floor of Takapuna's Spencer on Byron hotel is something to behold, even on a bad day.

From the penthouse that serves as his temporary office, Stephen Tindall looks down on most of Auckland, taking in vast swathes of the Waitemata, Rangitoto, and the city's northern and eastern suburbs.

Far below is the seemingly tiny speck that is the headquarters of the retailing empire he founded 24 years ago and where, until a couple of years ago, he spent most of his working days.

But soon, he will no longer be able to spot the sprawling mirror-glass building at the end of the rather-too-cutely-named Warehouse Way. He and his loyal PA for the past six-and-a-half years will shortly move to an attractive but unassuming two-storey building on Takapuna's main strip that they will share with his beloved foundation.

The move could yet prove to be a significant milestone, if market watchers are correct that Tindall might finally be ready to be persuaded that now is the time to get a bargain, and sell his stake in New Zealand's 11th-largest listed company.

Depending on who you believe, either Woolworths Australia and Foodstuffs New Zealand have thwarted his bid to take the Red and Blue Sheds private; or his supermarket rivals have taken the bait as he attempts an exit strategy.

In any case, the Warehouse's share price has rocketed amid speculation over what will happen next, boosting his 51 per cent share of the Warehouse Ltd to more than $1 billion.

It is assumed by some that Tindall long ago lost interest in the company he founded with just $40,000, and which has now grown into the third-largest retailer in New Zealand (behind the two supermarket groups, which now have a combined 20 per cent of the Warehouse). But that is patently untrue.

``How can you start something from nothing and get it to where it is today and not get emotionally attached?'' he retorts.

But he also agrees that he has, indeed, learned to distance himself from the business since British retailer Ian Morrice took over as chief executive in 2004.

When the new Warehouse Extra opened in Whangarei 10 days ago, Tindall was on a three-day fishing trip to Great Barrier Island.

``That might tell a bit of a story, but what it's telling is that I was still there the first day after the fishing, and I was enormously proud to walk through that store. I spent about four hours walking through the store in the way I probably always would have done, talking to a lot of old-time staff and so on.

``My heart is still in the business, but whether that means I'm going to keep it or not ...'' He doesn't finish the sentence.

In any case, whether or not he cashes in his chips at a handsome price, the great-grandson of department store founder George Court has plenty else to keep him occupied. While most people are aware he has been ploughing his share of the profits from the Warehouse into good causes and new ventures, they probably don't realise just how extensive his investments are.

So far, he calculates, he has put his fortune into more than 70 fledgling businesses, almost all of which are high-risk, high-tech start-ups he is convinced hold the key to New Zealand's future prosperity.

He hopes that by setting an example, others will realise property is not the only path to riches.

``Those guys that cashed up in Trade Me are looking to invest in these areas as well, so I think that's a great example of when you do cash up, making sure you've got a pipeline to put your money into - especially things that are going to be another Trade Me - and not everybody seeing that real estate is the only safe haven for money in New Zealand.''

His only proviso for investment is that the entrepreneur is using innovation or creativity that is able to be expanded on a global scale - and that he personally likes the people involved.

While he acknowledges the heroes of New Zealand's economy are still the farmers, he is convinced by the argument that farming will eventually be restricted by land use, and therefore as a country we need to concentrate on shipping ``tiny little things at high prices'' instead of ``big bulky things at low prices''.

His investments so far range from some already well-known companies like crystal maker Rakon, to small fry like Photonz, which is hoping to cash in on worldwide interest in the health benefits of Omega3, found in fish oils and micro- algae.

His strategy is based on the well- known maxim among angel investors that out of every 10 investments, about half will fail, three will be okay, one will be better than okay, and one will probably make millions - or even billions.

While unwilling to predict which ones look the most promising so far, he hopes that five of the 70 will eventually become billion-dollar companies, and another two will come ``pretty close''.

His reluctance to name names is perhaps understandable, given that six years ago, he was convinced that never-go- flat-battery inventor Peter Witehira had hit the jackpot with a device called U-Clic that allowed consumers to order products advertised on radio, television or in print.

Tindall was so excited by the device he showed it to Bill Gates, but not long after, as many predicted, his relationship with Witehira fell apart. As part of a legal settlement, Tindall and other investors bought out Witehira's 3D imaging technology, and handed him back U-Clic. He is reluctant to talk further about it, but admits it was a learning experience.

Fortunately, New Zealand is not exactly short of good ideas.

``We get plenty per week. And you end up having to be quite choosy for that reason. There are a lot of ideas, but often the idea is not enough. You've got to have the management capability, you've got to have the capacity to be able to do what you want to do, and most particularly - and this is a point that's really worth emphasising - you've got to have the marketing and sales ability, because a lot of these things could really blossom if we had really good sales and marketing people.''

Improving our sales and marketing skills is one of the biggest challenges facing New Zealand, he believes.

He is also continuing to dabble in the politically sensitive area of healthcare, through the MercyAscot private hospital group.

The group is going ``incredibly well'', he says, and he hints that it will soon announce ``a whole new area of healthcare

RETAILING, VENTURE CAPITAL

Worth: $412 million

THE WAREHOUSE founder and philanthropist Stephen Tindall is now principally involved in investing but it was his retailing roots that brought him glory last year. He was inducted into the Business Hall of Fame and also received a visionary leader award at the Deloitte/Management Magazine Top 200 awards.

A great-grandson of department store founder George Court, Tindall remains a director on The Warehouse board. Like any visionary leader he showed he was still willing to take it on the chin for his company at the November AGM.

The Warehouse's Australian operations had just been offloaded at a loss after flopping unmercifully over the past five years. He gave a personal apology for the board underestimating the competitiveness of the Australian market, but said taking risks was justified.

The Warehouse is now expanding into hypermarkets and with Foodstuffs' recent buy-in, the share price has strengthened. Tindall reaffirmed his commitment as majority shareholder.

The Warehouse Extra with grocery, pharmacy and liquor offerings opened at the Sylvia Park complex in Auckland in June. The Te Rapa, Hamilton, store trialling new services was the company's strongest performer.

Tindall's investment portfolio includes Neuren Pharmaceuticals, LCD designer Pure Depth, which recently listed in the US, and audio technology company Phitek, which manufactures noise-cancelling earphones.

Tindall has also shown faith in Woosh Wireless, joining with the Todd family and two other international investors to provide a $29 million cash injection in January after it posted a loss of nearly $22 million.

2005: $395 million