Tue 1 Jul 2014
THE BRW Rich 200 out this morning names the wealthiest people in the country — a mix of mining, property and retail magnates. But what’s it really like being part of such an elite club?
News.com.au asked debut rich lister and Kogan founder Ruslan Kogan — valued at $320 million — for his thoughts on Australia’s tech scene. Here’s what he had to say:
One thing about the Rich List list most people don’t realise, is that the valuations don’t represent the money someone actually has in the bank. In many cases it’s a hypothetical valuation for what a person might be worth. My bank account does not look anything like what BRW publishes. In fact, I have never had a salary from Kogan and the profits are reinvested back into the business to enable us to hire more people and keep building the vision we have for retail in Australia. Basically, my balls are on the line every day of the year.
Most people who look at the list think the numbers represent how much someone can buy. I don’t look at it that way. For me it represents what they have achieved. Most businesspeople who make the list have had a huge influence through the products or services that they laboured over for years. They have enhanced lives and created hundreds of thousands of jobs. It’s this contribution to the world that the number next to every person’s name represents to me.
As we move away from an economy dependant on resources, it’s not surprising many of the new entrants have come from a technology background. The internet has shattered the barriers to entry of nearly every single industry.
Historically, people on the list have grown their wealth through industries like property and construction. They relied on having money to make even more money. They needed capital to start with, relationships with the banks, ability to leverage loans and other things that simply aren’t available to the average person. Essentially, they needed a headstart.
My parents arrived in Australia in 1989 with $90 in their pocket. The chances of me making money through the property and construction game were slim to none. When the internet came along, a powerful idea became just as valuable as a deep pocket and bank leverage. Disruption caused by technology made it easier than ever to turn an idea into a real business.
If I wanted to start Kogan twenty years ago, I would have needed tens of millions of dollars of capital for showrooms, stock all over the country and a huge, loud and annoying advertising campaign.
Today, anyone with an idea can easily create a product or service and share it with the world in just a few clicks. You can literally start a business off the back of a credit card. Intellectual property is now just as valuable and important as physical property. You only need to look as far as companies like Google, Facebook, Atlassian, Twitter & Netflix to see that the most valuable assets these companies have are their ideas and innovation, not physical possessions or the ability to provide security to the banks for massive loans. Because of technology and the value of ideas, absolutely anyone can be on the Rich List in future.
What does this all mean? We need to embrace technology and the IT community, because it’s our future. The government needs to remove every roadblock possible to ensure entrepreneurs and technology start-ups are embraced by our economy and given every possibility to grow.
Politicians like to claim credit for creating jobs, but politicians don’t create jobs. They’re simply reallocating taxpayer dollars. High growth innovative businesses create jobs that otherwise would never exist. Google, Facebook, Atlassian, Twitter and Netflix would account for hundreds of thousands jobs that didn’t exist 15 years ago. We need companies like this starting in Australia and staying in Australia.
We have some of the best IT degrees in the world, but the first thing most people do when they finish one of these degrees is fly to the USA or Europe to work there. Whenever new technology comes out, the first thing you hear is whining about why it might cost jobs in other industries and why we should ban it. You only need to look as far as Uber’s recent expansion to Australia and some of the recent backlash. Why would the best young talent in the world choose to stay in Australia if that’s how we react to new technology?
Behind every product or service that enhances our lives, there’s an entrepreneur working their butt off thinking “how can I make it better?” Whether it’s the medicine you take to feel better, the computer you’re reading this on, the clothes you’re wearing, the shampoo you used this morning, there’s a business person behind it working very hard and employing people to make it better for you. We need to embrace businesses which will create more jobs and result in a more prosperous life for everyone.
Anyone with a good idea, and the perseverance to make it a reality, can leave their mark on the world. The Rich List is open to absolutely anyone.