6th Floor, 110 Sussex Street, Sydney – The ideas factory
Two Unicorns and a bunch of other stuff
A personal experience
By 1984 I had established a successful career in the corporate world and has risen to an international position managing over 700 employees across five countries and four continents when, out of nowhere came a government infrastructure policy change that devastated the Australian high-voltage power line transmission industry. Shell-shocked we held on to our employees for several months believing that the government would reverse their policies, they did not, leaving hundreds of employees without a future.
Not unlike many individuals today I needed to consider what I could do to earn a living and support a family. I never went back to being an employee and after a few months had established a new career in finance, a long way from engineering. I attended some conferences and happened to meet people who had had similar experiences and were in the process of creating their own employment. This is when I realised the importance of individuals with different skill sets working together to achieve an overall goal that none could achieve on their own, i.e. I had found a ‘Team’.
Chris Costello, Kris Chikarovski, Gary Fitton and Geoff Price came from different backgrounds, commerce, law, taxation and remuneration but had combined their skills and rented a small apartment on the 6th floor of The Chelsea at 110 Sussex Street Sydney. They had started a consultancy that would provide remuneration and taxation advice to large corporates and I had the good fortune to join them.
In the mid 1980’s Sussex Street, although within 200 yards of the city centre, was not seen as a desirable location for a business as it was adjacent to a derelict area that was once a set of docks for sailing ships to unload their cargo. Fairly rough and run down it was however relatively cheap and so the company Remuneration Planning Corporation Pty Ltd (RPC) was created. To entice high-end potential clients RPC installed a commercial coffee making machine at a time when there were few coffee shops in the city. Clients came, enjoyed coffee and business was done.
RPC became known as a small group of people that were at the cutting edge of employee remuneration structures and implementation. Initially it researched employee share schemes in other countries and set about creating a set of Employee Share Ownership Plans (ESOPs) that were compliant with and approved by the Australian Taxation Office. Over the next few years RPC created and installed ESOPs in to 60 of Australia’s top 100 corporations and became widely known for its innovation in the field. In 1988 RPC create the Novated Lease Taxation Ruling IT2509, an approved method for employers to cost efficiently provide vehicles for their employees. Chris Costello and I wrote a book on how to implement vehicle benefits in companies and $1 million of sales of the book were achieved in the first year.
As RPC grew and more large corporates used its services some of those corporates were raising questions about the ESOPs and their employees’ shares and although they liked the schemes and they were becoming increasingly popular with their employees, they were concerned about the way in which they could manage those shareholdings on paper in their administrative records. Back at the office at 110 Sussex Street an idea was hatched to create a basic software platform, a sophisticated spreadsheet, to record the employees’ shareholdings. This idea gained traction and drew the interest of a large finance and insurance company Legal and General (L&G). L&G approached RPC and offered to buy the platform and it was sold to them. Two years later, even though the platform was expanding and profitable, L&G had a change in focus and asked RPC if it would like to buy the company back. Chris Costello’s answer was ‘No’. L&G then asked if RPC would take it back at no cost and again Chris Costello’s answer was no. L&G’s final offer was for RPC to take back the platform and L&G would pay RPC an amount to do so, Chris Costello’s answer was ‘Yes’. What L&G did not recognise at the time was that the platform has performed services for which L&G had not invoiced the major corporates. RPC took back control of the platform, received a significant sum from L&G and then set about raising $600,000 in new invoices which it subsequently collected.
But that was not the end of the story. Geoff Price, one of the team and a remuneration lawyer, steered the platform, now called RPC Plan Managers Pty Ltd, to further growth and positioned it to become an attractive target. In Melbourne Chris Morris had established Computershare in 1978 with similar objectives and in 1998 acquired RPC Plan Managers and merged the two businesses. Geoff Price remained with Computershare for many years growing the company internationally to the point that today its stock market value is approaching $10 billion.
Meanwhile back at 110 Sussex Street other ideas were emerging. In the late 1990s, following RPC’s remuneration and employee benefit innovations, employers were also struggling with employee benefit administration and a parallel platform to RPC Plan Managers was devised with its purpose of creating more efficient ways to manage the flow of funds that employers channeled into employee benefits. I took on this task and we formed Smartsalary Pty ltd as an employee benefit administration company. To make this a reality we needed to raise funds and employ a team with the right skills. I raised $4 million, we leased the top floor of the building next door and both RPC Plan Managers and Smartsalary moved in.
It was in the process of recruiting key staff that I met my future partner. She had heard of RPC whilst working in Melbourne, cold called the company and inquired about a position. The company asked her to come to Sydney and we met in what then was an unknown 1800’s hotel across the road from our office. Unbeknown to both her and me at the time was that a Tasmanian girl, Mary Donaldson, was also meeting someone in the same bar, his name was Frederik, Crown Prince of Denmark. As my now wife likes to remind me Mary got her prince and she got the frog. Smartsalary grew, acquired a cornerstone client in the Australian Defence Forces and today has a stock market value in excess of $1 billion.
110 Sussex Street had not seen the last of its innovations as in 2002 it created the first of its three fintech products, ‘The Employee Benefits Card’, a credit card that removed all manual administration from the benefits that Public Hospitals and Not-for-Profit organisations provided their employees. More than 1.2 million Australians are employed in this sector and enjoy this Australian Taxation Office approved benefit. RPC created the company PBI Benefit Solutions Pty Ltd to market ‘The Employee Benefits Card’ and signed a Joint Venture Agreement with one of Australia’s largest bank Westpac. The card was a success and the company ran at a gross profit margin of 91%. Two more tax efficient cards were created in the following years, the ‘Leisure and Accommodation Card’ and the ‘Meal and Entertainment Card’.
Time has moved on, but innovation has not ceased, and as many of you would have realised by now, if you have an inquiring mind and see problems in front of you, you start thinking about how to create a solution. Today such a person is called an ‘entrepreneur’, in the 1980s we were just trying to solve problems and create a living.