Inside: Kordia’s Drew Gilpin

On renovating a struggling small business; on the perils of letting the geeks take control of your SME; and why buying a company is like bringing your first baby home

DREW GILPIN HAD always worked for other people (Canon, Apple, Terabyte Interactive, Clear, Telecom) when, in 2003, he bought a failing software company from another former employer, Advantage Group.

Aldridge Punter Ltd (later APL Plus) had shrunk from 110 staff to 18, and lost 40% of its revenue by the time Gilpin and fellow director Lincoln Watson took it over.

It wasn’t all smooth sailing, but by the time they sold to Integral Technology Group four years later, staff numbers were back up to 55, revenue had doubled and EBIT tripled.

Gilpin is now sales and marketing director of 1000-person company Kordia, the state- owned telecommunications company formed from the transmission arm of TVNZ – and almost killed by the shutdown of analogue TV. He talked about lessons learned with Nikki Mandow. You bought a struggling software company from a struggling technology group. Was that wise? It didn’t seem that way on that first day when we stood at one end of the lunchroom, with the 18 staff down the other end. The former boss introduced us as the guys who had bought the company and then he simply walked out and left us. That experience was like the day when you bring your first baby home from hospital and suddenly it’s all up to you. What happened? We knew there were lots of bruised people out there who had been sold bad stuff by geeks. So we developed a cultural policy of calling a spade a spade. We were brutally honest with customers re their dreams versus their budget. If it wasn’t going to work, we would walk away. You dressed your geeks in shirts and ties – that must have been a bit of a shock? Our view was the industry had destroyed trust with its customers. We figured if customers in 2004 had the choice of our shirt-and-tie-wearing sales people, or a hippy-looking competitor, they were more likely to trust our tie. You’d worked in big corporates before. What did that teach you about leading an SME? One of my first jobs, in my 20s, was working under Andrew Makin at Clear Communications. In its pre-Telstra iteration, Clear had a distinct and well-publicised set of values. It was like staff had a badge on the inside – how you carried yourself was an internal thing, but spoke to quality and truth.

We tried to take that through to APL. We believed in the importance of having a documented set of values. It told us how we were going to be, how we were going to behave and brought the company together. It set us apart from the competition. Hands on or hands off – what’s the best way to be with a small company? For the first year after we bought the company, we thought our job was to sell technology and software solutions – and we could just leave the people who knew how to build software to do their thing. Bad idea.

After we almost lost our houses, we decided it was time to take control back. If you are going to lose your house, it should be at your own hands. Any lessons? The most expensive words you’ll hear in your business is “We tried that before and it didn’t work.” The reason you buy a company is to make it different under you; so what others tried in the past isn’t relevant. It takes confidence to understand that. What’s the hardest part? Feeling responsible for the financial livelihoods of all those people. When it’s your own company, if you don’t get payment on that contract by the end of the week, the wages aren’t going to go out and 150 people are going to be significantly negatively affected. It’s a big responsibility and that’s stressful.

I’ve brought that learning to Kordia. Now I’ve stepped out of my own company, I recognise most things aren’t worth getting stressed about. You have to determine what’s important – and your work really isn’t. What’s your most importantimportant HRHR lesson from running your own show? It’s important not to be afraid to confront staff as soon as you see behaviour you don’t like, and exit staff if they don’t fit. Often managers don’t like to have that conversation, so although they aren’t happy with someone’s performance, they wait till they are really pissed off, then confront them.

And then people say “But how come what I have been doing has been fine for a year, and suddenly you say it’s not fine.” Then the HR risk is high. If you set the bar high when you hire people, then you go into problems thinking it’s likely the employee is a great person and just needs support to resolve the issue. So you discuss what support they need.

But if the bad behaviour carries on, then act quickly.