OLD HABITS DIE hard. Gerry Harvey has risen through the ranks into Australia’s richest – estimated wealth of some $900 million – but he still hunts up a good price before he’ll fill the petrol tank, for example, and he’s always bargain hunting.
“I like doing that sort of thing so if that’s part of your nature then you try to buy cheap and you try to sell for more than you paid for it. In business that’s what you do all day.”
Maybe it’s not that simple anymore. The former vacuum cleaner salesman – who started door-knocking at 19 and began his first business at just 22 – is now responsible for a vast, publicly listed retail network of 195 homewares, electrical and computer stores with a turnover approaching $6 billion.
Harvey may be no economist, but he watches and analyses all the signs, including what he hears at his own checkouts.
Over time, his instincts and accumulated wisdom have made him one of the most respected voices on the business spectrum, applauded for rare candour. Harvey calls it as he sees it; no puff, no PR spin.
Right now he’s upbeat, readying for “a boom – as big as we’ve ever had” but you couldn’t have said that a year ago when the sky was falling in on the sharemarket.
Given he estimates 75-80% of his wealth is in the sharemarket – including his 30% holding in Harvey Norman – he remembers a very scary ride.
Property, in which his group has an estimated $2 billion invested, fared better during the panic. But in retrospect, the whole episode turned out to be “a hiccup” in nearly 20 years of continuous growth, Harvey says, breathing easier.
He’s not alone. Buoyant consumer confidence levels mean his customers are showing “a greater propensity” to go into debt, he observes.
Yes, interest rates are rising, but they’re coming off record lows. Even so, the trend nags him. “I think most people spend beyond their means. It always amazes me that you can be 25, 35, 45 and not be worth any money and not be worried about where you might be one day.
Then you’re 65 and you’re on the old age pension or you’d starve. I’d never trust the government. They’ll probably feed me but they won’t give me much. So why would you go through your life not preparing for the day when you can’t work?
You should try to put yourself in a position that you’ll still have the means to get by and tell the world to get stuffed if you have to.”
Harvey knows struggle. Aged 12, he arrived home from school one day to find the family’s comfortable, middle class home – which had been inherited – burned to the ground.
With parents and two younger brothers, he lived in the small garage. With mother and father on meager pensions, Harvey put food on the table by trapping and skinning rabbits, helping out on nearby gardens and spending school holidays working on farms around NSW.
“We chopped our own wood and grew our own vegetables. We built our own beds. It was pretty bloody Spartan stuff.” He’s never really forgiven his father’s failure to support the family:
“He was a publican then a farmer and he went broke and just decided he didn’t want to work,” he says, shaking his head in dismay. “He should have gone to work.” Those early lessons linger.
“You think, I am never going to live like this. As wealthy as I am, I always think I could go broke. I never want to end up like that. It’s solidly burned into you.”
On what he teaches his own kids – he has four by two marriages, now to Katie Page, Harvey Norman’s chief executive – Harvey says: “I’ve never given them vast sums of money.
They’ve got through on their own, the two eldest ones – the two youngest (in their teens) have got to do that yet.” Oh, and don’t expect to find them inheriting the business.
Harvey has contempt for retail dynasties of old, having seen many fall under founders’ progeny who had neither the nous nor drive necessary to run them. “The danger is if you have a kid what’s the chance that kid’s as good as you?
Long shot. Put him out there with the thousands of other kids – there’s a million to one there’s someone better than him out there, right?
By doing that you’re giving your company a much better chance of going broke than you should be. You’re not doing anyone a favour.”
Harvey left school early but returned to finish and go on to university. “I did two years [of an economics, commerce and law degree] and hated it all the way through.
My son Michael who’s 44 [and an independent director on Harvey’s company board, while a daughter runs a franchise] did his commerce course but at no stage have I ever thought he’s got one up on me because he did a degree.
He doesn’t know any more because the thing is you get a basic knowledge doing a degree at university – that’s all it is – and then you spend the rest of your life learning.”
On what wealth means now Harvey says: “When you get to 70 it means a bit, not a lot because you get to a stage where someone says ‘I want to sell you that hotel’ and you think that’s another burden.
They burn down, they get flooded, they’re run by people who aren’t good at running things and there’s a phone call and you’ve got another problem so you think ‘Why do I need that?’ Unless it’s an asset you really like – and a horse falls into that category.”
Now you mention it, Harvey has about 1000 horses and five studs, though he says he doesn’t “add it up” and he guesses it’s all worth between $100 million and $200 million, making him one of the biggest bloodstock investors in the country. An indulgence?
“In retrospect it was but at the time I started in 1972 it was because I thought I could make money out of them.” He’d grown up around horses; going to school and working in the country, and remembers: “I could name every Melbourne Cup winner for the past 30 years when I was 15.”
He’s been rich and he’s been poor, has it changed him? “I’d like to think I haven’t changed – you rebel against becoming different because you’ve seen so many people who do – in self importance and ego.
You see it a lot among people who get a lot of money or a lot of position. It’s one of the things you’ve got to watch because I’ve met so many people who thought they were really important but they’d never be remembered for anything.
They don’t realise how unimportant they are, everyone is. I might be there in someone else’s view but I’m not there in my own. It’s pretty important that you don’t become important.”
That said, life is different since he’s had money: “It’s changed plenty, because you’ve got the security of having it.
I always used to think when I was a salesman – selling real estate, or vacuum cleaners or TVs or whatever – and I never had any money; I couldn’t afford to buy a packet of cigarettes.
I don’t smoke now but I used to think, ‘If only I had peace of mind and I didn’t have to make this bloody quid then I wouldn’t be so uptight about selling things. I could be relaxed and I could do a better job’.
It used to annoy me that I needed to get the sale to eat, rather than concentrate on getting the sale. I thought it always affected my performance.
So now when you don’t have to do that you can spend more time, I don’t know – thinking about it or doing it or not doing it without the pressure on you.”
Harvey trusts his knowledge and instincts on the stockmarket, having little respect for outside professionals.
“You retire and you’ve got, say, $1.2m to your name and you put it out with some fund managers and that’s how you’re going to live, I think whew, that’s a bigger gamble than putting your money on a racehorse. What if you lose it? You’ll end up like my mother and father.
I read somewhere the average superannuation fund member has $133,000. What good would that do them when they retire? It’s not much. If I live for 20 years I don’t want to live on that, but they do. Why aren’t they worrying?”
Bloodstock aside, Harvey doesn’t live big by Rich List standards anyway.
“I play tennis every week, I play golf a bit, I try to exercise every day, I try to eat reasonable food, I try to stay healthy – that’s what I call luxury. What’s luxury? Going on a big boat and sailing around the harbour?
That’s not luxury to me. See, when you start spending time on yourself, what are you doing? Lying on the beach all day reading a book?
I couldn’t think of anything worse. It’s boring. I’m relaxed right now. I try to stay relaxed all the time. But I don’t mind getting a bit of adrenalin moving. That’s good.”