Larry Kestelman at the site of the old Capitol Bakeries where his $500 million luxury development is set to be. Photo: Wayne TaylorDodo Internet founder and venture capital investor Larry Kestelman says start-ups often fail because they grow too fast without a firm grasp of the numbers, and entrepreneurs need basic accountancy skills.
“My biggest advice is lead by the numbers. Let your passion of entrepreneurship definitely take your heart and drive you, but don’t forget about the numbers,” Kestelman says.
“Most businesses will not fail because it’s a bad idea, most businesses will fail because people went a little too quickly without considering what the numbers behind it are.”
Kestelman, who is originally an accountant by profession, says entrepreneurs should make sure they have a very good understanding of the numbers or even do an accountancy course before they start. The trick is then to grow as quickly as you can, while still taking the time to constantly analyse the numbers and the things that need to change in the business.
“Growing quickly is a must, but having numbers on a spreadsheet versus having your funding in place versus having a clear business plan that you’re executing are not the same thing,” he says.
“The worst thing you can do is go a million miles an hour and then run out of funding and not have the commercials stack up.”
Kestelman made his fortune from telecommunications provider Dodo Internet, which he sold in 2013. He then founded Oxygen Ventures to invest in technology start-ups and this year is running The Big Pitch competition for start-ups to win up to $5 million in funding for the second time.
“I’m an entrepreneur by the nature of what I do, but I know who I am and I’m not the guy who’ll invent the next Google,” Kestelman says. “I’m hoping I might find the person who will, but I know I’m not the one.”
Instead, Kestelman says his entrepreneurial skill is an ability to “take on almost any industry and make it better”. He admires other entrepreneurs with the same knack, such as Richard Branson, “Aussie John” Symond, and Mark Bouris.
Capitol Grand plans
Charlize Theron has signed on as the face of the Capitol Grand development.
“To me business is business, whether it’s venture capitalism, telecommunications or property development, the same, sound business principles apply,” he says.
As a result, Kestelman has his fingers in several pies. When he gives people his business card, they turn it over to see 10 company names and logos on the back.
“I say there’s this business, it turns over $100 million, and there’s this business as well, and they look at the card and say ‘oh wow, you do basketball’,” says Kestelman, who is chairman of basketball club Melbourne United.
“Property is the biggest business I have but it’s not what people want to talk about – people would much rather talk about technology, venture capital, entrepreneurship and basketball.”
But his big project currently is the Capitol Grand development at the old Capitol Bakeries site on the corner of Toorak Rd and Chapel St in South Yarra. He bought the 5500 square-metre site for $85 million with planning approvals in place and is seeking to amend the plans, though he will need to argue his case in the Victorian Civil and Administrative Tribunal.
If he gets his way, the Capitol Grand will be a 50-storey building with 40-50 high-end retailers and about 450 luxury apartments with uninterrupted views of Melbourne, Port Philip Bay, the Dandenong Ranges. The development would cost $500 million in total and Kestelman says the “flowing curves” of the architecture will make it an iconic building.
“I have been a closet property developer since I was 25 – don’t tell anyone,” Kestelman jokes. “It’s not something I advertise, but this [development] is something I’m extraordinarily proud of.”
Kestelman has signed movie star Charlize Theron to promote Capitol Grand in Australia and throughout Asia. Theron will be in Melbourne for the Grand Prix this weekend.
Kestelman believes Australia needs to have a longer term view on what it stands for, and manufacturing, food production and agriculture should be core to the nation’s strategy. Kestelman says his next big investment might be in the food production and agriculture sector.