ABC Learning Centres chief Eddy Groves speaks to Joanne McCulloch about creating the ‘News Corp of education’, saying goodbye to the milk business and fending off the critics.

In His Words

“At the beginning, any person in small business is doing it because they want to create a future for themselves and it’s predominantly about making more money than if you were working for someone,” he says. “And somewhere along the line that completely shifts. For me now, it’s far more than that. It’s now about the opportunity I have of turning this into a very special global company. And nobody gets that opportunity - it is a very rare, rare thing.” - Eddy Groves

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Building Blocks To Success

ABC Learning Centres chief Eddy Groves speaks to Joanne McCulloch about creating the ‘News Corp of education’, saying goodbye to the milk business and fending off the critics.

 

 

Building Blocks To Success

Eddy GrovesBuilding Blocks To Success

WHEN I ask Eddy Groves about his reputation for fast cars, alligator skin boots and commuting to work by helicopter, he responds with an uncomfortable laugh. “In the early days there’s no denying it,” says the 41-year-old founder and chief executive of ABC Learning Centres.

“The first thing I wanted to own was a Ferrari - it was the driving influence of my life. Then what happens is you end up getting it, you get another one and trade another one. And then one day you wake up and realise it just sits in the garage and it’s a waste. I don’t have one any more. You realise that that’s not what’s important in life but it takes you 20 years to get to that point.”

And as Groves approaches the 20-year anniversary of ABC’s establishment, his penchant for the odd Ferrari is not the only thing to have changed. The company has grown from a single daycare centre in the Brisbane suburb of Ashgrove, which Groves opened up with his wife in 1988, to the largest listed childcare group in the world. It operates 2230 centres out of four countries and is worth around $3.1bn.

After taking 17 years to open 1000 centres across Australia and New Zealand, growth in the last four to five years has accelerated phenomenally. Revenues have risen 130-fold from $13m when the company floated in 2001 to $1.7bn this year. Profits have shot up 100 per cent a year on average and increased from $3.3m in 2001 to a record $143.1m this year. They’re set to double again over the next 12 months.

This huge growth has been buoyed by government funding, new contracts - including a tender to provide all childcare to the Department of Defence - and expansion into the US and UK. Oh, and then of course there’s Groves’ unstoppable energy. When we speak, the man dubbed “Fast Eddy” is travelling to his next meeting and bright as a button despite having just endured what most would consider the weekend from hell.

“I got on a plane to go to Los Angeles on Sunday at 12 o’clock two days ago and I flew back on the same plane on Sunday night,” he says. “So I did 42 hours - 28 hours in the air and 12 on the ground in LA. But that’s the commitment you have to have if you want to go on and achieve what you want.”

Naturally, Groves’ wealth has grown at an equally high trajectory as ABC’s. He has amassed a personal fortune of more than $260m, making him the country’s richest businessman under 40 last year, according to BRW. His wealth has tripled in the past five years alone.

BUILDING AN EMPIRE
But the down-to-earth entrepreneur says he’s now at the point where money is not his motivation - business success is. To this end, his aim is simple: to make ABC a world-leading child education empire.

“I honestly believe in my heart that this can be the News Corp of education,” he says. “It can be such a professional global company delivering on outcomes that are so crucial for children. That is the driving influence now for me and that benefits children, families globally and our shareholders.”

As part of this plan, he is fighting to be able to branch out from child minding to primary education for over-fives. Groves first touted the idea in 2004, but has run into troubles with government legislation that stipulates that education must not be involved with private profit-making. To this end, ABC set up a non-profit school, Independent Colleges Australia, and proposed a $2m investment in the school sector. Despite the barriers, Groves is clearly still intent on moving from ABC centres to ABC schools.

In the meantime, the company’s childcare empire is expanding - particularly via its entrance into the US. By the end of this year, just 20 months after entering the US, its operations there will be around the same size as those in Australia and Groves says he will look at further purchases should the right opportunity arise.

He is also working on leveraging growth in the UK. ABC is bedding down the recent $75m acquisition of the Leapfrog Nurseries - a deal which gives it 88 centres across the UK, a strong base to grow from and leverage off. Groves is also mindful of the lucrative Asian markets, but says for now he would rather focus on developing operations in existing regions. And develop it will. The company is said to have around $2bn set aside for future acquisitions.

So how does it feel to have created one of the country’s biggest and most successful companies in less than 20 years?

“I think it’s quite remarkable actually,” the South African born Queenslander says. “Every time I look at it I have to pinch myself. I don’t think you ever wake up when you’re a small business owner and say ‘I’m going to turn this into something that’s global’. It’s an evolution and you learn as you go.”

FACING THE CRITICS
As with many entrepreneurs, success hasn’t always come easy. Groves has been targeted by groups who are uncomfortable with the concept of making money from a cottage industry like childcare. Some have dubbed his business “the McDonald’s of childcare” and hit out at his expansion plans and growth, claiming it will see the quality of care deteriorate.

Groves believes the opposite is true. “I get frustrated every now and again because these critics are uneducated and ill informed,” he says. “At the end of the day it’s simple: before ABC was publicly listed there were private childcare operators. All we did was amalgamate a group of centres, build new centres and form like-minded systems. If you really think about it, if children are going to be in childcare, wouldn’t you want those centres to have the world’s best systems in place for those children? Well the only way to do that is with money.”

He adds: “You can’t build the IT capabilities that we have to be able to monitor certain things as an individual operator. More governments are starting to recognise that and unions have recognised that. So when you get people stand up and say we are the McDonald’s of childcare, you can take that as a compliment because it’s about having systems to protect and educate those children, which we’re very proud of.”

Groves claims that being large gives ABC the ability to fund higher levels of service, more staff training and world-class centre facilities. “We track every single accident and incident and every parent complaint,” he says. “We have tighter controls on staff history and police checks and other key areas such as accreditation and licensing. This adds to the quality of our operations and we do that better than anybody.”

He also points out that many smaller centres are not owner-managed, but are purchased simply as a business investment and then outsourced: “That is why I don’t understand the kafuffle about ABC. They have other people managing and often would not have a clue what is going on in their centres.”

Groves also claims he’s a victim of a ‘tall poppy’ culture in Australia, which celebrates the underdog and battler, but condemns those who are achieving global success and fortune. He says the opposite is true in the US, where he has been welcomed and assisted.

MILKING IT
Yet the criticism has not curbed Groves’ enthusiasm. The owner of the Brisbane Bullets basketball team says that his early career as a milkman - a job he started when he was just 19 - gave him an unflinching work ethic.

“The best training for me ever was milk,” he says. “No matter what, I had to work and run all through the night to deliver milk. Whether you were sick or injured - you couldn’t take time off or have a sickie because people were expecting to have their milk every day. I ran the streets for 16 hours a day. That was the best training from a discipline point of view.”

Groves bought a distributorship for Pauls Milk in Brisbane after studying accounting and then working for 12 months as a bank clerk for ANZ. In true Groves style, he ended up with the largest Pauls distribution network in Queensland. But he recently closed this chapter in his life, selling his milk business to European milk giant, Parmalat for an undisclosed sum. Despite having been involved with milk for the past 22 years, he says he found selling “unemotional” because he is so focused and busy with ABC.

With the alligator boots packed away and the Ferrari gone, Groves is now driven by his vision for ABC. And that is a perception he’s happy with.