Jessica Gardner Reporter

Jessica covers Australia's technology start-up scene, writing on breaking news and trends in entrepreneurialism, media and marketing. She was previously named Australia's best New IT Journalist for 2011.

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Baby-faced CEOs

Published 18 April 2012 11:45, Updated 19 April 2012 11:26

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As a 26-year-old, Leigh Williams carried around two sets of business cards for his company, eStore Logistics.

One named him as chief executive. The other read “solutions specialist”.

The dual business card strategy was because Williams found that clients were uncomfortable dealing with such a young CEO, believing that it meant he didn’t have the experience to do the work.

“At first when I started handing out the CEO card, people would straight out say that they would prefer to go with a more experienced company,” Williams remembers of his first year in business.

So he changed tack and started using the solutions specialist title when pitching for new clients or signing deals and found clients were reassured by imagining there was an older chief executive in the background.

Once eStore Logistics was providing services to a new retail client and it was “all running nice and smoothly”, Williams would confess. “Then I would explain that I not only run sales but I also run the company.”

A lack of trust or confidence in one’s ability to do the job is a peril faced by many young CEOs. Williams, who reckons he looks even younger than his birth certificate suggests, initially struggled to show customers that they could trust his fledgling company with their stock delivery needs.

“I guess for our particular industry the biggest issue is the risk that [customers] have in their mind, of giving $10 million worth of stock to someone who is 26 and saying, ‘Yes, we trust you that nothing will go missing or get stolen and also that you will deliver it to our customers in a timely fashion’,” the now 29-year-old says.

Williams is not alone. As a 17-year-old, the founder of social discovery app Roamz, Jonathan Barouch, was laughed out of the bank when he tried to set up an account for his first start-up, online florist Fast Flowers. He had to return, with his dad in tow, to sign all the paperwork.

But young CEOs are proving their detractors wrong. Barouch, now 29, was first to market with selling flowers online and built up the business before selling it. At 28, Nick Armstrong topped the BRW Fast 100 in 2011 with his carbon trading company COzero, achieving average growth of 605 per cent over three years and revenue in 2010-11 of $165.8 million. And perhaps the 28-year-old that they all look to as proof that you don’t need thinning hair or age to build a great business is Facebook wunderkind Mark Zuckerberg, who just last week spent $US1 billion to acquire photo-sharing network Instagram.

But as Ellen McGirt wrote in US magazine Fast Company, even Zuckerberg struggled with an image problem she dubs being the “boy CEO”. “Young, arrogant, and awkward – no one believed that Zuckerberg could survive the adult swim of real business and thanks to his depiction in the [2010 movie] The Social Network, some folks will forever see him as the fatally flawed psychopathic robot nerd looking to steal your code, your personal data, your girlfriend,” McGirt wrote in March.

Young CEOs will always come up against varied obstacles, ranging from disbelief to discrimination. The measure of their success is how deftly they identify and then hurdle those obstacles and go on to build great, sustainable companies.

For many young CEOs their age is most telling when it comes to the business of doing business. “If you’ve got a CEO of a major retailer, Woolworths for example, and they’re used to dealing with older CEOs at Linfox or Toll – that’s the ‘go to’ place because they’ve already been to an industry event together, they all know each other and they’ve been on each other’s yacht,” Williams says.

So for many, networking is a major stumbling block. “I’d rather poke my eyes out than go and play golf on the weekend,” Armstrong quips. “The hard thing is I don’t want to network in the old school. I don’t want to go to gentlemen’s clubs and sit around and drink port.”

In response, they are finding their own networks. Many point to flourishing young entrepreneurial communities. Armstrong recently returned from hanging with “younger” business people at the Hong Kong 7s rugby union tournament.

Shaking up the establishment is part of the allure of young leaders. Armstrong talks of COzero’s flat management structure, use of social media channels, with everything in the cloud and his employees connected wirelessly “24/7”. Williams explains that all of eStore’s systems and processes are stored in a wiki-style knowledge base.

And it’s not just how they’re running their businesses. A lot of the discrimination these young CEOs face comes from established players that fear, or do not understand, the new business models the young are pushing.

“[At industry events] we’re always talking about new school ways of doing things and how online retail is taking off,” says Williams, whose biggest problems are not the traditional ones such as buying trucks but coding the warehouse management system. “The logistics companies that do traditional retail see the volumes that they’re dealing with are decreasing. And we’re taking apart their market share, so they wouldn’t be the happiest people to be talking to us at the venue, especially after I’ve had a few beers.”

Their innovative business models are catching up with the older generations more rapidly than some would like. “The flower industry – you can’t get a more old school, backwards industry than that,” Barouch remembers. “The people running the show were all 50 and 60 [years old] and they couldn’t understand how this internet thing was doing so well.”

Now, with Roamz, Barouch says his age works in his favour because advertisers need him as a conduit to talk to customers in channels they haven’t quite worked out. He reckons companies could do with a more diverse age range among the people making the decisions and points to Starbucks, which recently appointed 29-year-old Clara Shih to its board of directors, as a company bucking the trend.

“I think a lot of boards are struggling with social media, with digital, with e-commerce,” he says. “You look at some of Australia’s iconic businesses that have been so late to the party and I think having a voice at the table that can understand it and explain it to other directors or even the executives is really helpful. And funnily enough, even some companies where their target audience are in that 18- to 35-year-old bracket, they often don’t have people in that demographic in the leadership team or on the board. That’s why they get so many consultants and waste so much money.”

The young CEOs are certainly confident but they’re not without their weaknesses. Holly McErvale established Verve Portraits, a photographic studio that took a more creative angle on the soft-focus, plain background portraits of her competitors. At 26, she says, her toughest challenge was people management.

Now 34, she recalls: “I found it quite natural negotiating and setting up with all the products [contracts] and the real estate but it was developing the team and knowing how to coach and mentor them,” she says.

It’s the obligation to a group of people who rely on you for mortgage payments and stability that is the biggest shock to young CEOs.

“We had about 40 odd staff at Fast Flowers,” Barouch says. “I was probably close to one of the youngest. It was really hard at the beginning because you don’t have the emotional intelligence. When you’ve had some more life experience, it’s a lot easier to relate to people and understand their issues and get the best out of them.”

Despite their struggles, the CEOs agree that there are definite positives to being young and at the top. “If you are young and enthusiastic, people are inclined to listen,” Barouch says. “You do get more attention with partners and potentially with press.”

And they warn established businesses not to dismiss the next baby-faced CEO supplier pitching a new technology – it may pay to listen to how it might help your business. And investors should certainly not dismiss the next elevator pitch from the mouth of babes. It could be the next Mark Zuckerberg.

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