It had been a terrible week. Two staff members had just resigned and we also had to let go of our chef who we caught stealing. We also had our dough machine break down, a large booking that we couldn’t cater for, disappointed investors, and a purchaser of our business who suddenly just ‘disappeared’. The cash we had available was low and depleting, we even arranged meetings with our accountant and lawyer to figure out how close we actually were to insolvent trading. This was rock bottom.
Only two years earlier Elise and I were on an extended holiday after having sold the remaining stake in our previous business Mumgo.com.au to Catch of the Day, one of Australia’s largest online retailers.
Before that I’d studied and played college football in America, Elise and I had both done well in uni, and we had both worked in top investment banking jobs at UBS and Morgan Stanley in Sydney. All we had ever known was success.
Our extended holiday was part of a round-the-world trip to plan our next venture. We undertook a two week intensive pizza making course Verace Pizza Napoletana in Naples, Italy and we then spent several weeks road tripping around the United States, researching all their pizza and hospitality concepts.
When we returned to Melbourne we started a small food truck, “Mini Melt”, selling small pizzas at festivals, and we also took over an old pizzeria on Chapel Street which we eventually converted into our first MELT store.
The idea for MELT was gourmet woodfired pizza but with a Subway style of ordering. Customers would walk in, pick and choose their favourite toppings, and then with a 90 second bake soon after paying and being seated their pizzas would be ready. It was great idea in theory, and certainly a first-of-its-kind in Australia. We thought we could make it the Grill’d of pizza, and we invested nearly all our money into it.
The business was executed exactly as planned, but unfortunately the concept didn’t take off. Our lunch trade was terrible, capacity constraints meant that customers had to wait too long for their orders, larger families and groups either got confused or frustrated by our ‘down the line’ style of ordering, and our operation quickly became very complicated and costly to run.
We were working 7 days a week across two stores and only paying ourselves $50k p.a. each, but by the end of 2014 we were loss making and very short of cash. We consulted our investors and advisers, and we trialed countless changes to improve the business, however nothing seemed to move the dial. It was as is the concept itself was so far off the mark, and only large scale overhauls (e.g. completely new concepts/designs, which would have cost tens of thousands to implement) had any chance of actually succeeding. By this stage we were six or so months away from losing everything. After much deliberation we eventually decided to cut our losses, sell both stores, and move on.
It was a disappointing end to a business that we had heavily invested in. Although we recovered some money through the store sales we still lost significantly overall, as did our investors. Our dreams of innovating the market and creating a large store network throughout Australia were over. And it was going to be a long road to recovery.
Once MELT drew to a close, rather than attempting a third business, Elise and I made the decision to go out and find great jobs, and really get our lives back on track. I chose to get the best job I could in property finance, and Elise and I also agreed that real estate was the only asset class we both felt comfortable reinvesting our money in, to rebuild our wealth. That was last year in 2015.
Thinking back to Elise and my first property investment, a 40sqm company titled studio apartment in Sydney (one of 120)… what we’re doing now is a world apart. We actually made some money on the Sydney investment but we had no idea what we were doing and it was pure luck.
In summary, I guess I’ve had some hard learnings along the way, but as someone who has made money, and now also lost money through investments, I feel as if I’ve got a much richer perspective on the process now, and I think this holds me in good stead moving forward.
One thing I’ve realised about investments, and also about life in general, is that most things are never as good as they seem to be, nor are they ever as bad as they often seem to be either. Knowing this is helpful because I think it allows you to approach things more sensibly and analytically. It’s very easy getting caught up in the emotion of various things, but that’s often an unwise approach.
Another thought is that the risk of never failing is that you’re more likely to let your guard down, because you’re oblivious to the consequences of ever losing. I know I’m much less likely to make poor investment decisions now, because I’ve experienced the hurt they bring, and I’d rather just be more sensible in my approach moving forward. This is one good thing which has come from the MELT experience.
Elise and I first started investing together in 2010 (our first property purchase), however we are definitely ‘long’ property now, and we feel good about it.
The one thing I do miss about MELT and Mumgo though is the personal sense of fulfillment that came from creating new products and experiences, which genuinely helped people.
It was very satisfying reading the positive reviews we received from satisfied customers at both MELT and Mumgo. So too were the opportunities for growth and development we were able to offer our staff. Knowing we played a small part in making our small corner of the world a better place was the real driver for us.
You don’t really get this from investing/developing your own property portfolio…
But looking forward I can see myself deriving a similar sense of fulfillment and satisfaction from educating clients about investments and enabling them to build wealth more effectively. I have no doubt that delivering an amazing service experience and playing a part in directly improving the financial lives of clients will be rewarding.
I think I’m a very service driven person because the desire to help people has always come very naturally and appealed to me. I get a buzz out of it and it makes me happy. In the past when I have believed in what I’m doing, and I have known that I’m genuinely helping people, I have always been highly motivated. Hopefully this makes me a better mortgage broker.
As devastating as MELT was, I always knew that we had done the right thing by everyone involved, and I knew that we couldn’t have tried any harder to make the business a success. I always knew that we could bounce back again. Rather than being depressed I’ve always just wanted to find something to apply myself to again. To bring some of the fun back.
<< before and after shots of Elise and my first property investment in 2010, we bought, renovated and sold a 40sqm studio apartment in Darlinghurst NSW >>
<< before >>
<< after >>
<< birthday celebrations with the team at Mumgo, now owned and operated by the online retailer, Catch of the Day >>
<< pizza making training in Naples, Italy >>
<< Mini Melt >>
<< Australia’s first “down the line” pizza concept >>
<< Recent property investment (Mitchelton), 8km from Brisbane CBD, internal reno complete, subdivision potential >>
<< Another recent purchase (Eastwood), 2.5km from Adelaide CBD, reno complete, hoping to convert the double fronted cottage into 2 x single fronted cottages soon >>
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