Not Just a Business
With interests in magazines, property, music and glass, Ash Hunter, CEO of Hunter 5, leads more than the one business and is the driver behind a case study in diversity and niche market strategy. By Jason Day
Many readers would be familiar with the Just Magazines stable of titles, including Just Bikes and Just Cars. Today, where a web ad or eBay listing isn't complete without descriptive photos, it may seem inconceivable that there was a time when ads were made of words alone. But the genesis of Just Magazines's classifieds-with-pictures, and the profitable magazine business they spawned, was simple.
The father of Hunter 5 CEO, Ash Hunter, Shayne, started a host of vehicle based classified magazines in the 1970s, publishing them out of his workshop in Williamstown, Victoria, at night.
The publications were revolutionary. There was nothing like them at the time in Australia. The actual idea for pictorial classifieds came to Shayne from the London Motor Show annuals he bought each year that depicted a photograph and details for each car manufactured in that year.
Successful, Shayne sold out his magazine titles to ACP in the 1980s but, unable to stay away, he started up again in magazine classifieds with the Just Bikes title in 1989; he ran the company through to his untimely death in 1998. There are five titles today.
"Dad started the business out of an end of the house," says Hunter. "I packed boxes after school, proofing ads, working with the type setters, all those sorts of things. I grew up with those magazines."
Only 22 when his father died, Hunter was just starting a career in real estate, but came back to assume control of Just Magazines. While admitting he had a lot to learn, the business grew. It is now one of the largest privately owned publishers in Australia.
Over time, Hunter says that when they had some extra money the company would invest in property or "other areas". It may be that his fascination for "everything", as Hunter puts it, and a wish to be directly involved in things so that he could learn, was the real catalyst behind the niche business strategy that characterises the Hunter 5 group of companies.
Hunter 5 business interests are split into two areas: media and manufacturing. The media division comprises a range of complementary businesses and capacities in publishing, video production, online and web, music and events management. Manufacturing includes glass making plants and hospitality kitchen equipment sourcing and manufacturing in China. Run from offices Melbourne, the Hunter 5 is worth around $100 million.
On paper, there's not an obvious synergy to some of the company's diversity. It appears mostly the result of business opportunities. There is some truth to this, but the story is more complex and strategic than that.
"Because I'm fascinated with everything and get bored doing the same thing for too long, that's partly why we started to move into new areas; I just think, 'I wonder how that works?'; there's no better way to learn than being directly involved," says Hunter.
"Our original entrance into China was in buying out a Chinese partner who was problematic for Australian business partners we were involved with. But so too, part of the strategy was simply that I needed to learn more about China.
"A good way to do that was to get involved with it, travel there, have to transact, have to deal with the government, have to deal with local business people.
"Most people when they end up in an unexpected area do so because of someone else; that's much the same with me. We saw opportunities that, if I had never gone over to China, I wouldn't have seen."
The glass game
Hunter 5's glass manufacturing concerns in China were up until recently making 15 million units a year. A new factory, built in tandem with a Chinese partner, provides capacity for 70 million units a year. That was until the credit crunch came.
"We were financing our working capital with letters of credit and we'd pre-sold 25 million pieces, which was all looking fantastic," muses Hunter.
"But when US bank Lehman Brothers fell over and banks stopped trusting each other, our bank wouldn't come to the party.
"But that's okay, fortunately, we own everything, so there's no debt, and we want to stay in glass. While distributors around the world stopped buying, they really just let their stocks reduce; people are still breaking glasses in restaurants and pubs, so they've started buying again.
"Also, the restrictions on borrowing that the Chinese government had imposed is loosening. We're being wooed by local Chinese banks, and they're very responsive to our business."
In fact, Hunter confides that not being in a position to do anything was perhaps a blessing. Once you start up a glass furnace, you've got to keep it going. "If you have to shut down the factory, it's a nightmare. It takes you three weeks just to start a furnace!"
Certainly as far as their media business interests, ask the question of Hunter 5's strategy for its seemingly diversified businesses, and Hunter is forthright.
"Some people look at what we're doing and think nothing really matches, that it doesn't make sense," he answers. "But it depends on how you view us, and more importantly, how much of the bigger picture you see. We're no longer just publishers.
"What we actually do now is create and collate content. We then distribute it in a multitude of ways. What we will be able to do in time is give people what they want, when they want it, and in the format they want it.
"While in magazines there are certain titles that are still growing, it is a given that consumption will fall over time. We have been fortunate to arrest decline in our business, a direct result of our niche focus and dedication to our offline audience. Things have changed however, and people procure content with varied consumption habits.
"So we have an events company, a record company, a web solution, and publishing, and each of those distribution methods attract and help different people. On one hand, we have a certain age bracket and type of person that likes reading a magazine, that's great. Now with the web, it's an entirely different person. While there's some crossover, we're actually hitting a whole new market.
In fact, listen to Hunter explain and the strategy becomes clearer; there's an obvious plan behind the operation. His event management company – which is responsible for putting together anything from car and swap meets to race events – is integral to the way in which the company distributes some products and content to customers. Integrated within these sorts of events is music and video which improves the overall richness of content.
Complaining about the cost mentality in TV and film where "You need 400 people to do anything", Hunter also says that he ran into trouble with such media suppliers due to the fact that they appreciate their distinct business niches.
"These guys just didn't understand what we were trying to achieve, and why. We've found it easier to bring in these capabilities with the right people and the right mindset. We've produced our own content using new technologies and new systems; and we do it in a much more cost effective manner."
So how much of this is all hard-nosed business sense and how much is entrepreneurial spirit?
"I used to not like that word," says Hunter. "It was bandied around a lot and often used to refer to people who I certainly wouldn't classify as having entrepreneurial qualities. I used to think it potentially embarrassing to be tarred with the same brush.
"But I love the entrepreneurial spirit. I think Hunter 5 is very entrepreneurial and I don't really care what anybody else is doing. I don't care what other people are doing in the online space; I don't care what they're doing in the publishing space. We do things because they make sense for us.
"And while I'd love to be able to invest in some of the things I look at, it has to be based on the fundamentals. I do get excited about ideas, but the reality is 'Can we monetise that?'
"It's like looking at the idea behind Facebook, and people saying, 'Well isn't it fantastic? Let's all build online communities now', and I still scratch my head and say, 'But where's the cash?'
"I believe we're good at finding businesses that actually make fundamental sense, or have the potential to. And for us right now, our focus is on adding scope and capability to our original publishing company, and allowing new product development and entry into new markets."