Doing Something You Love (and turning a profit)

Michael Glennon

When I left my last firm just before the GFC I had a non-compete associated with the sale of the equity as I was a major shareholder. For the first time in my career I took some time off. I travelled overseas and spent some time in Madrid, Spain. I did some work as a bicycle mechanic and found it to be a good break, but soon enough I was itching to get back to Australia and start investing again.

Initially I just invested my own funds along with some family and friends money. In that period post the GFC I made some amazing investments in businesses like Credit Corp (CCP) at 30 cents, Dominos Pizza (DMP), RHG (RHG) and Silver Chef (SIV) to name a few. We made spectacular returns from these investments over the next few years, which was really a once in a lifetime opportunity.

"Things went along well but I came to the realisation that I didn’t want to be a shopkeeper without a shop..."

During that period I also decided I would set up an online business selling bicycle jerseys as I was racing bikes at the time and I thought it would be a good little passive investment I could be involved with. Things went along well but I came to the realisation that I didn’t want to be a shopkeeper without a shop, in an industry with no barriers to entry with a product that was not significantly differentiated from our competitors and which was subject to the whims of fashion.

Having only invested a small amount of capital in building a website and ordering some product from China, I gave my half of the business to my partner in the business. He is still operating that business and has managed to be able to turn from a hobby into a profitable business, but it is a small scale business and probably always will be.

I realised what I had done was to critically assess my own investment as I would for any other investment and came to the conclusion that it was a low-quality business without pricing power, no barriers to entry, without a differentiated product. It was an important lesson, if I had wanted or been passionate about being a retailer I would have chosen a career being a retailer.

I like riding bikes but I’ll keep the bike riding to the weekends and keep it as a hobby and stick to investing in quality businesses with good business models or where the business is significantly undervalued.


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