Phillip Kingston’s wide range of business interests and penchant for fundamentals-style investments at just 28 get Zilla Efrat wondering if he is the next Warren Buffet in making.
For someone who is only 28, Phillip Kingston MAICD (Twitter @PhillipKingston) has certainly packed a lot of milestones into his life. He is already an experienced director, having sat on a range of private company and not-for-profit boards. He is also the founder of companies such as Trimantium Capital, internet solutions company KDIS (Twitter @KDISintl) and the Henley Club, a private social club in Melbourne. He is co-founder of Good Super (Twitter @GoodSuperAus), a social impact superannuation fund specifically targeted at young people.
In addition to being a director of the Centre for Sustainability Leadership, he is chairman of the International Technology Fund, which helps international non-government organisations (NGOs) improve their use of technology. To cap it all off, he is an experienced rock climber, mountaineer and endurance event participant and a published author.
But none of these roles appeared to be on the cards for Kingston when growing up in Melbourne. As an only child, he spent a lot of time around adults and was influenced by his parents’ friends to become a lawyer or accountant. However, at the ripe old age of eight, he realised he was interested in technology after spending three days rewiring a server room with his father, who worked in IT at General Electric.
“I remember thinking that this was fun and I got paid,” he says. “So from there I started pulling apart computers and making websites and the hobby became a passion. The technology itself is only a very small part of the story; turning ideas into something tangible to help people is what really drew me into technology and keeps me interested.”
During high school and university (where he studied commerce and science), Kingston did software contracting. “What I found, time and time again, was a quality vacuum in the area of IT and, in particular, web and mobile consulting. My experience was that the software consulting industry focused on quality processes as opposed to quality outcomes. Non-technical decision-makers had been burnt too many times.”
So in 2008, while still at university, Kingston started KDIS, which helps multi-brand companies get the most out of their digital marketing and boasts clients such as Nestlé, Toyota, the United Nations, GlaxoSmithKline and Roche.
He says: “For KDIS, quality outcomes are not only about quality processes, but also about strategic thinking, long-term planning, proper incentives and delivering a high degree of care-factor and discretionary effort on every project.
“Our simple point of difference – we care more – gives us an enormous competitive advantage and has allowed us to grow quickly and acquire very impressive clients.”
A highlight for Kingston was the opportunity to work with the United Nations on a range of projects in the design of technology-driven public health interventions. “These projects bring a lot of impressive minds together to solve some very serious problems,” he says.
Kingston also founded Trimantium Capital in 2008. It invests in companies at all stages of their lifecycles, usually (but not always) taking a hands-on role in management, strategy and growth. It typically chooses companies that are commercialising technologies where there is an established demand for their products (market-pull) as opposed to them pushing the technology onto customers (technology-push). Its investments include KDIS, Brisbane-based website developer Fireworks, research and marketing consultancy Walter Analytics, search technology innovation start-up Lumanetix and Dragon Star, which provides technology and digital marketing services in China.
Kingston says Trimantium, which has doubled its revenue year on year, applies a fundamentals investment style, which has always resonated with him. “My interest has only grown as I see the fundamentals investment approach becoming increasingly rarefied. Warren Buffett and [his sidekick] Charlie Munger have it right – investing in companies that have or could have sustainable earning streams a long way into the future. This attitude does a lot of social good as well, rather than simply seeking investment value in short-term price movements or external shocks. It is just a more sustainable, enterprise value-driven approach and is more of an investment in people and the nation’s prosperity than trickery, asymmetry or arbitrage.”
Kingston says he has always wanted to make a positive impact through business. Thus, Trimantium has a high standard of environmental and social governance (ESG) and a social impact focus. “I feel I can create the most change through an investment company. Most change activists rally managers and directors to change their companies in a certain way, usually to price externalities, provide stewardship, improve supply chain integrity, and often against their duties to maximise shareholder interests. If the activism comes from the shareholders, this duty conflict is removed.”
Kingston also supports the “B Corporation” movement, which certifies companies that meet rigorous ESG standards. Started in the US, it is based on the idea that companies should consider the interests of stakeholders, such as employees, the community and the environment, in addition to the interests of shareholders.
“I see it as a great way for a company to measure and improve its governance, workforce and operations against coherent benchmarks,” he says.
In 2012, Kingston founded the B Corp-certified Henley Club in an attempt to “fill a social and cultural void that emerges in one’s life post university”.
“It is common for many hard-working young people to get stuck in a vertical work stream, swamped in the management of both their bosses’ and client demands,” he says.
“There are many private clubs in Australia which facilitate networking and knowledge sharing. However, I have found that many are not really suited to my generation. With that in mind, the Henley Club was designed to take all the positive attributes of those clubs and modernise the rules and membership criteria.
“There is a lack of horizontal integration in society and increasing levels of specialist skills with fewer people than ever focused on how it all comes together. We spend years improving our ability to do a narrower set of things well. Corporate Australia is increasingly a niche. The Henley Club encourages its members to understand the context of their work and the way good initiatives can be magnified and intensified with collective will and effort.”
Late last year, Kingston also co-founded Good Super “to address major challenges in the allocation of capital in Australia”.
“We want to solve issues that government, private enterprise and NGOs are not able to due to a lack of intent and capital, short-termism and structural capacity,” he says.
“Australia’s superannuation industry has the ability to address these long-term challenges by investing in profitable companies that are part of Australia’s future. Good Super has been able to make an impact because of the background it has in technology. We’ve built some proprietary systems which have given us an undeniable competitive advantage. We’re able to move much faster than other superannuation funds and our marketing is extremely nimble.
“We are aiming to raise $20 billion over the next five years. Interest has been overwhelming and we’ve signed up nearly 5,000 members in our first three months, all through digital marketing and our systems.”
With so many different interests, what is Kingston’s main day job? “No two days are the same,” he says. “My day usually involves helping my business managers to improve their business, which generally means I’m an HR manager. My focus is keeping the best people and everything else works itself out. After people, I try to ensure we have the most efficient allocation of our capital in each of our businesses.”
His advice to other young entrepreneurs is: “Solve real problems where there is, or could be, a willingness to pay. Most entrepreneurs in the tech start-up arena look to “black-swan exits” or liquidity events like Facebook, WhatsApp and Twitter for guidance on the construction of their business models. There are a very small number of companies that succeed without a sustainable revenue model and few of these last.
“I cannot stress enough the importance of focusing on delivering value to someone that could conceivably pay. Digital advertising is on a very natural and permanent downward trajectory in terms of delivering meaningful revenue. Advertising, in my view, should not be considered a realistic source of revenue for a business starting up today. Instead, look for opportunities that are close to transactions. As in finance, the closer you are to the money, the more money you make. Also, practise responsible entrepreneurship. Ensure the company you are building is sustainable as well as profitable. It’s hard to fix it later and businesses that are ethically-built are more resilient to legislation changes, politics, bad publicity, lawsuit provisions and asset write-downs.”
Kingston’s first directorship was on the board of e-Fortify, an internet security auditing company he started at 18. The first time he was appointed director by someone else was on the Centre for Sustainability Leadership’s board. “That was in 2007 and I’d just turned 22. I was invited to join this board by a departing director who put me forward as his replacement.”
Asked how young directors can benefit boards, he says: “The benefit is more a function of years of relevant experience than years of living and, of course, what one’s views are on the role of directors. I do not believe there should be young people on boards for the sake of it or for representation, but I suspect there are good directors overlooked for their age. Young people with commercial experience (say five to eight years at a bank or in a CA/CPA role) and a good degree often have the technical knowledge to fulfil their director’s duties. To really add value though is a different story. I find young people regularly lack experience in human factors such as talent development, and culture and people management to provide practical advice to experienced managers.
“I look for young people that have validated leadership qualities and who have led winning teams for a prolonged period of time in competitive industries. In fact, in all of my recruitment programs, I look for the things that you can’t learn, because the rest we can teach them. A track record of entrepreneurial success is not itself a good marker for directorship quality. Entrepreneurs, while they may be lucky, are sometimes disorganised, unstructured and struggle with true engagement in other people’s businesses. I want enterprise value to be created and protected by my board, not just compliance.
“New-world thinking by agile digital natives that are globally mobile and socially conscious is critical to a board that is going to drive enterprise value over the next decade.”
On being a director, Kingston says: “Cutting through nice narratives from managers to quantitative realities can be hard, particularly with good communicators and sales people. I would say the skill that I’ve honed on boards over the past 10 years is the ability to ask hard-hitting diagnostic questions that allow me to flesh out the shape of a situation quickly and having resilient cross-checks up my sleeve to work out if I’m getting the whole story.”
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