He’s Australia’s mortgage magician who, in less than a decade, built a small home lending business into a behemoth turning over hundreds of millions of dollars. Camille Howard talks to Mark Bouris, the marketing genius behind Wizard Home Loans.
Seven years in a chartered accountants firm and seven years in a law firm (with know-how about banking and structured finance) in the 80s and early 90s was all the experience Mark Bouris needed to get Wizard off the ground. Well, that plus contacts with a few reputable mortgage brokers, a "modest" personal investment, and a lot of "luck". Some might add, a bit of magic.
It all began in 1996, when he approached some mortgage broker friends who were sharing office space. "I said if you put your skills together with my investment, I’ll use my background to take us into the origination market [underwritten loans]."
It was the market the John Symond-led Aussie Home Loans was already making a mark in, and thanks to the booming property market there was plenty of room for other players. "I just knew the origination market was going to take off. It was a new segment within the financial services areas and it was in a rising tide—property was starting to take off, money was becoming far cheaper, relatively speaking, because of the competition, and I knew as a result of that the property market was going to take off," he says. "Well, I didn’t know there was going to be a property boom, but I suspected there was."
His instincts proved right, and thanks to the increasing popularity of non-bank lenders (the most public one of the time being Aussie), Wizard grew beyond Bouris’ expectations. As the first investor, he retained 40 percent of the business. Over the years, that percentage grew as he bought the brokers out—only one remains today. "I had the instinct, but I had to have the opportunity, too," he adds.
A big part of that opportunity came in the form of fanciers with deep pockets. "You can’t be a non-bank lender unless you have a financier behind you. And you need big, deep wholesale market financiers to do it." Over the years, his backers have included the Kerry Packer-led PBL, Deutsche Bank, ABN Amro, and GE Money, who finally bought Bouris out a few years ago.
The secret for any non-bank lender to attract this kind of backing, similar to that of financial advisers, is to have a good distribution model that wholesale financiers would be attracted to fund. Thanks to that funding, Wizard was able to roll out its first campaign in 1998.
While he concedes that the John Symond-led Aussie was a marketing success that helped draw attention to non-bank lenders, he denies Aussie’s success paved the way for Wizard’s. "There were a number of organisations who were looking to have their wholesale money loaned out to as many non-bank lenders as they could, and they had lots of them," he says. "But Aussie was the first one that became a brand. Symond spent a lot of money on marketing and advertising. I wouldn’t say he paved the way for me, or anyone for that matter, but he was by far the biggest brand—he became the biggest brand by marketing his business."
What the financiers invest in, Bouris says, is the distribution model, which is where Wizard was able to stand out from the crowd. "What John [Symond] had was a great distribution model, that’s where he paved the way. He had a system of what they call mobile lending units, we never adopted that but that was something he did very well.
"Our wholesale funder recognised that our non-bank branch distribution model was a good way to distribute, and in turn they decided to fund us to build our brand as well," he says. "There are hundreds of thousands of non-bank lenders who don’t go down that route because they want to stay boutique, or don’t have a business model their wholesale funder wants to back."
Although the launch of three branches simultaneously wasn’t exactly a boutique style of business, Bouris had no idea it was going to grow to its current size. There are now around 250 Wizard branches across Australia and New Zealand, and there was a launch into the Indian market earlier this year. This growth was only achievable thanks to the growing stable of investors. "The capital from one investor allows more branches to open, which makes it more attractive to other investors, making it easier to roll out more branches and attract still more investors," he explains. "Then, the income from the branches should provide you with the cash flow and the ability to grow your branches."
From the beginning, the business model involved the branches being run as individual small businesses, with principals signing up to licensing agreements. That has recently changed, with Wizard rolling out a new franchise system earlier this year. Bouris and his team recognised that the business had matured, and was ready to take on a franchise system, where the branch operators have the right to sell the business. "These things happen in stages—it’s just another development in the evolution of the business."
It’s also helped aid growth in a slowing market. "Growth is relative to your base and we’ve got a big base now, so it’s hard to grow at the same rate as before." That said, Bouris says they’re not far off St George and some of the major banks in terms of branch size, which means they are growing to target. "And the franchise system, to some extent, is there to assist the growth as well."
And profits close to $100 million a year contribute to attracting both new customers and new franchisees. Both marketing and distribution teams are assigned budgets and targets, which are established from the ground up, to achieve growth in both areas. They weren’t always so well off, though, as Bouris admits. In the early days, it used to be "going hard" in one area, and "playing catch up" in the other.
Branding & Marketing
Although his has been compared with Sir Richard Branson’s Virgin brand, Bouris says the brands have little in common. He and his partners chose the name (after scouring the dictionary) because it was a similar sounding name to Virgin, but this was more about representing "iconic Australian values" of sport and financial wizardry. "It was also a name that was ‘out there’ enough that people might take notice," he says. "You had to have a name that people were going to ask: what the hell does that mean? That’s why we chose the name Wizard."
While he is the face of Wizard, as Branson is for Virgin, Bouris says that was more from accident than design. When an advertising agency budgeted $40,000 for ‘talent’ in commercials, a cost they couldn’t afford, Bouris stepped in, becoming the man behind the brand. "We did everything off the smell of an oily rag in the early stages," he says. This included helping to write the TV ad scripts up until 2004. "It just shows that when you’ve got nothing to lose, you’re fearless."
What has been the real marketing boon, though, is the strategy to become heavily involved in sporting sponsorships, pouring millions of dollars into rugby league and AFL. There are also community and arts sponsorships that keep the Wizard brand in front of a wide community.
He admits everything hasn’t always happened according to plan, especially in the early days, with one of the most frustrating mistakes involving the wrong phone number being printed in a newspaper ad. Despite the glitches, he maintains much of the Mark Bouris–Wizard success story comes down to a lot of luck. It was luck and instinct that he got into the business at the right time. It was luck that he put together a marketing strategy that worked for the business, and it was luck that he became the face of the brand.
Part of that luck was in the timing, and in the opportunity that Bouris says doesn’t exist now. In fact, the lending
market has become tighter and increasingly more competitive since Wizard threw its hat in the ring, with fewer competitors in the lending space. He admits the downturn in the property market has resulted in a reduction of profit margins, so there’s an increasing pressure to grow the business, and watch costs more closely. Another spot of luck, he says, was the brand achieving critical mass before the downturn, so now the focus is on maintenance of critical mass rather than growth. He even goes so far as predicting there isn’t enough growth or margin for new players to enter the market for some time. "From my point of view, it’s good, because I’m an incumbent now. If I tried to break into this market now, well, you just wouldn’t make it."
Although it wasn’t part of the planned succession strategy, Bouris sold the business in 2004 to GE Money. Being retained as chairman, he is still the face of the brand. Although he didn’t have a plan to sell the business from the outset, he made sure the role he created for himself meant he didn’t need a successor, always looking to "much smarter" people to run the business day-to-day. "They understood the business from the ground up. They’d grown up on mortgage markets since their 20s, and I didn’t. There were parts where I had a greater strategic input—such as wholesale funding of the business—and they were more focused on expansion and building out new products.
"The business has been running without me for many years, back to about 2002," he says. "There’s no difference in the business from then to now except that it’s gotten so big there are executives all over the joint, and it needs less and less of my input."
Bouris does a bit of mental kicking over his decision to sell the business when he did. Not that he didn’t do well out of the sale (it was in excess of $400 million—he took his share in GE stock, the Packers took theirs in cash), and he doesn’t regret selling but he realises how much it would be worth today. "I probably wouldn’t have sold out," he says, if he had his time again. "I probably could have sold it for double today!" That said, he recognises the timing was right. "If you asked me what was best for me, I would have been better holding out. If you asked me what was best for the business, it was for me to sell out and for it to have a big owner."
Since the sale, Bouris has remained in a chairman role, signing a joint venture with GE Money to build the business into emerging markets, and this is where the Indian expansion comes in. Called GE Money Wizard, the Indian business is basically the same offering, with some minor changes to suit the new market.
A bit of his magic has followed the move into India, with rapid growth since launching earlier this year. He attributes this to India’s rising market, which is a similar sort of market to where Australia was 10 or 15 years ago. It’s also been made easier by India’s similar legal system, the fact that English is widely spoken, and that India has a mortgage market, which Bouris says is not the same the world over. "And there’s no competition there for the incumbent banks," he adds. "My role is to build out the market as quickly as possible, hopefully two a year at least." There are also other emerging markets to consider, the details of which he remains somewhat tight-lipped about.
If not for Wizard, Bouris would be in the property game. "That’s what I was doing, and still am to an extent. We do property developments, land subdivisions, I would just be in it in a bigger way. It’s a tough game, too!"
Rather than labelling himself as an entrepreneur, Bouris prefers the term investor. "I’m like a private equity investor, which is what I was at Wizard. I was the first investor, then I brought the other investors in, then I sold all the investors out. We sold out to GE, and GE chose to keep me on as chairman, which gave me the opportunity to run established businesses for them overseas."
Even now, he has many fingers in many pies. There’s a property business, overseas businesses, internet business, financial planning business, small investment banking business. "I’m a business builder, building business to maturity until it is run by someone else." From startup to more established small businesses.
Although he’s not influenced by others before him, he draws inspiration from a variety of leaders, including Nelson Mandela and the Dalai Lama for their courage and their struggle, and philanthropic businessman, Warren Buffett, because he keeps things simple, and Bill Gates for all he has achieved with Microsoft. "I try to emulate as many good qualities from these kinds of people as often as possible," he says. "The common theme [to their success] is a bit of imagination and sheer hard work to start with—it’s all about execution, at the end of the day, and how often you attend to that execution."
Tips from the Wizard
• There comes a point when you have to stop spending capital to grow the business. Use partners to grow the business, whether it’s staff buying a percentage or big partners investing. And you should only expand the business if it’s going to yield more income and profits.
• Always involve your most senior people in equity of the business. Don’t charge them, give it to them, because they’ll think far differently as proprietors than they do as employees, and you’ll get a far better result. You don’t have to give them half the business, just proprietorship.
• Don’t try and run and control every part of the business yourself. You can employ people smarter than you are and just give them guidance, rather than tell them what to do all the time. If you really want to make your business more valuable, you need to replicate it, and employ people you can trust to run the other offices. Which means you need to have more of a mentoring type of personality. Take some people risks, and back your judgment. This requires capital and you’re better off using someone else’s.