McCombie, Helen --- "Michael Norster, co-founder of Australian Energy Limited (Powerdirect) - Sustainable wealth" [2005] MonashBusRw 22; (2005) 1(2) Monash Business Review 6

Michael Norster, co-founder of Australian Energy Limited (Powerdirect)
Sustainable wealth

Helen McCombie

Entrepreneurs shouldn’t just leap from deal to deal, says bright spark Michael Norster who recently moved from electricity to telecommunications. Entrepreneurs should be more about delivering a sustainable business scenario. Helen McCombie reports.

When you think of an entrepreneur, you tend to think of a person who builds a business from nothing, creates an empire and then rules supreme as the company grows and prospers. But one Australian entrepreneur has a different view of how his business should be run.

Michael Norster, 39, co-founded electricity retailer Australian Energy in 1997 and currently owns 19 per cent of it but, after being very hands-on for seven years, now has no day-to-day role in the running of the company. Norster made his debut this year on BRW magazine’s Young Rich List (a ranking of the country’s 100 wealthiest people younger than 40) with a personal wealth of $13 million.

“Officially I had the chief operations officer’s role, so I did all the operational stuff from contract closure to collection, and for a time I did a business development role. If the truth be known with start ups you do everything and I have done everything – and I mean everything – from cleaning the toilet to doing treasury function with the bank,” he says.

Australian Energy started life as an electricity broking business. After building a base of customers through bulk electricity agreements with trade associations, Norster and his partners branched out by obtaining a retail licence in Victoria in 2000, then listed on the Australian Stock Exchange in 2001. Last year, Norster departed the executive team believing the company had enough turnover, enough profit and enough diversity in terms of customers and staff to be a self-sufficient, successful operation. He outlines his approach to managing.

“Usually I start pretty close to the business. I will add as much value as I can and then gradually fade back, unless I think the business can really benefit from me having front-line involvement. So I take a very pragmatic approach. If I think the business is going to benefit in a maximum sense from me being the MD, being out in front of it etc, that’s the role I will take on. If I think the business is going to benefit from other people running it, and me being in the background or having even not much at all to do with it, then that’s the role I will take.”

Norster was always ambitious, although those who knew him at Monash University, where he studied science/law, might not have recognised the mark that he was going to make in the business world.

“When I got out of uni, they thought I was a pretty average person who had done a couple of degrees and was just headed into a profession to melt into the background.”

The initial choice of law as a career was partly driven by what his father did. “Dad’s a lawyer and there was a bit of parental influence I think. I did science law, and I did it on the basis that it was a career that would teach you to think, it would teach you a bit of logic, a bit of discipline and you know, to be fair, it did somewhat give me those skills,” he says.

But after seven years as a lawyer Norster decided there were better things to do.

“I was a solicitor who specialised in telecommunications and information technology law. I got sick of the law and sick of the politics and sick of the personalities, working my guts out for no money-type arrangements. So I looked hard at deregulation, what was going on in terms of what was being de-regulated, and I saw that after the telco industry, the Victorian government was deregulating the market in a staged fashion. I thought, what the heck, everybody needs electricity and if I could take advantage of the deregulation why not.”

After success in the electricity sector, Norster has entered the telecommunications industry with a venture which has similar marketing principles to Australian Energy. Miracom Telecommunications, launched in August by Norster and business partner Chris Kuperman, offers bundled voice and data services to companies in capital cities.

Miracom will use Kuperman’s Joint Internet network, bypassing the more expensive Telstra network.

“I’ve gone into business with Chris Kuperman who has been running an internet service provider for about 10 years. It’s a business grade network with only business customers. Miracom is going to focus on SME customers. What we do, we leverage off all that wholesale power that Joint Internet has got, and we put a sales and marketing face (pretty much like Australian Energy or Powerdirect) on something that is already operating and we expand it quite considerably. We expand it in a fashion where we can actually deliver the price and promises that we make.”

Norster has a surprising take on the telecommunications industry. While the major players complain about the fierce competition, he has a different view, finding it a breeze after his struggles with electricity.

“Electricity has been bloody hard. There is not just a money barrier to entry, it’s full of nasty competitors and regulation and I must say I am finding telco an absolute holiday. People say telecommunications is very competitive and it has been done over. Well that is rubbish quite frankly. With new technologies coming in, my personal view is that Telstra will struggle for a period of time and with those circumstances coinciding in a market where there are reasonable commercial terms and it’s mature in a regulatory sense, I am just finding it a dream, it’s delightful.”

Norster has been branded an entrepreneur, a label he doesn’t mind, but has particular views about what the word stands for. “Entrepreneurs I believe are born not made and I think there are some very different sorts of entrepreneurs. There’s what I call the crazy sales and marketing guys, who just do deal, deal, deal, and it doesn’t matter what the deal is or whether it is supportable or makes money or whatever, and I think they give the word entrepreneur a bad name. But it ranges back to people who are bit more interested in putting together sustainable wealth. I happen to think if I am branded an entrepreneur, people see me more as the person providing a sustainable deliverable wealth scenario or business scenario, and somebody who is a person of good reputation and integrity. Reputation is very important to me,” he says.

The big issue for the people running Australian companies at the moment Norster believes is coming to grips with technology and how it will affect the way that business is done.

“I think that the biggest issue that current management – baby boomers around early 40s to 65 – faces is coming to grips with the proper and efficient use of technology. I am nonplussed with certain baby boomers. I think they have got tickets on themselves and they overrate their own ability. There are a lot of people in the States who have said, and I agree, that the internet as a commercial tool hasn’t really got going yet.”

Cite this article as

McCombie, Helen. 'Michael Norster, co-founder of Australian Energy Limited (Powerdirect)'. Monash Business Review. 2005.; Monash University ePress: Victoria, Australia. http://www.epress.monash.edu.au/. : 6–9. DOI:10.2104/mbr05022