Ray White Group has grown from one man and his shed in Australia’s backblocks to an international property powerhouse. Nicholas Moody meets third-generation co-chairman Brian White
The heart of Australasia’s largest real estate agency sits not among the soaring steel and glimmering glass of Brisbane, Sydney, or Melbourne’s high-rise skylines, but in a humble tin shed in Crows Nest, a small Queensland town, 150km north-west of Brisbane.
“I get goose bumps every time I come to this place,” says Brian White, third-generation co-chair of Ray White Group. The reflection features in a video produced last year to document the family’s links to “The Shed” (as it is known). “Could it be the most valuable property in the whole of the White family?,” he asks.
Brian White’s grandfather, Ray White, was a young man in his 20s when he set up a trading business in Crows Nest in 1902. He started by renting the disused shed on the town’s railway siding. From this modest base he tried his hand at selling virtually anything, from farm machinery, to holding pig auctions, to insurance. Twenty years later, Ray moved his young family to Queensland’s capital, Brisbane. There he started out again at the age of 46 and built the real estate empire that has grown to more than AUD$46 billion ($35.3 billion) in unconditional sales revenues today. Yet the link back to Crows Nest is a vital one to this day, says his grandson.
“When our centenary was approaching we had to find the shed. By then of course all the railway line had been pulled up and everything had been dismantled. We put adverts in the local paper and finally found some guy [who owned it]; the sign was still there, but very faded. We put the shed back together and renovated it.”
The setting for Ray White Group today is a world away from that small Queensland town. When we meet, Brian White sits in the modern boardroom of Ray White’s Sydney headquarters, 17 floors up in the heart of downtown Sydney. The patriarch is a picture of calm as builders scuttle around the skyscrapers. Next door is Loan Market, a retail mortgage brokerage set up by Brian’s son, Sam, in 1995. Alongside the original Ray White real estate business and Loan Market, the White Family Group of companies now includes financial adviser Wealth Market, Home Now, property manager Living Here, real estate investment and advisory firm White & Partners and Concierge. Brian’s second eldest son Dan runs the Ray White Group day-to-day and has led White & Partners since 2001. Third son Ben oversees property technology firm Ailo and the Leading Property Managers Association (LPMA).
Brian’s brother, Paul, is joint chairman of Ray White and chairman of Ray White Rural, while Paul’s son, Matthew, owns the Ray White franchise in St Kilda, an important area for the company, in Melbourne.
Today Ray White has more than 13,000 people, spread throughout 1,000 offices from Australia and NZ. Its reach also extends to Indonesia, China and as far away as Saudi Arabia and Lebanon. But it wasn’t always this way.
Climbing the property ladder
Ray White’s son, Alan, had taken over his father’s fledgling business and expanded Ray White Real Estate to include 15 company-owned offices through Queensland in the post-war period.
White, now in his mid-70s, recalls one of his clearest memories was when he was about 13. His father stood up at the dinner table one night to make an announcement to his small family. One of the big rival real estate firms from New South Wales had approached Alan with an acquisition offer.
“I remember so strongly, he said: “I’ve got an announcement to make, “I’ve decided not to sell; we’ll hang on for as long as we can”. I remember those last words,” says White.
Alan stepped back from the business and handed the reins to White in his early 30s. Taking charge in the face of rising competition led to a bold vision to expand beyond Queensland’s borders. They chose to become a nationwide business in the mid-1980s using the franchise model.
“Alan created the springboard. The job of the third generation was to jump on it and take the company to an international operation,” White says in a background on Ray White’s history.
“The big question was, ‘Are we going to expand interstate?’. And eventually the decision that I took was, ‘Well, we have to give it a go’. It was a big risk, and business is about taking risks, but this was a risk that was going to be significant. We could actually have a go at going national and probably lose everything if it fails. We had a go and good things happened.”
Yet the expansion was not without significant strain. White mortgaged his own properties to fund the initiative and he became a member of what he calls “The 2am Club”.
“For about a year I’d be up at 2am walking the streets to deal with the tension and sleeplessness. It was the best time of Scooby’s life (the dog we had at the time),” he jokes.
“He was always awake with his tail wagging. He knew where we were going and he knew where the cats were to chase!”
The house that Ray built
The family has done much to try and preserve Ray White’s founding ethos of humility and ambition into the fourth generation.
“Towards the end of his life someone said to my father, ‘Oh you must be pleased by what Brian has done’. And he said, ‘Yeah he’s done a good job, but it has taken him a long time.’ His view was if good things happen, yes you should rejoice, but not for too long—get back into it. I remember it brought me down to ground very nicely.”
White is pleased all his sons started out to the family business.
“There was never any expectation that they would join the business,” he says.
White’s view is formed from personal experience and informs his strident views on succession.
“I had worked for my father and I remember what it was like. You want to make own decisions; you want to be in charge of things. You want to be able to do things without saying, ‘Hey Dad, what do you think about this?’ Because your father only has to say, ‘Well, I am not too sure about that’, and it is like a veto.”
To keep that ambition alive, White is eager to give his sons and nephew what he calls a “red hot go”—Australian slang for giving it your best effort.
“It is so important that as a parent you let your kids have a go and they [the boys] are all having red hot goes in different areas,” he says.
Ray White’s ability to be a fourth-generation family business that is still 100% owned and led, puts it in a rare company. It has informed Brian’s contrarian attitudes about ownership and succession.
“The theory goes the first generation starts the business, the second generation creates something good, the third generation stuffs it up. Could it be more realistically, first generation starts, second generation creates it and then buggers up the succession? Is it a second generation problem, not the third?”
“Parents are so keen to be equal or fair to their kids, that they give everyone a third or quarter or how many shares there are in the company. They put their hands above the table and say, ‘I’ve done the right thing’. But you have given [the next generation] a poisoned chalice,” he warns.
White recounts the story of a personal friend who was considering giving his three children equal shares in a family business, despite only one working in it, and the other siblings living overseas, but demanding involvement.
“No, you do not do that. You do not put your one child in the situation where his two siblings, who know nothing about the business, are going to have effective control over the board,” he says passionately, for a moment breaking his normally calm demeanour.
White’s views are formed from first hand experience. At one point his father wanted to give him a half share in a farm the family had bought for his brother Paul, and split the ownership share in the real estate business. White resisted it as he did not want a share in a cattle farm and could see the future problems if either business got into financial trouble.
“If I had said yes, I wouldn’t be here today,” he reflects.
Transferring the deed
Succession is a topic so close to White’s heart since many of the franchise owners in Ray White’s business are themselves family businesses.
“In our company we have got so many franchises and family businesses themselves. I get involved a lot in these discussions. It is so important for us to get that succession right. The whole essence of family business is how you work the succession,” he says.
So what is his advice to these franchisees?
“I ask, ‘Who is going to run the operating business?’ If so, he or she must have control. And if that means it is not equal, well then tough. As long as there are some other assets that can be used to say, ‘Okay, you get the business and you’ll get more of the house than your sibling’. But do not give a poisoned chalice to the next generation by giving them half and half,” he says.
How does Ray White’s succession work at present then, if White is so resistant to split ownership?
“It is a work in progress. Everyone understands what is going on and all of them are getting a red hot go with their individual businesses,” he says.
How does the family communicate between themselves?
“I am encouraging each of my boys to treat the business as their own, so they tend to say [to me], ‘We have made the decision to do this’, rather than ‘I’d like to debate this’.
All three have shares in the main Ray White company in addition to the areas they are responsible for. They communicate with Andrew Jamson, the head of the White Family Office and honorary member of the White family (as he’s referred to on their website), about decisions made with their individual ventures. Jamson is the only non-family member of Ray White Group’s five person, all-male board.
“[Andrew] knows everything that is happening in the company. He knows more about what is happening than I do,” quips White.
“Each of the boys will debate with Andrew what they want to do. [The boys] make decisions and they are always telling me what they are going through. [However,] I would never ask Andrew to convey a discussion he had had with any of my boys.
“Andrew has never said: ‘Oh, I had this discussion, you should know about it’, as that would break the whole trust structure.
“That is why the family office works well because it is a real exchange of views or ideas. The family office does not have any power in and of itself,” he adds.
“Family businesses work well because the ownership is controlled by a family that is at a high level of functioning in their relationships,” says David Harland, managing director of Brisbane-based FINH who advises family businesses in Australia, New Zealand, and South-East Asia.
Harland says that Ray White’s model of 100% family owners within a franchise model and close to 100% family membership on the corporate board is unlikely to be one that “corporate governance experts around the world would advocate”.
“But that is the unique things about family businesses. They cut the cloth to suit their family relationships and how they wish to run their organisations,” says Harland.
Bricks and mortar
White acknowledges that letting go of the leadership of a family business is a tough thing to do.
“A company is going pretty well and it is a great thrill. It is easy to say, ‘Oh, I want to know what is happening’. And I do not do that. I keep thinking, ‘Oh whoops. I did not tell my father that either!’
“Who knows what my kids will work out amongst themselves? It is up to them. They are going to have to work that out as time goes by as there will be changing environments, changing conditions, and changing risks.”
Having stepped back from a day-to-day role (allowing more time for personal pursuits including tennis and surfing), White now spends a lot of time as an ambassador—although don’t be fooled—he still spends most days working on some aspect of the business. He is an avid reader of management books.
“I never say, ‘I am going to stay home today’,” to which he adds later on: “There is no such thing as a holiday in leadership”.
“There is a huge role that I intend to keep personalising the company. We have got thousands of people running businesses. Just communicating with them is very positive and I enjoy doing that enormously,” he says.
“Everyone love Brian,” confirms Alex Tilbury, Ray White’s media manager.
“He is like a rock star when he goes to events, people want to be in his photo and they just love talking to Brian.”
“It is a big advantage to us,” says White.
“If you spoke to our [franchise] business—they are all independently owned—and you asked: Why are you in Ray White? Why do you stay in Ray White? The word family would come up first. It is the family structure, and the brand. The stability of not just the family, but the leadership benches is impressive to a lot of people.”
Harland agrees: “Ray White Group, and through Brian, have really mastered how they present the ‘familyness’ and the social capital of the family through their brand name of Ray White. So although it is the Ray White family and it is the Ray White brand name, they actually leverage the model through other families.”
What are White’s final thoughts? “Family businesses are fantastic things. But you can never take any of that for granted is one of the biggest lessons.”
A humble attitude that his grandfather would be proud to hear is still a core value 116 years after starting from one tin shed.