Did you hear about the Morgans?

Last updated 16:19 22/03/2014
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They're one of this country's great family success stories: Gareth Morgan, the outspoken economist and his publicity-shy son, wunderkind Sam, who made $227 million selling Trade Me - and as much again through his investment in Xero. While Gareth remains firmly in the public eye, Sam is quietly driving ambitious business and philanthropy projects here and overseas. Today they share their thoughts on wealth - and, more importantly, the art of giving it away. Michael Fox reports.

Sam Morgan loves telling the story about the day he was having trouble with a faulty parking machine at Nelson Airport.

Frustrated when it wouldn't accept his ticket, he sought the help of the parking warden, who was particularly obliging.

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"He goes 'Absolutely I'll help you' and he was really nice to me . . . and he sorted me out and I said thanks for that, that's really awesome and he said, 'Anything I can do for you, Mr Morgan - I followed you into Xero when you invested in that and it's made me $300,000'.

"I loved that, it's awesome, how cool is that?"

That's largely become the story of the Morgans - Sam, father Gareth and family - after the phenomenal success of online auction site Trade Me, founded by Sam and backed by Gareth and wife Joanne among others, which was sold to Fairfax in 2006 for $700 million.

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The sale made them instant multi-millionaires. Sam became one of this country's 25 richest people overnight. It was no fluke. He has since amassed a second fortune investing in Xero, the business accounting software company.

After making millions the Morgans are now intent on giving lots of money away, Gareth and Jo through the Morgan Foundation and Sam through Jasmine Social Investments, including projects aimed at alleviating poverty in the developing world and conservation efforts here at home.

They have also had a significant impact on the business landscape through the creation of jobs, wealth and spin- offs from Trade Me.

Neither works fulltime now, at least in the conventional sense.

Gareth, 61 (going on 35, he reckons), has a busy schedule juggling his co-ownership of the Wellington Phoenix and Hurricanes franchises, various philanthropic commitments and social campaigns, and of course a high-profile assault on cats and now rats.

Sam is focused on his investment portfolio, philanthropy, family and business roles.

Neither is prone to acts of ostentation and father and son appear completely unaffected by their success.

Sam drives a VW Golf, Gareth a Toyota Yaris. Gareth wears old Rugged Sharks shoes, sports an at-times poorly groomed, droopy moustache and is gregarious and open. Much of his conversation is punctuated by a hoarse and hearty chuckle. He finds his financial situation hilarious.

Bold and ambitious, he's intent on using his wealth and profile to push for the changes he sees necessary, whether it be conservation and anti-cat initiatives, fighting poverty or blowing the whistle on poor practices in the finance sector.

Sam has more swagger, born of phenomenal success at a relatively young age (he was 30 when he sold Trade Me).

He's be-sure-of-your-facts- around-him smart. If you're wrong he likely knows it - the kind of guy who can go from identifying rock formations, to listing how much venture funding GoPro received, to discussing water filters and particular chemicals in soap.

Gareth is well used to this.

"He's a good boy, he's bloody bright, he's very clever, don't tell him that though. He has a superb brain."

Life has changed significantly for Sam, a university dropout, since he sold the online trading site he built from scratch, famously inspired by his inability to buy a heater online for his Wellington flat.

He has absolutely no interest in starting another business, which he says takes a level of obsession which only those who have done so can fully understand.

"I spent 10 years basically only thinking about Trade Me. It's all I thought about. Literally the last thought in my head when I went to sleep at night was something to do with Trade Me, the first thought in my morning, before thinking about brushing teeth or breakfast or your wife or your kids or anything, was Trade Me," he recalls.

Instead, he is focused on finding and funding poverty alleviation projects around the world, backing people who are "kicking arse", and on on his family and business interests.

He says he is inspired by people who have succeeded in multiple areas, pointing to former Fairfax boss and All Black World Cup-winning captain David Kirk.

"He always keeps moving."

Having varied interests means he is no longer competing with himself or trying to live up to people's expectations.

"After the Trade Me sale people were asking, 'So what are you going to do next?' They were literally asking me that five minutes afterwards. I was like, 'I've got no idea what I'm doing next'."

Shifting his focus removed that expectation, he says.

"If I was continuing to try and hit home runs then that can be a burden, you know, your next home run has to be bigger than your last home run so I don't really think so much like that anymore."

Philanthropy was a logical next step.

"When you make lots of money in an internet company the next thing to do is to go and see how you can apply technology and business-like thinking into the philanthropic space."

GIVING IT AWAY

Sam is certainly in a position to put his money where his mouth is. He made a reported $227m from the Trade Me sale, and says his investment in Xero has been just as profitable for him.

Sam now has 20 or 25 projects in the developing world on the go, mostly focused on poverty, and says he feels privileged to be in a position to do it.

"It's actually an extremely fun thing to do as well. You get to go and hang out with people - we only fund people who are really smart, doing really good work in really interesting parts of the world - and you learn an awful lot."

He links the rise in philanthropy from the world's mega-wealthy to the tech boom.

"We go through these periods of time where people make extraordinary amounts of money and there's been times when that has happened in the past around Henry Ford or before that the Carnegies and Rockefellers and so forth, railroads and steel and all the other major . . technology shifts that have created huge amounts of wealth, and since the late '90s really there's been quite a large number of people make an inordinate amount of money quite young - it's not unusual to find 30-year-old billionaires now. Facebook alone has probably created half a dozen of them."

While his parents have switched a large chunk of their philanthropic focus to New Zealand, Sam has so far concentrated on the developing world, where he says small sums of money make massive changes.

He sees himself as a small part of those projects though, saying the opportunity cost to him of giving away money - typically several hundred thousand dollars a year per project - is dwarfed by the cost to those who dedicate their lives to helping others.

For Gareth, philanthropy is about giving back, while also having fun.

"I mean there are so many causes out there, so many good causes too, it's impossible to choose one against the other so I think, well, which is the one that makes the most fun and will make a bit of a difference and that's how I tend to select them really."

He is also part of a consortium that bought the Wellington Phoenix when they were asked to help prevent the franchise from folding and he owns a stake in the Hurricanes - which some might say makes him a sucker for punishment.

He's driving the building of a new stadium for the Phoenix in Petone and a bid to cull stray cats to help the population of native birds recover.

He and Jo are known adventurers, particularly as avid motorcylists who have driven through countries such as North Korea, while Jo has recently taken up mountaineering and plans to climb all of New Zealand's 3000-metre-plus peaks.

"We all just can't believe it, she's gone mad," Gareth says.

In what other observers might also deem mad, the pair also plan to visit a project they support in Pakistan's Taliban-controlled Swat Valley later this year.

Sam says that's something he admires about his parents - their willingness to give things a crack.

"If something comes up that sounds completely crazy their answer is yes, regardless of what it is. I really like that about them."

GREEN (WITH ENVY)

Sam laughs at Gareth's interest in conservation, saying his dad had never struck him as a passionate conservationist, but that was what got him on the recent HMNZS Wellington voyage around the sub-Antarctic islands.

Gareth was invited due to his support for the Million Dollar Mouse pest eradication campaign in the Antipodes, while he has also successfully piqued Sam's interest in a plan to turn Stewart Island into the world's biggest pest-free island.

The pair are close but say they don't get to spend enough time together and the two-week trip was an opportunity to do that. Sam asked Gareth to arrange a spot for him.

"I said I'm not sure I can organise that . . . and he said just tell them the story about the golden goose," Gareth laughs.

They are inundated all the time with requests for funding but say they are used to that, and have got better at picking successful business and philanthropy projects.

Gareth says that when they first started getting into philanthropy - after famously declaring he would give away their share of the Trade Me profits - his biggest emphasis was on poverty alleviation overseas.

After several years of that he got the urge to do something closer to home, saying he backed Kiwis whenever he could, and conservation efforts fit with New Zealand's identity.

"And it's a nice change from all the poverty stuff . . . it's pretty depressing all that stuff, you feel you can't make a difference, that's not an excuse for not doing anything but it's just so hopeless."

He laughs at his immense wealth - his share of Trade Me's sale made him $50m - and says that makes up a quarter or a third of his worth - and says he feels "incredibly lucky" to be in a position to help others.

"I've hit the jackpot about four times which is more than my fair share really."

LIFE AFTER TRADE ME

Father and son admit the sale of Trade Me was life-changing.

While Gareth had long been in the public eye, the sale catapulted Sam into the spotlight - something from which he has largely shrunk from since.

While Gareth maintains a high profile, which Sam likes to poke a bit of fun at, Sam was a reluctant interviewee at first, saying a public profile is something he has little desire to pursue.

He has moved from Wellington to Nelson with wife Talei Hayward, whom he met at Victoria University, and two daughters, and sees little point in publicising his philanthropy.

He likened the attention after Trade Me to someone who is selected for the All Blacks: "You go from no-one really knows who you are, to suddenly the world actually changes a bit around you."

He admits to being "quite afraid" at the start of how life would change. He had people telling him he would need to hire bodyguards and install lasers at his house.

While not as social as his dad he says he took a lead from his high-profile parents, long in the public eye, who took it in stride.

Seeing Gareth always in the media while growing up made the transition to public life easier and he says he has not really thought about what it means to be a Morgan.

"It's sort of like asking someone how it feels to be so tall and good looking . . . You don't think about that stuff."

While he thinks making a fortune did little to change him, it did have an impact on people around him and could at times be distancing - though the reactions have been positive.

He puts that down to them understanding how he made his money. Trade Me was something people had used and understood (today it has more than 3.3 million active users).

"On the relationship side what happens is things change around you quite a lot . . . the classic is if you go into a flash restaurant if you're dressed like a bum then they serve you like a bum but if they recognise that you're a valued customer they treat you differently, so the world around you changes a bit if you do get recognised.

"But it wasn't really a trajectory that I was wanting to amplify."

Having a family and wanting to keep life as normal as possible influenced his outlook, as did living in New Zealand, where people were sensitive to "big noting".

"In New Zealand if you're wealthy people note it but it doesn't significantly impact how they interface with you. People still treat you the same.

"The US is unbelievable like that. If you're a billionaire you actually have a different god, you've almost reached immortality.

"It's really odd, there are people and then there are 'us'," he jokes.

"It's very, very class-based, very stratified like that. We don't really have that in New Zealand, New Zealand is a very egalitarian sort of a place and I think if you are a bit of a dick you get a bit of a slap, you know."

Having such financial security means Sam and his family don't share certain common complaints like mortgage rates with many of the people around them, "but you've still got all the other same problems".

"Most of life I think doesn't really change but anything to do with money . . . you sort of need to recognise that you don't have the same level of problems as ordinary people do with mortgages and affording a holiday once a year or whatever, those become non-problems.

"But everything else is pretty much the same, you know. The dishwasher still doesn't empty itself."

ALL IN THE FAMILY

Having a tight extended family also helps. Sam has great respect for his parents and says he and Gareth enjoy a beer together and talk over their mutual interests.

"He's an extremely hard worker. I sort of always aspired to not be as hard a worker as that. He has a very real requirement to be busy all the time with his projects so he's always got a lot on the go, I'd be a lot less so but I kind of want it that way."

Gareth is more social "and quite enjoys that, whereas I have less time for that".

Gareth thinks that ultimately his son's success was inspired by his "super strong" mum - the original trader in the family.

"That's where he learned it from, not from me, I'm an academic. I can remember once when Joanne was buying and selling student desks or something one year and Sam said, 'Oh, Mum, you're such an embarrassment' and that was really funny and now he becomes the biggest garage sale merchant in the country, you know!

"She calls herself an heiress . . . she's inherited from the son."

Gareth says wealth can be a barrier to new relationships and you have to work at maintaining old ones, though it is easier for him at his age than it was for Sam.

"That's a hell of a shock to the system. And when we look at the Trade Me group, all the people who've made money out of it, some of it has, not destroyed their lives, that's too hard, but they've had trouble with it.

"He's handled it pretty well in the end. He's still pretty grounded, Sam - he could've gone to seed with it - and that's due to his family around him, his wife especially. He's kept his priorities, which is his family and stuff. It's been a great story really."

Aside from an extra $50m in their account, the Trade Me sale has not changed Gareth and Jo's life a great deal, he says.

"Before we started making money really, or big money like that, we were pretty happy and lived within our means.We've got four great kids and good friends and pretty well established in Wellington and happy in Wellington and didn't want to change."

Gareth never gave any thought to the fact that they were now The Morgans. "I don't feel it really, I mean obviously if I walk down the street a lot of people come up to me but I really enjoy that. People are neat, even if they don't agree with me - generally the interaction is pretty good with them. You don't meet many arseholes."

THE FUTURE

Sam says the wider impact of Trade Me, and more recently Xero, has opened massive doors in this country.

Trade Me created jobs for 350 people and has seen several staff head off and build their own multi-million companies.

Xero employs 400 people and has gone from being worth nothing to $5 billion in a few short years and created "a huge amount of wealth".

Such success had paved the way for new business.

When Sam started Trade Me, aged 23, capital was difficult to come by. It is much easier now for good young businesses to go out and raise a million in venture capital.

Xero has pushed that even further, bringing in talent and venture capital from around the world, "and you've got to earn that".

"You've got to have something which is world class to do that but once you have there's this real virtuous effect where you've got people down to New Zealand, you've got New Zealanders going to the US, you've got capital going out and capital coming back. It's working pretty well.

"To me it's an extraordinary achievement. If you think, people were really impressed when we sold Trade Me for $750m, but Xero is six or seven times that size. It's a big deal."

This was what New Zealand needed, Sam says - to diversify beyond the primary sector and create large-scale businesses.

"If we can build a few more of them in the next 10 years - if we get two more of them that's pretty big."

Gareth plans to keep pushing his projects, including his plan to revive the Phoenix and build them a new stadium and his controversial anti-cat campaign - something he jokes has provoked a far more visceral reaction than he expected.

But he's happy with how things have turned out for him and his family. "I haven't found it yet, haven't found any downside, it's great, it's awesome, I'm happy, but I was happy before. So nothing's changed, really."

- The Dominion Post

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