Alan

"‘No, Alan! Shit!’ Heatley pleaded. ‘I’ve spent months on this. Our future depends on it. You’re playing Russian roulette! Eighty million dollars is still a lot of money. We can’t afford to lose this. We can do them a more favourable deal.’ Heatley was wretched. It was not simply the $108 million. What if this was the end of the deal altogether? It was a complicated partnership and there was nothing to stop the Americans walking away. The letter Gibbs had dictated had not even made a counter-offer. Heatley would have been prepared to take $80 million to get the deal done. Naturally, $108 million would be better than $80 million, but $80 million was better than no deal at all. No deal now was unthinkable. Gibbs was cool. He knew how much this meant to Heatley, but Gibbs also knew the Americans. ‘No,’ he told Heatley, ‘I know these pricks. I bet they’ll be back by breakfast. This is the way they negotiate. It’s all they know.’ The letter was sent by fax. Heatley waited, more anxious than he had ever been. If it was all over, where would they look for new investors? He did not have long to wait. The Americans replied. Gibbs had been right. The deal was on again, for $108 million. Heatley’s relief was palpable."

"‘If there is one part of my corporate history that I could change, it would be that decision I made not to tell Trevor and Alan that I was selling my Sky shares,’ he says. ‘It was spur of the moment, based on my friendship with Rupert Murdoch and I did not think it through enough. I wasn’t trying to be clever, I wasn’t trying to do a deal behind the bike sheds and I wasn’t trying to do something that was not in their interests. My total concern was security of information, but that implies that I did not trust them and that is not true. I totally trusted them. So I don’t quite know, looking back, why I did it. It is a big personal regret and it caused some strain in our relationship for a while, but I consider both of those guys to be my close friends. Sometimes things like that happen in life—you get caught up in the moment, you don’t think something through and later you think, I should not have done that.’ Gibbs and Farmer later sold their Sky shares to Telecom."

"If Elsie was a warm and loving saint in her youngest son’s eyes, Theo remained remote and inscrutable. By the age of 12, Alan had worked out a mutually beneficial way to extract money from Theo. Since 1944 Gibbs had owned JA Hazelwood, a reasonably substantial general store in Upper Hutt. On weekends he’d visit the business, taking Alan along for the ride. Theo was an observant man and would point things out to his son to teach him about the world, but Alan soon figured out that, at bottom, his father had better things to do than answer an endless stream of questions from a 12-year-old. He proposed that Theo pay him a sixpence fee (around $1.50 in today’s terms) if he could remain silent all the way from Wellington to Upper Hutt. The deal was readily accepted. Theo Gibbs did have a lot on his mind in the early 1950s. Having come to Wellington largely to concentrate on Macduffs Ltd, he’d found that despite his efforts, the company was struggling by 1949 in the intense post-war competition. In 1950 he arranged to merge it with Woolworths. This deal unlocked good value for shareholders and enabled him to extract himself from day-to-day management. Thereafter he operated as a company director and adviser to several businesses, including Hurley Bendon Ltd, a new lingerie company set up by brothers Ray and Des Hurley."

"Their next stop, Colombo in Sri Lanka (then Ceylon), was also an assault on the senses, but on a train excursion through the lush tropical countryside to Negombo they gained a sense of the glory of the former British Empire. As they sailed to Aden, Alan spent much of his time talking to fellow passengers about their electronics purchases, finding out what they’d paid. By the time they reached Aden, then a free-trade port and still part of the Empire, he’d worked out the lowest price anyone had achieved in Singapore for the radio he wanted:"

"Gibbs’ warm and easy relationship with Holyoake, who went on to become prime minister briefly in 1957 and again for more than a decade from 1960, boosted his boyhood confidence. Ian’s ambition and his success at Kinloch, meanwhile, provided Alan with a benchmark that in time he might measure himself against. His eldest brother also drove around in great sports cars. As a schoolboy, however, Alan could only daydream of future deeds and entrepreneurial schemes as he stomped the streets on his paper rounds or delivered parcels of groceries during holiday jobs at Hazelwoods. He took any opportunities that presented themselves to trade, however, such as with bubble gum at school or when mushrooms could be gathered on the hills and sold on the roadside."

"The reality is, however, that TN Gibbs had sent mixed messages over a longer period. Alan didn’t receive any financial assets from his father, but he had gained something more valuable. As he puts it, ‘I gained the benefit of seeing Dad being successful in business. He didn’t talk about it much, but watching him gave me the feel for it, it gave me the confidence that business wasn’t a great mystery, but rather something I could master.’"

"A couple of weeks staying in King’s Cross in a one-room flat with a coin-operated gas fire was sufficient for them to organise their European excursion. Theo had lent the young couple £400 to buy a car; the money went a long way since they were able to buy a car tax-free as they were taking it out of Britain. Alan picked up a Morris 1100 for £408 and was delighted with the result. ‘It was a fantastic little car; probably the favourite of all my cars. Designed by Sir Alec Issigonis, the same guy who designed the Mini, and with hydrolastic suspension and a front-wheel-drive transverse engine, which has since become the standard worldwide, it handled brilliantly.’"

"Within a few months Alan found a small metal-pressing business in South Auckland, Holmes Manufacturing Ltd. It was a family affair owned by a tool maker who was keen to devote more time to his magnificent train set. The company employed around 12 people: two tool makers, the most highly skilled men of the trade, who made the dies from which the metal would be stamped, and 10 press operators. They made components for Dominion Electric, a company that assembled electronic goods under protection from international competition by import licences. Holmes Manufacturing produced metal chassis for radios and television sets. They also made stainless steel conveyor chains for freezing works and film reels and cans for the government film department. One of their highest volume products was a peach pitting spoon; basically a bent knife. ‘It was an elementary little business,’ Gibbs recalls, but he was intent on turning it into something bigger."

"Alan arranged to bring Sir Lawrence Hartnett, the father of the Australian car industry, to New Zealand to lend weight to their press conferences and ministerial visits. Hartnett had overseen the birth and development of the Holden since the 1930s and was a respected figure internationally. With Hartnett flying in on Sunday, 17 September for the announcement, they planned maximum publicity. ‘Top secret plans for New Zealand’s own car’ were leaked to the *Sunday News* to build up excitement, then coverage of the Sunday afternoon press conference generated front-page or page-three news all around the country the following day. Initially, they talked simply of a ‘90 mph family car’. Ian Gibbs fronted, while Lawrence Hartnett said he was at a loss to explain the proposal’s cool reception from Norm Shelton, the Customs Minister.[15](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477268-974936905-15)"

"At the High Commission in Haymarket, a recently completed modernist tower with great views across the city, Alan was on a good wicket. He was paid £1800 a year (nearly $70,000 in today’s terms), twice what he could have earned in the civil service at home, on top of free accommodation and plenty of privileges, such as duty-free alcohol and membership of the RAC Club, a posh private men’s club near the High Commission. He was much taken with the sports area in the RAC Club’s basement, which had a 33-yard heated swimming pool, a restaurant, massage tables, a Turkish bath and squash courts:"

"Knowing that the car project would take months, possibly years, to come to fruition, Gibbs kept busy on other things to pay the bills. By the time Alan joined Anziel, Ian was employing six or seven people. Leaving the car project to one side, Alan’s job at Anziel was to look for a manufacturing business to buy, in order to grow the business. There was an expectation down the line that he would buy into this new business."

"*I yelled at Judge, ‘You know it’s a contract, we’ll sue your asses off.’ Then I got hold of Ron. ‘Alan,’ he said, ‘I’m not going to buy. Do what you like, but I’m not going to buy it.’ He knew as well as I that the threat of being sued was better than buying something you don’t want. This left me in a quandary, because I’d spent months walking through Tappenden’s many premises, examining records in the land registry, searching Companies Office files back several years. In those days companies didn’t publish accounts of subsidiaries; big conglomerates would always try to confuse where the money came from. So it was hard to know where the real money was being made.* *Yet it was critical in terms of valuing the company. I’d taken a fitting off my boat to the engineering works in Christchurch, talked to the sales people about a new fitting, got them to show me around the foundry and could tell whether they were busy or not. I’d done something similar in all their businesses. That’s what it takes. If you want a successful takeover, you have to find value where the market can’t see it. More than that, if you have a better idea than the owners or directors of where the value lies in a company, then you can bend them round to getting what they want, while you get the pearls. I knew more about Tappenden’s various companies than its own directors did. So, I thought this is a good deal going wanting. I* *said to Tom, ‘I’ll buy it.’*"

"*I yelled at Judge, ‘You know it’s a contract, we’ll sue your asses off.’ Then I got hold of Ron. ‘Alan,’ he said, ‘I’m not going to buy. Do what you like, but I’m not going to buy it.’ He knew as well as I that the threat of being sued was better than buying something you don’t want. This left me in a quandary, because I’d spent months walking through Tappenden’s many premises, examining records in the land registry, searching Companies Office files back several years. In those days companies didn’t publish accounts of subsidiaries; big conglomerates would always try to confuse where the money came from. So it was hard to know where the real money was being made.* *Yet it was critical in terms of valuing the company. I’d taken a fitting off my boat to the engineering works in Christchurch, talked to the sales people about a new fitting, got them to show me around the foundry and could tell whether they were busy or not. I’d done something similar in all their businesses. That’s what it takes. If you want a successful takeover, you have to find value where the market can’t see it. More than that, if you have a better idea than the owners or directors of where the value lies in a company, then you can bend them round to getting what they want, while you get the pearls. I knew more about Tappenden’s various companies than its own directors did. So, I thought this is a good deal going wanting. I* *said to Tom, ‘I’ll buy it.’*"

"In December 1984, he and Jenny took the family to Mexico, where they had many adventures in an old van driven by a hairy old local the girls dubbed ‘Catweasel’. He also rediscovered the joys of skiing. Warren and Sally Paine were frequent partners in mountain excursions. A typical adventure, in Paine’s memory, started with an exclamation from a wrung-out Gibbs: ‘For heaven’s sake, Jenny, let’s have some fun.’ She’d arrange a ski trip to Aspen in Colorado or Courchevel in France with the Paines and the Reynolds. Gibbs found his release through competition. ‘There was only one speed with Alan,’ says Paine, ‘flat out. Being in front of him was like being in front of a freight train, he was always trying to pass, arms and legs were flying and he was yelling and cursing; it was great fun.’ As it was with business, so it was with entertainment: Gibbs threw himself into whatever he was doing as if the fate of the world hinged on the result and by the end of the day he was spent."

"He could certainly upset people; anyone who wasn’t of fairly strong character would fold fairly quickly. I eventually realised that it stems not from a desire on his part to be aggressive, but from a personality and an intellect that makes him want to challenge everything. He’s very unusual in that his intellect is so inquiring. My experience has been that a lot of very intellectual people are quite blinkered; going down a line that they’re good at. Alan’s the opposite; his thought processes go outward, incorporating everything, well beyond any one specialty. This gives him a unique perspective on many topics. Even if a matter was black and white, he’d want to challenge it in some way to find an element of greyness. We’d debate something until we’d reached a point when I’d think, that’s all clear, it’s black and white, and then he’d come back on another angle, to challenge it. It could be frustrating, but you knew that your ideas were fully tested."

"Alan was always pushing the envelope; that’s what I liked about him. He always had new ideas and was restless. What we’d done might be good, but he didn’t want to dwell on it; instead he focused on what remained to be done. And he always had a slightly different way of looking at things. Generally, I’d have several ideas flung at me; I’d need to discard most of them, but invariably I’d go away with at least one good idea."

"‘It was an example of Alan saying, “Stuff it, everyone says go left; I’ll go right”,’ says Heatley."

"*We agreed on $108 million, a bloody good price, and they said, ‘Well, we have to refer to our HQs and consult before we give you the final answer,* *but basically we’ve got a deal.’ Then they came back with the classic tack and said, ‘Oh dear, the due diligence was not as thorough as it should have been and our boards have told us we can’t go that far.’ So they offered us 20 per cent less. I knew that they really wanted it, but they were just trying it on. I said to Craig, ‘No way!’ Then I dictated a letter from our lawyer responding to the offer, which had only one line: ‘Your offer is of no interest whatsoever to our clients.’ We were losing money and they were still offering us $80 odd million. Craig was a bit nervous, but, sure enough, the phone line began to buzz a few hours later and we got the full amount.* Heatley concedes that Gibbs was a much better bluffer. ‘We were in a weak position,’ he says, ‘and Alan convinced them we were as strong as an ox; he knew they were just being bullies, trying to chisel us, and that they’d give way if we held firm.’"

"I said to the Americans, ‘All I want is a bright, tough, telephone man, who really understands how many people you need to do a job and who is a very experienced manager. And on the other side, I want a financial guy who really understands telecom economics. The guy you had working on the bid, Jeff White, would be perfect.’ They agreed, so along with White they sent Ben McMillen, this brilliant old telephone guy who would get in there at 6am each morning and tear into it. They each brought down some helpers and combined with Telecom’s best we ended up with 50 people in a hotel on The Terrace. I gave them my speech: ‘We’re going to plan a reconstruction of the company within a month. The primary thing is to take labour out of it. I’ve done my analysis and I reckon we can run it with 6500 people.’ They said, ‘Alan, impossible.’ I said, ‘Bullshit. I’m sure we can do it. You’ve got to reconstruct the business as if it was yours. Not as if it’s some lazy American company, but how you would run it with your own money.’ McMillen loved the chance to organise things as he thought they should be. ‘Go to it,’ I said. I’ll be back once a week. They came back with a plan for 6300 staff."

"*Alan didn’t have a high opinion of professional directors, but my sense is that he would have tackled Fletchers because he believed it was on the wrong track and it was his duty as a New Zealander to respond if asked. At the same time he was getting stuck into producer boards, calling for deregulation and reforms, so he never shied away from the big issues. It would have been a fascinating moment in New Zealand corporate history if he’d joined Fletchers, explosive even. He would have bitten hard and sought to re-orientate the company towards the interests of its shareholders. He’d thought very deeply about the nature of capitalism, about the rights of shareholders, the purpose of a company, in an intellectual way that was so unusual in New Zealand, and diametrically opposed to Hugh Fletcher’s view of the world and the pervading culture at Fletchers. Gibbs’ arrival would have been a takeover, in effect. The divisional heads would have had an entirely new experience, and it certainly would have been the end of Hugh.*[31](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-31)"

"Gibbs’ style was an object lesson. ‘Alan would hit on only a couple of things during Freightways board meetings and they would always be of substance,’ he says. ‘While I’d think a little bit about everything, Alan would have thought deeply about a few things, the things that mattered, which on reflection is a better approach.’"

"*What made them such an incredibly powerful business duo was that you had two highly competent individuals, not a Batman and Robin set-up where one was junior. Trevor was one of the very best chief executives I’ve seen in my life, while Alan was, without question, the best corporate finance exponent. And Alan wasn’t just a brilliant corporate financier; he could harness strategy alongside it. So to put the two together created an unbelievably good combination, particularly as they kept out of each other’s space. Alan would say, ‘How many people do we employ?’ ‘Aw, about 2500 to 3000,’ Trevor would reply. ‘Thank God you’re there, Trev, I can’t even manage Jacquie.’*[33](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-33)"

"*I never found Alan easy to chat to; his intelligence was so ferocious that if you got into a conversation with him, within two or three minutes you were conscious of this enormous challenge being hurled at you. But Trevor handled it easily. He could say, ‘Oh bullshit, Gibbs,’ when he was overstating his case and that would get things back on track. I never saw anyone else do it; I certainly didn’t.*[34](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-34)"

"*I’d just read a book about the Iban tribe, who used to be renowned as head-hunters, so I told this guide that we wanted to go and find this tribe. He got hold of someone, who knew someone else and within a couple of days we were on a chopper going way up a river. There was no helicopter pad, so while we hovered the local men hacked back the foliage to clear a space for us to land. Most of the villagers had never seen a helicopter and were soon throwing blood all over the ground for reasons that were unclear. We lived in one of their longhouses for a couple of days and it was magical. Alan was twice as tall as anyone there, but these guys were wiry. In their canoes a couple of wrinkly men pulled us upstream with incredible strength. We ate fish on the banks, but midway through our meal had to leap into the river to avoid a swarm of bees coming through.* *We lay fully submerged breathing through pieces of bamboo. At the dinner that night in the longhouse Alan was given 50 bowls of food, since* *he was the top man. I got 20. Every now and then Alan would look at me and say, ‘I can’t believe I pay you a salary to do this.’ And he had a point; I’ve never laughed as much as when I’ve been with Alan. He’d have me on: ‘David, if ever we get into a situation where it’s life and death, you know you’re the sacrifice. I’ll be nice to your parents.’ We never ran into serious trouble. He was a young 56, cutting loose with energy to burn and such a passion to extract everything possible from life. We’d have an incredible experience and then a few minutes later I’d hear the inevitable, ‘OK, what’s next?’*[12](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477351-409220225-12)"

"Gibbs presents an interesting paradox in the sense that his personality is intensely restless and rarely satisfied, driving a ceaseless search for new forms of stimulation, but so far as his money is concerned he has long since been satisfied and his search for stimulus has never extended to a desire to put it at risk. Telecom acquisition team member Steve Walker remembers Gibbs ruminating late one evening after a meal in Philadelphia in 1989 while they were chasing the Telecom deal: *Alan told me, ‘Look, I’ve got 100 million dollars,’ or some such figure. ‘It wouldn’t make a scrap of difference to my lifestyle if I had another 100 million dollars; but it would make a big difference and would seriously piss me off if I lost $50 million.’*[18](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477355-616451090-18)"

"*At heart, Alan’s a frustrated engineer. He loves solving problems and he’s good at it; he’s had an awful lot of valuable input into solving lots of the problems. In terms of management structure, having your co-owner wandering around engaging with the engineers and technicians could be disastrous, but Alan quickly sorted out a working formula. Anyone was free to take his advice, but if they adopted it, they had to own it absolutely. Nobody could say they were doing something ‘because Gibbs said so’.*[2](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-2) Gibbs had a sign erected on the wall to reinforce the point: *Alan Gibbs questions, challenges, and suggests ideas. These are not instructions, those come through line management. If you adopt Alan’s* *input it becomes yours.*"

"*Alan’s ears were flapping as these men explained how they selected students. This involved a list of potential candidates being sent to the ministry in Tehran, which laid a political dimension over every decision; it was the same with the appointment of staff. This is what Alan loves doing — probing to find out how things worked. What exactly did they mean by Islamic economics and Islamic science? When he tried to engage with economic officials in Tehran, however, the shutters went up.*[6](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477351-409220225-6)"

"So, in the sweltering heat of Macapa in September 2005, he proposed to Myers that they go their separate ways; Myers keep the boat and Gibbs take the helicopter. Myers was annoyed at the sudden change of plans, but on reflection was not surprised. ‘Alan,’ he says, ‘doesn’t like to be pegged down. His idea of fun is to turn up at an airport, see where the next plane is going to and jump aboard. With Senses, by contrast, you can’t just go where you want; you’ve got a crew, a big organisation, another owner — it is the antithesis of freedom.’[27](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-27)"