I UNWITTINGLY pick one of the busiest times in Storm McGrath’s year to arrange an interview. He is in London when he receives my first email, and then the United Kingdom in the weeks after. When we finally meet in his third-floor Newcomen Street office with its view of Newcastle harbour and Nobbys lighthouse, the CEO of Kip McGrath Education Centres has just returned from the Bahamas and the Conference of Commonwealth Education Ministers.
The well-known tutoring franchise was one of three inaugural official supporters of the conference. ‘‘To be the first person to go to the conference and speak as a private enterprise in front of the ministers ... the big square table with all the flags ... I was petrified,’’ says a quietly spoken McGrath. ‘‘I got a little ill because of the stress.’’
The McGrath model, which centres on remediation, has been implemented in schools in some of the poorest communities in South Africa for a year-long trial: their location means they don’t compete with existing franchises in wealthier areas.
‘‘The results are going really well,’’ offers the 45-year-old. ‘‘We’ve tried to get them [government] to agree to more schools and we’ll know in the next month. I set the goal that by 2030 we’ll teach a million kids, but we’ll do more than that; we’ll do a million in the next two to three years out of Africa alone.’’
Kip McGrath Education Centres is already in 15 Commonwealth countries and in any given week, 50,000 children around the world are tutored by the franchise. It is not surprising that McGrath has been away for 40 days, though he managed a week at home in the middle to spend time with his three children, a daughter aged 16, and 14-year-old twins, a boy and a girl.
‘‘My wife and I are getting divorced at the moment,’’ he says candidly, taking me by surprise. ‘‘The business is all encompassing and engrossing,’’ he continues. ‘‘It’s been through so much change. It’s been really hard.’’ He pauses and lowers his eyes. ‘‘It’s been a hard 10 to 12 years really.’’
As understatements go, it is a whopper. In the past decade, Kip McGrath Education Centres came close to going under. Founder and chairman Kip McGrath, Storm’s indefatigable 68-year-old father and former owner of that red Rolls Royce, twice injected his own funds into the troubled business to help keep it afloat. It was a perfect storm created by the high exchange rate before the global financial crisis set in – the majority of the company’s revenue comes from overseas – and a costly and time-consuming investment in an online version of the business, which began in the McGraths’ Metford garage. The official date the business began is unclear, but Storm thinks it was 1976.
‘‘Mum and Dad floated the business for $16million and then a few years later it dropped to $400,000,’’ says McGrath. ‘‘That’s how bad things were.’’
‘‘He [Storm] recognised that change had to happen,’’ says the CEO of the company’s online business, James Street. ‘‘It was dying on the vine [and] he had to reinvigorate and redirect the business, and he wanted to move it to the next generation of delivery, which is online.
‘‘While his old man and his mother had built this unbelievable business, you’ve got to keep building. We had to head in a new direction. We had to change the way teachers did business.’’
Listed on the ASX in 2003, the company began buying back many of its franchises, keen to better control its expansion. Not thrilled with the results, and with its overseas profits taking a hit, it soon changed tack.
Receiving a cash injection from a private equity firm, Kip McGrath Education Centres abolished its traditional fee structure in favour of 10per cent of revenue. It also introduced a 20per cent ‘‘gold partnership’’ revenue scheme, under which it does all the back office work for franchisees. Almost 200 of the firm’s now 520 franchisees are gold partners, but it was far from a smooth transition.
‘‘We got death threats out of New Zealand and the UK,’’ says Street, who was employed by the younger McGrath in 2010. ‘‘I’d been here three months and we went to New Zealand to speak to franchisees and the venom thrown at us ... the place had got out of control basically.
‘‘I had to do a business plan and when I started analysing it, I realised they had this unbelievable business with 500 sales staff globally. I don’t think Kip and Dug [Storm’s mother Dugnija] really knew what they had.’’
‘‘THE world has a problem and the problem is that around 15 to 20 per cent of people finish school and can’t read or do maths well enough to get a job,’’ explains Storm McGrath, sitting opposite me on a square black leather chair. He is a large man with boyish features.
‘‘Twenty-five years ago that was fine because they’d get a job digging holes, or work in a bar. Now they can’t.
‘‘The key is that we can fix that.’’
Between 60 to 70 per cent of the kids who are tutored by Kip McGrath Education Centres are more than a year behind where they should be at school. ‘‘If you can’t read at an acceptable level by 10 years of age, there’s a 65 per cent chance you’ll be on welfare or in jail,’’ says McGrath. ‘‘It’s an American statistic and it’s worse than that in poorer countries.’’
McGrath, a former Newcastle High student, remains focused on the company’s original methodology in teaching maths and English. His parents were teachers, after all, and never lost sight of the importance of the basics. And while the online learning platform has evolved to keep pace with the iPad generation, face-to-face tutoring is still a significant part of the model.
Kip and Dug met at teachers’ college in Wollongong. They taught in one-teacher schools out west before being posted to Kurri Kurri. ‘‘I can remember going to the principal at recess,’’ recalls Kip, ‘‘and saying, ‘Half the kids can’t read’. And he said, ‘Well, that’s all right, they’re in 5C’. I said, ‘What about 5D?’ ‘Oh, none of them can read’.
‘‘I thought, here’s an opportunity. All the other teachers I knew used to work in bars to make extra money so I decided to start the business.’’
‘‘They always had big dreams,’’ says Storm, who was named after a character in a book his mother was passionate about. ‘‘That was Mum’s thing – if we’re going to do this, it’s a global business from day one. Her dream was to be the first tutoring company on the moon. That’s how she talked.
‘‘It was a good partnership because Mum was a big thinker but probably more risk averse, but Dad’s more risk on. As they got older and things became more complex, me being here was good. The three of us worked well together.’’
Was his joining the franchise after years of managing his inner-city printing business inevitable or a choice? McGrath pauses. ‘‘Um. Yeah. It was pretty much inevitable really,’’ he says before another long pause. ‘‘Yeah, it was a choice,’’ he offers, unconvincingly. ‘‘At the end of the day you always have a choice. I get on really well with my father and mother; always have.’’
The hesitation about whether or not he had a choice may be linked to the tragic position he found himself in after the death of his only sibling, Garth. His younger brother struggled with heroin addiction and took his own life 12 years ago.
‘‘He went to rehab three or four times, but he’d just leave,’’ remembers McGrath. ‘‘My mum never recovered.’’
Dug, who had a lifetime of heart problems after growing up impoverished in World War II Latvia, died in 2012 at the age of 70.
‘‘After my brother died she had a heart attack,’’ says McGrath, quietly. ‘‘She had been on medication. I didn’t think she had long, but it was still a shock.’’
I ask McGrath to describe his mother and he hesitates, either to suppress the welling emotion, or to find the right words. Possibly both. ‘‘Mum was quite an outlandish person,’’ he replies, smiling. ‘‘She wore very bright clothes and wore her hair dyed somewhere between blonde and purple depending on how she was feeling. She lit up a room and had completely different viewpoints. She was very creative, very focused, had big dreams.
‘‘She was also a hard, tough woman. She hated sexist behaviour and I’m completely non-sexist because of her.’’
The trio lived and breathed the business, resisting pressure to move its Newcastle headquarters south. ‘‘We’d have an executive meeting on a Thursday and then we’d have a beer at Customs House. At the end of the day, if you’re going to work with your family, you can’t let personal issues take control. As soon as you walk out the door that’s it.
‘‘Say what you want to say in the boardroom, or the office, don’t let it take a couple of beers to get it off your chest. It took time. They started the business, they know everything, then the son comes along who’s pretty opinionated, but was still really quite shy in those days.
‘‘We’ve had a couple of barneys over the years,’’ he says, warming to the topic. ‘‘One really good one at Customs House. I had to make a point about a specific thing and I drove it home pretty hard and they both cracked the shits and walked out.
‘‘But I had to win. If I didn’t win that point I was stuffed.’’
SUCCESS has two faces. There are the trappings – nifty high-tech gadgets, expensive watches, spacious house, club memberships, fancy clothes, a red Rolls Royce! – and the plaudits, but there is also a flipside that includes gruelling hours, a relentless travel schedule, bland meals on the run, impersonal hotel rooms, family tension, and hypertension.
Storm McGrath has experienced it all. He drives a Mercedes-Benz, has a collection of 20 watches, and is a 20-year member of Newcastle Golf Club. But in 2005, in the final stage of his master in business administration at the University of Newcastle, he had part of a lung removed after a bout of pneumonia floored him. He knows he was working too hard. Home life was challenging with three young children.
His marriage and his health suffered. There have also been two heart-breaking deaths to comes to terms with.
McGrath’s low-key demeanour conceals a deep well of resilience. His ageless face and thick white fingers could lead you to think he is out of his depth – or ‘‘soft’’ – but he possesses a steely resolve. He makes ambitious statements but he does so without machismo, which puts him at odds with so many of the men in suits I have interviewed over the years.
McGrath says he never contemplated walking away from the business, even when targeted by death threats. ‘‘I’m really driven,’’ he offers. Driven or stubborn? ‘‘Is there a difference?’’ he laughs.
‘‘I never believed the business was stuffed. The business was always good. What we do is right. If you know what you do is good and just and where you are going is the best direction, it’s just a matter of time. My last 12 years have been a horror story in some ways. That’s why I play golf on Saturdays, so I can take it all out on a white ball.’’
I can’t help but think he takes it out on himself, too.
‘‘I love the Rocky line: ‘Life’s not about how hard you hit, it’s about how hard you get back up’. It’s a pretty crappy line, but it’s the way life is.’’