Interview by Laurence Weinstein of Gene O\u27Neill and Liz Ellington, owners of TeWhau Lodge in New Zealand

Ellington, Liz

O\u27Neill, Gene

Weinstein, Laurence

English

Sacred Heart University: DigitalCommons@SHU

New England Journal ofEntrepreneurshipVolume 6 | Number 2 Article 32003From Corporate to Entrepreneurial Life: Risks andChallenges Along the WayGene O'NeillTeWhau LodgeLiz EllingtonTeWhau LodgeLaurence WeinsteinSacred Heart UniversityFollow this and additional works at: https://digitalcommons.sacredheart.edu/nejePart of the Entrepreneurial and Small Business Operations CommonsThis Interview is brought to you for free and open access by the Jack Welch College of Business at DigitalCommons@SHU. It has been accepted forinclusion in New England Journal of Entrepreneurship by an authorized editor of DigitalCommons@SHU. For more information, please contactferribyp@sacredheart.edu, lysobeyb@sacredheart.edu.Recommended CitationO'Neill, Gene; Ellington, Liz; and Weinstein, Laurence (2003) "From Corporate to Entrepreneurial Life: Risks and Challenges Alongthe Way," New England Journal of Entrepreneurship: Vol. 6 : No. 2 , Article 3.Available at: https://digitalcommons.sacredheart.edu/neje/vol6/iss2/3Gene and Liz were married in 1991 and have fulfilledtheir dream of owning and operating their own busi-ness—TeWhau Lodge. The lodge is located on WaihekeIsland, a vineyard region just 30 minutes by ferry from down-town Auckland. Guests are provided lodging along with gour-met dinners and breakfasts for New Zealand $495 per night percouple (about U.S. $235).NEJE: Many folks in corporate life dream someday they’llstart their own businesses, be their own boss, and settheir own hours and financial goals. You seem to be primeexamples of that.Gene: I can’t say I started out thinking that way when Ijoined Air New Zealand. I enjoyed corporate life andstayed with the company for 27 years. At first, I was onthe union side but then moved over to managementwhere I had important responsibilities in aircraft engi-neering and maintenance.Liz: I’m with Gene on that one. I was “all corporate.”After university where I majored in fine arts and lan-guage, I went into human resources. I worked my wayup to HR director working for multinational organiza-tions with thousands of employees based in the UnitedStates, Australia, China, Malaysia, and Hong Kong. Ihad direct responsibility for salary and benefit com-pensation programs, incentive plans, recruitment, andtraining and development. Then, I specialized in help-ing expat managers bring their families and furnish-ings over to New Zealand. I loved the perks, the excel-lent salary, and the status of belonging to large compa-nies.NEJE: Yet here you are, far from corporate life and liv-ing on an island operating a lodge that provides gour-met meals for up to a maximum of eight lodgers anight.Gene: Yes, it’s been quite an adjustment, but one we areboth happy we made. The threat of redundancy, losingone’s employment to corporate whim and whimsy is notsomething we wanted to endure. Each of us felt a lack ofcontrol over our destinies while in corporate life. Here,at TeWhau, owning our own business at least gives us an“illusion of control.”NEJE: Why is it an “illusion?” That doesn’t sound pos-itive.Gene: Don’t misunderstand. We have control over howwe manage the lodge, but we still depend on suppliers; wehave no influence over the local economy, and non-NewZealanders account for 40 percent of our business. Anyterrorist activity that threatens plane travel could impactenormously on us. That’s what I mean by “illusion of con-trol.” There’s a frightening amount of sheer luck that’sinvolved in being successful when one runs this type ofoperation. There are so many variables out of our directcontrol.NEJE: What about the “24/7” dedication you both need tobring to the lodge? Do you find it’s difficult to wake upeach day and feel motivated to spend another 14- to 18-hour day preparing meals, welcoming guests, and keepingeverything ship-shape?Liz: No, actually we love this type of life. We were bothbrought up in small country towns in New Zealandwhere hard work was valued and expected.Gene: I grew up on a dairy farm and had to milk thefamily’s cows twice a day. I was part of a communityback then where everyone supported each other andyou learned to get along with all sorts of personali-ties. We see those early experiences as a real asset.Being in isolation at work or at home doesn’t appealto me. I love being with people, and I really enjoyfood preparation. Learning to cook came from mymother, who encouraged me to spend time in thekitchen with her.NEJE: Yet operating a lodge seems so removed from cor-porate life. What sorts of adjustments have you had tomake?Gene: (Laughing) Well, one thing we’ve had to adjust toFrom Corporate to Entrepreneurial Life: Risks and Challenges Along the WayGene O’Neill, Liz EllingtonProprietors, TeWhau Lodge, Waiheke IslandNEJE INTERVIEW 71O'Neill et al.: From Corporate to Entrepreneurial LifePublished by DigitalCommons@SHU, 2003is the loss of our corporate salaries and perks. We aren’tgoing to die rich by any means.Liz: For me, it’s always having to be one step ahead of thegame. You have to be a lot more nimble as an entrepre-neur. There’s no such thing as financial security, at leastnot the kind I felt when I was getting a paycheck from myemployer every week. We’re only as good as the last per-son who leaves the lodge every day. We are in the busi-ness of pleasing people, of helping them de-stress, seeingthat they thoroughly enjoy their stay with us.We are not unique in what we offer. It’s a typical NewZealand experience. Yes, we own 16 acres of land; yes, ourlodge is beautifully situated overlooking a bay; but ourguests have a lot of similar lodges from which they canchoose, and we are very mindful of that. We only havefour guestrooms; that is a maximum of eight lodgers pernight. Being a small operation, we have to treat visitorsroyally or else they won’t consider coming back.NEJE: Why did you choose a small lodge operation versusone that could have accommodated many more visitorsat a time?Gene: If we had made TeWhau Lodge bigger, the wholedynamic of what we wanted to provide here would bevery different. We would have lost a lot of customer con-tact, and the food portions would have had to be createdin so much more volume. We consider ourselves restaura-teurs and see that as a way to make us different; it’s ourniche so to speak. We serve our guests around a tablewhere eight people can sit comfortably and make newfriendships that often carry over when they return home.Guests don’t want to be dominated by their host so we’velearned what to provide, how to interact without beingintrusive, and then “disappear.”I plan the menu each morning and evening very care-fully, but I don’t see the lodge as a way to showcase ourcuisine. What’s important is whether our guests enjoytheir social experience around the table; the food we serveis just one part of that memory. How we conduct our-selves, the ambiance we create, the sunsets over Aucklandthat our guests photograph on the veranda each evening,they’re all part of how visitors remember the lodge.NEJE: You selected the building site and worked with anarchitect to design the lodge. Wasn’t there a lot more riskin starting from “scratch” rather than purchasing anexisting operation?Liz: But if we had purchased someone else’s property, itwouldn’t have meant the same to us. We would havebought someone else’s dream instead of creating our own.Gene: It was frustrating at first. We looked at other areasbut really wanted to build on Waiheke Island. Yet wealmost gave up because we couldn’t find the right build-ing site. Finally, one day the realtor working with usfound out about this property being available and rushedus out here to see it. One look told us this is where wewould someday build and run our lodge.To create your own operation from the ground upinvolves a lot of detail. However, we felt we were in a bet-ter position than most entrepreneurs because we hadsaved up enough money from our corporate jobs so thatwe did not have time constraints. Also, Liz continued towork in her corporate job for another 18 months after weopened the lodge as a way to buffer our start-up expens-es from depleting our savings. We were focused on whatit would take to construct the lodge in a way that wouldmake it look distinctive. We had the money to do it with-out overleveraging ourselves with the bank. And we hadthe time so nothing had to be rushed or short-changed.NEJE: Did you put together a business plan?Gene: Absolutely. We both had had exposure to businessplanning in corporate life so we knew that a strong busi-ness plan was essential to our success. Once we slowdown after our summer season, around April, we taketime out from the business and analyze systemically howwe have done versus our original plan. We undertake acomplete financial review and update our SWOT analy-sis.Last year, we hired a terrific consultant who stayed atthe lodge and whom we treated as a regular guest. Hisstay lasted for 24 hours, and then he wrote a lengthyreport on what, in his opinion, we had done right orwhere we had shown some lapses. It was enormouslyhelpful to get that kind of feedback.Liz: We made sure that financial worries did not driveour decisions. We do not have significant debt to payback. That means we don’t have to worry about howmany cars come down the driveway on a daily basis. Wefocus on customer needs rather than how we are going tomeet the mortgage payment. We waited until a later stagein life to start our business. With no young children toraise at this point, we can put all of our energies intogrowing the business.It’s important to point out that our guests’ expecta-tions about their experience at TeWhau Lodge keepsgoing up. We need to be mindful of what our competitionis offering and how to keep ahead of the game. We’veheard a new lodge is opening up on the Island, andwe’ve done our initial homework on what type of lodg-8 NEW ENGLAND JOURNAL OF ENTREPRENEURSHIP2New England Journal of Entrepreneurship, Vol. 6 [2003], No. 2, Art. 3https://digitalcommons.sacredheart.edu/neje/vol6/iss2/3ing experience they expect to provide and how thatmight impact us.There are other concerns. What if Air New Zealand isnot bought out by Qantas Airlines, as has been rumoredof late? For Air New Zealand to survive independently,they might cut fares and a price war might ensue. If thathappened, Aucklanders who form the backbone of ourbusiness might be tempted to vacation in Sydney ratherthan just take the ferry to local Waiheke Island.Gene: We can’t foresee everything that is going to happenaround us, but fortunately we can at least choose theroute the business will take and not have to go to somecommittee or distant company CEO to ask for permissionto take certain steps to improve the lodge. Not so withcorporate life, where you have to seek consensus or con-stantly ask your supervisor if it’s all right to make deci-sions that carry some risk. We can move quickly and con-fidently because our corporate “boardroom” is just thetwo of us.NEJE: How did you divide up the responsibilities of run-ning the lodge?Gene: I take care of buying all of the food provisions,preparing the meals and general maintenance of thelodge.Liz: I handle the inquiries and guest bookings by phoneand email and send out proposals when corporationswant to use the lodge for conferences and also when, onoccasion, we have a couple who wish to be married at thelodge.NEJE: Have you ever experienced dissatisfied customers?Liz: In the four years we’ve been operating the lodge, wehave had perhaps 600 couples come and stay with us. Ican remember only one couple who went away unhappy.They were truly beyond our ability to please. It wasunfortunate but, thankfully, very rare for us. For the mostpart, guests are easy to deal with. They’re on holiday andthey’re using discretionary dollars. They want to have agood time; and except for meals, generally they want tobe left alone. Gene: We’re anxious to provide a “wow” factor to ourvisitors, and we hope we succeed. I think we do. Bighotels spend millions on decoration, marble, slate, andother design appeal; but they seem to miss the “peoplefactor.” Their only interaction with their guests is whensomeone behind a counter asks for the visitor’s creditcard.Here’s a specific example. When I was with Air NewZealand, I used to travel quite a lot. I went to the samehotel nearly every week for years; and every time I regis-tered at the front desk, the hotel representative would askme to fill out the same registration form. It was crazy andI began to resent it, so I changed my lodging to a small,family-run operation. After staying there just once ortwice, people working at the hotel would greet me whenI came in and say, “Hello and welcome, Mr. O’Neill.” Thatsimple way of personalizing my stay and making me feelwelcome and special meant a lot to me, and I haven’t for-gotten that experience. That is exactly what we do here atthe lodge when visitors arrive.NEJE: What was it like when you first opened up thelodge?Gene: We decided we didn’t want to overreach andbecome inundated with eight guests every night rightfrom the beginning. So we opened the lodge and “softly”got on our way by taking in one or two couples a night.This made our learning curve less steep and reduced thepressure on us to get everything just right at the start. ButI must admit that I tried to take on too much. I thought wecould get along without much staff; but I found certainthings to be too exhausting, like the grounds mainte-nance. We had to learn the economics of the lodging busi-ness and how many staff to hire for what kinds of tasks.NEJE: How has your experience been as employers ratherthan what you were previously—corporate employees?Gene: The general employment picture on WaihekeIsland has been one of weak demand; so when peoplefind employment they like, they want to hold onto theirjobs. Our employees value their positions with us, and werespect their contributions to the lodge. We seek theirideas and suggestions and take them seriously. We workalongside the staff so they see how hard we work andhow devoted we are to the business. That almost neverhappens in corporations where employees never see theleadership. Being an employer has been an experiencewe’ve both enjoyed. Fortunately, our staff shares ourvision for TeWhau Lodge, and we get along famously.NEJE: Does the government provide New Zealanders withincentives to become entrepreneurs?Gene: We have received no help whatsoever. If anything,the government offers disincentives through theiremployment policies. For instance, women continue toget paid so they can take time off when they are rearingtheir young children. If one of our employees has achild, we need to pay for her and for her replacement.NEJE INTERVIEW 93O'Neill et al.: From Corporate to Entrepreneurial LifePublished by DigitalCommons@SHU, 2003The laws are written in favor of large corporations thatcan afford this type of social policy. It’s tough for smalloperations like ours to take on that kind of addedexpense.The amount of paperwork involved in hiring andmaintaining a staff is immense. As a country, we aremoving away from a socialist economic model so taxa-tion, at least, is no longer confiscatory. The top rate isonly 36 percent. And we don’t have a system of deduc-tions so the tax form is all of one page. That’s all to thegood. Although the central government in Wellingtonlikes to promote itself as business-friendly, they heavilyfavor the large corporations. Most of our politicianswere never self-employed. The government is made upof career politicians, lawyers, academics, and tradeunionists, not small businessowners. It’s tough.NEJE: What’s your “end game?” What happens when youdon’t want to dedicate long hours every day to yourenterprise?Gene: I’m not sure yet. I’m 52 years old, and I don’t thinkI’ll be able to keep up this pace when I’m 60. We get up at6 AM, and we’re lucky to be back in bed by midnight dur-ing our busiest summer months from December throughApril. I’d like some day to be able to employ a chef, per-haps another person to run the front end; but then ourprofit would disappear. We’d have to price our lodgingmuch higher, and that would probably discourage thelocal Auckland demographic from staying with us. We’dbe affordable only to international tourists, and that’ssomething we don’t want to do. I suppose the trick is tolive at the lodge without being so involved in all the day-to-day details.Liz: We don’t ever want to run a restaurant. Whatever wedo next will have to involve a lot of people contact andhave some sort of food element to it. It takes incrediblestamina to do what we’re doing at TeWhau, and weunderstand we can’t do it forever. It’s easy to lose per-spective, so we make sure we go away at least three timesa year even if it’s only for a few days at a time. We feel it’sterribly important to keep some balance in our lives.(For more information about TeWhau Lodge, visit the websitewww.tewhaulodge.co.nz.)—L.W.10 NEW ENGLAND JOURNAL OF ENTREPRENEURSHIP4New England Journal of Entrepreneurship, Vol. 6 [2003], No. 2, Art. 3https://digitalcommons.sacredheart.edu/neje/vol6/iss2/3

From Corporate to Entrepreneurial Life: Risks and Challenges Along the Way

https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?article=1182&amp;context=neje

From Corporate to Entrepreneurial Life: Risks and Challenges Along the Way

Abstract

Similar works

Full text

Available Versions

Sacred Heart University: DigitalCommons@SHU