Ep 27. Dominique Lyone, Managing Director of COS – The Honest CEO Show

The Honest CEO Show, Episode 27: Dominique Lyone, Managing Director of COS

Caroline Kennedy (00:21)
Welcome to the show and thanks for joining me. It's great to have you here today. Family business equates to about 70 % of all business in Australia with an average turnover of $12 million and the wealth of the sector is estimated at $4.3 trillion. So family business is important to our economy.

Today, my guest is Dominique Lyone and he's the managing director of COS, Complete Office Supplies. We're going to talk about his journey from immigrant to head of Australia's only privately owned national office supplies business, which has an annual turnover of 130 million. This episode is key for any business that wants to scale.

Dominique's story is one of family perseverance and passion. He grew his business from zero revenue startup company to a hundred and thirty million dollars turnover. He fled Egypt following the 1967 six day war and Dominique and his family settled in Western Sydney with almost nothing to start a new life. And what a life he's built.

Welcome to the show Dominique and congratulations on building such a successful family business.

Dominique Lyone (01:54)
Well, thank you very much. Glad to be with you.

Caroline Kennedy (01:57)
Your family migrated to Australia when you were 13 years of age. You had little in terms of material possessions. However, your family did own a small business in Egypt and in 1976 at the age of 22, you started a local office stationary business selling mainly typewriters, ribbons and carbon paper. Tell us about that.

Dominique Lyone (02:22)
Well, yes, you're right. We immigrated from Egypt in the in the late 60s. My father did have a very, very small shop with fixed typewriters. And I guess I used to help him as a young child. And that remained in the blood, so to speak. In Australia, got I got a job as a salesperson for a what was then a stationary company or supplies company. And at the age of 21, ⁓

After having an argument with my CEO back then, I decided that I would start my own with a very, very simple concept. If I buy something for a dollar and sell it for a dollar 20, I should be able to survive.

Caroline Kennedy (03:07)
Now 40 years on, you've grown the business to have an annual revenue turnover of 130 million and you sell over 21,000 products, have over 350 staff and warehouses and offices in every Australian state and territory servicing more than 5,000 business customers.

So I think that you were right on the mark in terms of, well, if I buy something for a dollar and sell it for 20 cents, I should be able to have a business because you clearly have built a very strong business. But whilst you're successful now, I'm sure the early days were challenging for you. Can you tell us about those early days?

Dominique Lyone (03:51)
There's no doubt about that it's been a challenge. I started the business from the point of view of I just didn't want to work for the man. And if I could make enough money ⁓ as I would have weighed, that's great. And then later I decided to actually build it as a business to where it is today. I came very, very close to shutting the shop, so to speak.

Back in  the early 80s,  I made a big strategic mistake. I had a situation where I decided that I would go into the retail business  and opened up a couple of stores  off the back of getting some money from my father. So my father retired working for the Navy and I noticed that he'd got his superannuation payment.

And I went to him as a young entrepreneur and said to my father, dad, if you give me that money,  I'll make you millions. And he did give me every cent of it. And within 18 months, I had lost everything. So it was a major, major lesson to the point that these days I say to young entrepreneurs, go broke early because it's kind of great training for you for the future.

Caroline Kennedy (05:18)
Yeah, well you certainly need to be resilient nowadays and back then as well as an entrepreneur, didn't you?

Dominique Lyone (05:25)
That's correct. Yes. think resilient is a great word. Persistence, certainly. The business is very successful today, but it's taken a lot of persistence over many, many, many years to get it to this point.

Caroline Kennedy (05:41)
Yeah. And what has been the catalyst for success in your business?

Dominique Lyone (05:47)
I think a key, as I started to learn about business and expanding the business, guess, taking the point of view of creating a bigger business rather than just making a wage, if you like, or having a small niche, it became very clear to me that to become more customer-centric was important.

So I guess in the late 80s, I became a mentee of a gentleman called Robert Kiyosaki, who became quite famous these days with his franchise, Rich Dad Poor Dad. And we were constantly talking about how do you add more value to the customer? How do you add more value to the customer? So at Complete Office Supplies, the customer is at the center of everything that we do.

Caroline Kennedy (06:40)
Yeah. And I can see that that is very evident actually. And, and I believe in being customer centric and culture, culture centric and in business, is really paramount. And I, know, as I said, I can see that you put the customer at the heart of everything that you do. And I know that the rest follows when that occurs. So tell me how you've done that.

Dominique Lyone (07:07)
Well, I mean, one of the things you can't do it by yourself. So obviously there's a, there's a, there's a team of people here. And as you said, in your introduction, it's 350 people today. So trying to get that message across the business to put the customer first on everything that we do gets to be a bigger and bigger challenge. So I have multiple ways of constantly communicating that not just to the, executive team, which we do on a weekly basis, but for instance, we have, know, monthly get together where I have lunch with the whole team. And, you know, we speak about being customer centric and customer centric, whether you're the salesperson, whether you're the person in the warehouse that's that's putting product in a box, whether you're the truck driver delivering product and the receptionist says to you, look, can you put the product upstairs?

It's all part of putting the customer first.

Caroline Kennedy (08:11)
And in terms of being customer centric, so that's internally, externally, what do you do to understand, I suppose, the problems with the needs of the customer?

Dominique Lyone (08:24)
Yeah, well, there's one of the key things that all my executive teams must spend time with customers. So they have to go out and spend a certain amount of their time in the month with customers. And that helps us then when we're in the boardroom, understanding ⁓ what the needs of the customers are today. And there's  massive differences in the needs from where we started or even where it was five years ago to what it is today.

Caroline Kennedy (08:59)
Yeah. And I always talk about the importance of remaining relevant to your customer because a lot of businesses do find themselves becoming very internally focused. But at the end of the day, it's not about, well, I mean, it is, you know, the internal aspects are important, but without your customers, you don't have a business. So getting those insights and understanding exactly where you're hitting the mark for your customers, and perhaps where you're not and where you need to improve is just integral.

And as you say, it just, evolves continually the demands and particularly as the marketplace shifts. I know innovation is one of the key elements in remaining relevant in this ever changing market, no matter what industry you're in. And I know that complete office supplies have really, I suppose, valued innovation and, and using it to grow the business. So can you tell us a little bit about that?

Dominique Lyone (09:59)
I think the innovation for me is I also say you got to understand the edges of what's going on in your space in the industry and also potential of other industries that are eyeing your space off, if you like. You did say at the beginning that we started this business selling typewriter ribbons and carbon paper, which both of those products of course are non-existent today and a number of the audience won't even know what that is. We are, in the eighties and nineties, we're a stationary company. Today, we're living in a digital world that's making stationary completely redundant. There's less paper being used today than ever before. So having to move with the time, whether it's on the product that we offer to the customer or the services that we offer the customer, it changes.

To give you some ideas, we do one of our large customers in the city, one of the big banks, we go in there at three o'clock in the morning, fill their cupboards, we're out of there by six before any employee has showed up. When people come in the next morning, it's all fulfilled and the cupboards are full. I keep myself up to date by traveling. I visit other people in the same space in various parts of the world. I've visited throughout the United States, Canada, Japan, Europe. I constantly try and see what's in the space, what's coming into the future.

Caroline Kennedy (11:45)
Yeah, yeah. And technology, I know, just played a key part in that and investing in technology for you guys, particularly as the market has changed and demands have changed, as you mentioned before, with the digital space. So tell us a little bit about that.

Dominique Lyone (12:02)
Well, think the biggest, we've made a significant, obviously, investment in the transaction in our website. We started that many, many, many years ago. Today, about 85 % of all of our transactions is done on the website. To have a website that is up to date and contemporary and current takes continuous investment is that there's a team here that just focuses on make sure that the website is up to date and relevant. So technology, not just from a website perspective, but overall from running the business, today it's an advantage. It's a great enabler for smaller businesses to compete with bigger businesses. Because even though we've got a $130 million turnover today, but I've always played a David and Goliath game. My two competitors in the market, one is a $12 billion company and the other one is a $22 billion company. So on a global basis, we're butting up against Goliath and the way to beat Goliath is through technology.

Caroline Kennedy (13:29)
Yeah, yeah, very much so. And I think it helps create an even playing field somewhat. I mean, it's never necessarily even, but it helps you be able to play in that space a little bit more. And I think that goes across a lot of industries.

Dominique Lyone (13:46)
Correct. It reduces the gap.

Caroline Kennedy (13:49)
Yep, very much so. Now you've been assertive in your approach to sales and business development, which is so critical to business. Tell us about that.

Dominique Lyone (14:01)
Well, I guess the key change for me was that am I selling product or am I building a business? And I spend most of my time today as a CEO enabling the company to expand and develop rather than focusing on the day-to-day transaction.

So to speak. So I've got the business developers who are there looking that focus on the new clients and then we call them, I guess, the hunter farmer situation. So the hunters get our business and the farmers make sure that the business is well serviced.

Caroline Kennedy (14:55)
I like that. And you know, I love to hear that. And as a CEO, I think it is so important that you're looking at the expansion piece, but also working on the business rather than in the business. You know, where that gap is to get from, I suppose, the SME kind of couple of million dollar turnover to grow a business really is about working on the business continually and looking at the strategy for growth on an ongoing basis.

Dominique Lyone (15:29)
Yeah, look, the piece of on versus in is crucial and made such a big difference to me once I got really what that really means. As a small business, the focus is really, let's get the sale and then work on that sale and deliver the service that we promised that we were going to do. And you end up getting stuck in that cycle of, know, get the salary work on the service where I do my best to stay above that and just work on the business. the earlier days, I would have the discipline of saying, I'm just going to have one day in the week where I do nothing else but work on it. I'm not going to be in it at all today. I'm just going to focus completely on it.

Caroline Kennedy (16:21)
Yeah. Yeah. And it's a good starting point, isn't it there? Because you have to start somewhere, you know,

Dominique Lyone (16:27)
When you're small, you're going to be in it, whether you like it or not, you're going to be in it.

Caroline Kennedy (16:33)
Yeah. Yeah. Now you mentioned before the two big competitors that are playing in your space. And I understand that in the early nineties, you know, you saw the arrival of larger international competitors in this space and they had access to a lot of capital, obviously. So rather than throw in the towel, you stood your ground and stay true to your visions. Tell us a little bit about that because I'm sure that would have been really challenging.

Dominique Lyone (17:01)
Yeah, well, certainly in the early 90s, we saw a consolidation happen in our space and the competitors arrived from the USA and sort of started buying all of my mates that were in similar businesses, all sold their businesses. And we were offered a nice check as well, but I decided that I would continue to compete.

Fundamentally, the difference was the catalyst of staying in was a conversation with my accountant who once looked at my balance sheet and said, Dominique, you've got a great business here because you're operating it on, he called it negative cash flow. And fundamentally, he said, if you can continue to run it in this way, which is pay your creditors on 55 days and collect your money on 35 days, you'll probably never need capital. And that's held true. The reality is that this business has gone from zero to 130 million simply by creating profits and reinvesting the profits. We've never put any more capital into the business. So that's made me feel that really the one thing that those big businesses had which was access to capital, I probably did not need and therefore should be able to compete.

Caroline Kennedy (18:34)
Yeah. Okay. Your point before was you'd had an offer on the business during that time. What was the driving force behind you really being passionate about keeping the company privately owned and within your family?

Dominique Lyone (18:49)
Still the same force today, really. At the end of the day, I think that as a privately-owned business, we can make more long-term decisions. I don't have to worry about my share price today or how my results this quarter. So I do like that idea of having it privately-owned as a business, we don't need huge amount of capital. really being a listed or part of a listed business is kind of irrelevant within this space.

I've got two daughters in the business today, Belinda and Amy have both been in the business around 10 years and we're working through a succession plan and how it will look into the next generation.

Caroline Kennedy (19:44)
Okay. And succession planning is so important and having that, I suppose, that foresight into, what is the strategy for the business long-term and what resources do we need within that to keep it going? And I think it's looking at that long-term strategy, but a lot of businesses tend to miss that and the succession planning isn't necessarily a priority for them.

Dominique Lyone (20:14)
Well, succession has been very important to me. We've been talking about it for a number of years yet and being very careful that ⁓ succession, I guess, within the family, ⁓ people would say to me, Dominic, remember, it's your dream. It may not be your kid's dream. ⁓ But there is certainly, as the daughters have been in the business for some time now, there's some deep desirability to take it forward.

Caroline Kennedy (20:50)
I get a sense that that is the case having watched some of the videos that you have produced, but also that the girls have produced and their involvement in it and you can see their passion.

Dominique Lyone (21:01)
Yeah, they're very, very passionate. They really match me on passion when it comes to the business, having the customer at the center of the business. They're 100 % matching me today.

Caroline Kennedy (21:15)
Great. Now what is your advice for anyone starting a business today? I know it's a big question.

Dominique Lyone (21:23)
I think get started, do something, begin. As an entrepreneur, you're probably going to fail as long as you get back on the horse, so to speak. It's part of the badge, if you like. It's very, very normal that an entrepreneur is going to fail probably multiple, multiple times. The earlier you start, the better it is. I've found in my lifetime is that it's very rare that people start it later. Once you start to have lots of commitments and so on in life, putting your hand up and saying, you know, I'm now going to start my own business is probably not going to happen. So get started early.

Caroline Kennedy (22:13)
Yeah, that's good advice. Wish I'd taken that advice. I started mine later on in life, but still good. Now in 2013, you established the foundation, belonging to the family with a goal of giving $1 million each year to charities who help others in need. Now 15 % of all of your profits go to the foundation. And I love hearing about businesses who are more than just about the bottom line. so tell us about your decision to go down that path and give such a, what I would call a large percentage of your profits to charity.

Dominique Lyone (22:56)
Well, it is at the core of what we do. And I guess that, you I've been very blessed to have been able to have such a great business. Certainly there's a lot of hard work, but there's also a certain amount of luck to it. And when I arrived in Australia, as said, at the age of 13, I remember very, very clearly, I was about maybe 12 weeks into having been here.

On a Saturday morning, we were in massive need of help. We had no money, no food in the refrigerator, and really probably not going to be able to have breakfast tomorrow morning. My father said to me, Dom, we've got to do something. We knocked on the door of a local school up in Randwick, and they instigated significant help. And one of those charities was one called St. Vincent's de Paul, who came with Klaus Foods; changed our schools and did so many things.

So in 2013, when my wife and I were having a bit of an epitome in Africa, we said, what are we going to do with our future? And it seemed that, you know, let's let's continue to set this thing up, continue to run it and give back in a much bigger way that we have in the past. So we've been doing some amazing things with the foundation. There's a number of charities that we support. The staff help us pick some of those charities. And so far, I've managed to keep that million dollars a year target in place.

Caroline Kennedy (24:43)
Well done. It's really, as I said, it's really great to see that business is giving back to community and it's so important.

Dominique Lyone (24:52)
Yeah, look, think that's also one of the other key differences in businesses today is that private businesses can do that when you've got, you know, a family can decide to do that. Much, much harder for a listed company to do that because the CEO and the executive team are not, it's not their money. They're usually dealing with where shareholders are constrained. But with a privately owned business, we have a little bit more freedom.

Caroline Kennedy (25:23)
Now, what are the three main tips you have for other businesses in terms of how they can punch above their weight, which is clearly what you guys have done.

Dominique Lyone (25:34)
Yes, we're definitely punched above our weight. I think that one of the key things is that, know, humans, business is done by humans. And I have found over the years that, you know, many people want to help other people. I've had some great clients who, you know, have decided to, even though we've had this David and Goliath dinner, have given me a go.

And if you keep servicing them, they'll continue to buy from you. So, you know, don't be discouraged of the bigger companies. You should be able to compete and face them.

Caroline Kennedy (26:21)
Yeah, yeah, very much so. And finally, what keeps you awake at night?

Dominique Lyone (26:28)
Well, know, have a, apart from my daughters, I also have a 13 year old son. He, you know, I think a little bit about his future and the future of the future of the planet where and where all this is going. I mean, from a business perspective, not too many things worry me today, but there is some bigger issues on the planet that concerns me, know, all these, you know, the refugees looking for homes, looking for a place. At the end of the day, we were, if you like, to a degree a refugee that arrived here. So there's some big picture things that concern me on the planet today.

Caroline Kennedy (27:16)
Yeah, yeah. You know what I love about that answer is that all of it was related to family or community as opposed to business. And it says a lot about clearly your character and your priorities. And, and before you mentioned about, you know, people supporting each other and humans in business and you know, years ago we used to say it was business to consumer or business to business. And I always say it's people to people.

We're in the people business and we're all human and if we can support each other, then why wouldn't we? And it's so important that that remains strong as well out there in the marketplace. And I think sometimes we forget about that, but clearly you don't. So thank you.

Dominique Lyone (28:06)
Pleasure. When I get in front of my team, I usually say, people buy from people.

Caroline Kennedy (28:11)
Yes, I've used that a lot as well in business and it's very true. Well, thank you so much for your time today, Dominique. It's really been a pleasure chatting with you.

Dominique Lyone (28:22)
Thank you, Caroline. Have a great day.

Caroline Kennedy (28:24)
You too.