07 May 2024
Words John Miller Informer

The Dice Man

Mandala Asset Solutions’ John Zeckendorf discusses his company’s steep ascent, whether money can buy happiness, and breaking down mountain-size problems into manageable molehills.

When John Zeckendorf was preparing to climb Denali on his quest to conquer the Seven Summits, he would take a dice along on his regular training sessions. If at the end of any session he rolled a six, he committed to repeating the session in full. Zeckendorf’s idea was to introduce a chance factor, something he couldn’t control. Hence the dice.

“Denali’s weather is completely unpredictable,” says Zeckendorf. “You can turn up at a campsite to find it too dangerous to stay in or that it’s blown away entirely. So, you have to push on to the next camp or climb back down to the last one. It’s like running a marathon only to realise you have to run it again once you get to the finish line. So, I introduced a random element, something outside my control in order to adjust my mindset, if necessary. If I rolled a six, I had to do the whole thing again regardless of what it was I’d just done. In one case, it was an eight-hour run. I had to call my wife to tell her I’d be a bit late.”

The method in this madness worked. Zeckendorf went on to summit Denali, his third of the seven following his earlier climbs of Kilimanjaro and Elbrus. After Denali, it was Vinson, then Aconcagua, which he managed on his second attempt in 2016. The following year, he became the first Tasmanian to summit Everest, thereby completing his conquest of the Seven Summits, the highest mountains in each of the seven continents.

Broad Peak, opposite K2, is a likely contender were Zeckendorf to attempt another summit above 8,000 metres. “But don’t tell my wife,” he jokes. As to why he climbs the world’s tallest mountains, he gives a Malloryesque response: “I climb them because they’re mountains I want to climb,” he says.

Throughout this mountaineering at high altitudes, Zeckendorf has also managed to steer Mandala Asset Solutions, one of Australia’s largest regional accommodation funds, which he founded in 2002 with business partner Ryan Shaw.

The pair met working at PricewaterhouseCoopers in the 1990s where they specialised in insolvency. When Southeast Asia melted down in the 1997 Financial Crisis, they relocated there to take on a number of floundering assets. The skills Zeckendorf acquired came in handy when, in 2000, he left PwC to reconcile the profligate spending of Prince Jefri Bolkiah, the notorious playboy and younger brother of the Sultan of Brunei, who chalked up $40 billion worth of debt. More on this later.

Mountaineering has helped Zeckendorf navigate the commercial challenges his work has thrown him, but business has also informed his mountaineering. The trick, he says, is to break down the mountain, be it figurative or actual, into smaller manageable targets.

“You end up in this position where it doesn’t really matter what’s thrown at you, you can find a way through it,” says the 53-year-old, who is based in Kingston Beach, just outside Hobart.

“People get overwhelmed by the enormity of what’s before them. Most people look at a big problem and focus on the wrong question. They think, gosh, how can I do that? But they need to ask, what do I need to be able to do to break that down into something I can do? You do that quite a lot with climbing mountains. You don’t think of the enormity of the mountain in front of you. You think, OK, what do I have to do next? I’ve just got to make it up to here. I’ve just got to go there. I know I’ve got to get through this tricky bit, so I need to practice and prepare for it. When you get around to actually doing it, it’s just a matter of putting it all together.”

Mandala’s success has come from assembling those constituent parts. From a single hotel acquisition in 2002, it has grown its portfolio to 35 properties in 22 cities across Australia, representing some $200 million in accommodation assets under management. Mandala is also expanding its external management offering to owners of regional and city accommodation properties that want to benefit from Mandala’s highly successful operating model.

“The word mandala means segment,” says Zeckendorf. “It’s when you put the segments together that you end up with the whole. It’s about the harmony of the elements working together. Take any one segment away and it doesn’t work. It’s a principle most people have heard of, the idea of taking things that aren’t the same and putting them together, with the whole being greater than the sum of its parts. That’s what Mandala has always done. We’ve always collaborated with people in long-term partnerships. We tend not to do one-night stands, we’re much better at being married.”

“It works in a business sense. It’s not that we’ll only work with certain people, it’s that when you find a formula that works you want to keep it going to some extent. That’s what’s really worked well with ResortBrokers.”

Mandala’s primary focus is the acquisition and management of accommodation properties in regional locations, where Zeckendorf says you will always find better returns than major metropolitan areas. The company is attracted to accommodation businesses in regional economic centres that are export driven, especially by mining or agriculture, or have strong government-based services or domestic tourism.

“The returns can be fabulous,” he says. “But often these accommodation businesses and regions are often overlooked by investors.”

“There’s probably a number of reasons why. For one, these buildings often aren’t shiny or glamourous. They may be in towns people haven’t heard of, or if they’ve heard of them, it may not have been for the right reasons. It’s also quite an ordeal just getting to some of these towns because of the vast distance. Then there’s the issue of management. If you want to run something in the middle of nowhere, you’re probably not going to attract a first-class manager. We’re lucky. Most of our managers are fabulous and we can track them because we’re bigger.”

Besides mountaineering and commerce, Zeckendorf has been on another journey, one which guides his life, personal relationships and business ethics. No profile of him would be complete without mentioning it, though accepted wisdom tells us the subject should not be discussed in polite company.

Raised Jewish, and with a grandfather who perished in Auschwitz, Zeckendorf converted to Christianity when he met his wife in his 20s and remains a committed Christian today. He is comfortably open about his Christian faith, neither pushy nor reserved.

“Everyone in Mandala knows my faith position but it doesn’t mean I broadcast it,” he says. “A Russian friend of mine says, ‘You Australians don’t talk about religion or politics, but we Russians realise there’s nothing else worth talking about.’”

“I realise I’m not just accountable to my investors but to a higher authority. I know I could make more money if I cut corners, but I want to do the right thing. The good news is that when Fair Work does an audit on any of our employees, we never have a problem as we don’t underpay them!”

Between 2000 and 2002, Zeckendorf opened one of the most unique chapters in his storied life when he worked to reconcile the debt of Prince Jefri Bolkiah who served as Brunei’s Minister of Finance and Economy before being undone by the 1997 Asian financial crisis.

Zeckendorf was recruited by his predecessor, a friend from his PwC days who had burnt out working to square the debt, whose parting advice was to stay well clear of court politics.

“It was the best tip he gave me,” says Zeckendorf. “And he was absolutely right. That wasn’t my job. My job was to clean up the mess.”

“Basically, they threw me the keys to 70 assets around the world, including luxury hotels, jewellery, palaces, you name it, and a whole bunch of toys. We had about $5 billion worth of assets. But we also had $40 billion worth of liabilities. So, we had a mismatch between the prince’s means and his responsibilities. My job was to resolve both sides of that equation. After three years I had basically done that.”

“It was the perfect role for me. It was a huge amount of autonomy and responsibility but solving these sorts of problems are fascinating to me. I’m a trouble-shooter who likes a good crisis.”

Zeckendorf saw the trappings of extreme wealth as well as the traps it laid for the prince. It recalled, he says, the lament of King Solomon, the wise sage of the Old Testament, whose pursuit of his own pleasure did not result in lasting fulfillment, only spiritual emptiness. “Come now, I will test you with pleasure and gratification; so, enjoy yourself and have a good time. But behold, this too was vanity,” says Ecclesiastes, a book of the bible attributed to Solomon.

“His immense wealth left him wanting,” says Zeckendorf. “Prince Jefri had many, many girlfriends, many mistresses and a whole bunch of wives. Around mega wealthy people there’s also an abundance of what I shall politely call parasites. That’s where all the loose women and cocaine and that sort of stuff was going on.”

“One of the last wives that came along, they actually really loved each other. He didn’t have money in those days, and she didn’t want money. She actually loved him. From what I saw at a distance that was probably the relationship that made him happier than everything else. It was just that one woman that he had fallen in love with, and she with him.”

As for Mandala, Zeckendorf says the plan is to develop the business for the foreseeable future. If the company were to reach $1 billion of accommodation assets under management, he says it would be highly attractive to a sovereign wealth or super fund for a roll up.

“For the next five, ten years we’ll grow it, but at some point in that journey someone will make us an offer and our investors may say, ‘OK, that sounds like enough.’” END