Waco Tao

‘My name is Sue, how do you do?’

 

That classic Johnny Cash song from 1969 tells the story of a father who knew he wasn’t going to stay, but wanted to ensure his son grew up tough. So, he gave his boy a girl’s name.

 

In China you weren’t named Sue, you were named Erguniang (it’s not pronounced phonetically as it appears in English either!). At least that’s what happened to Waco Tao, and while his father did stay, just like the boy in the song, that name shaped Waco’s life.

 

“I’m the second of three boys,” says Waco. “After me, my parents were desperate for a girl however they got another son and thought ‘oh not again!’, so they started treating me like a girl.

“My Mum called me Erguniang, which means second daughter, and I was taught all the girly stuff, like knitting and embroidery.”

That led Waco to develop an interest in model-building: “not that models are girly, it just seemed a natural progression.”

Who would have thought that an innocent nickname given to him by his mother would lead Waco down a path to the establishment of PowerHouse Homes.

The introduction on the website outlines the business perfectly:  ‘PowerHouse Homes is a Melbourne based prefab housing company specialising in R&D, manufacture and construct of prefab buildings catering for both residential and commercial markets.’

But to understand how a ‘girly’ upbringing has lead to such an innovative company, you have to go back, way back – back to before Waco even arrived in Australia.

As he recalls, “before I started school, children would learn English, but by the time I went to school it was the height of the Cultural Revolution, and learning English was frowned upon. It wasn’t banned, but not encouraged either.

“I had one teacher who spoke very good English and I listened. Most of my classmates didn’t listen – they weren’t interested – but I was, and I became pretty good at it.”

Learning While Earning

The first piece of the puzzle was in place: when Waco arrived in Australia, he could already speak English fluently.

His ticket into Australia was as a student in the hospitality industry, and because of his fluency in English he was able to turn a two-year course into one year.

At the time, Waco was studying at the Australian College of Travel and Hospitality in Melbourne. “They were trying to cut costs, and because I was already a qualified hotelier and my English was good, they offered me the chance to become a lecturer.

“I didn’t get paid, so I still needed to have a job. I was working as a waiter and the owners of the restaurant realised I was overqualified, so they made me the manager.”

That role “helped me develop my management skills, and not just with Chinese people, but with English-speaking people as well.”

The second piece of the puzzle then fell into place. Not only was Waco becoming a good people manager, he was dealing with customers and these were “skills which have played a huge role in where I am today.”

In his spare time Waco’s hobby was building models – mainly ships – and he had a friend who was an architect. He told Waco that if you can make model ships, you could make architectural models. At the time, “I had no idea what he was talking about; I had never seen one. I was a bit of a daredevil, I guess, and said I’d do it.”

It took Waco four months to complete the model of a four-storey building in Toorak. “My friend was amazed and the next thing I realise there was a cheque in the mail. Of course, I didn’t expect that.”

Another piece of the puzzle was embedded into Waco’s journey: his introduction to the construction business.

The realisation that “there is money here” led Waco to begin “knocking on the doors of architects; I thought architects would give me the business, but I was wrong. The architects did recommend me to developers, and they became my clients.”

The next piece of Waco’s building industry education was about deadlines. “If I missed a deadline there were penalties, so I knew I couldn’t do it by myself: I needed help.

“Initially I was outsourcing locally, but that became expensive, so I drew on the experience I’d received in several other jobs I’d had and looked overseas. That’s when I went back to China and found model-makers there who didn’t cost me as much and performed more efficiently.”

Waco had learnt about outsourcing overseas in his research papers he’d read while studying at Monash University, and also whilst working for training, stationery, cosmetics and 3PL companies during that period.

Waco Tao was developing a unique set of skills which would set him apart from others in his field. He recalls that “during these last two jobs in particular, I was dealing directly in procurement. It’s the beginning of the supply chain. You have to buy the goods first, they’re then shipped, transferred to a warehouse ready for distribution and eventually sold.”

Puzzle Taking Shape

The third-party logistics company that Waco was using to bring goods into the country made him an offer too good to refuse. The initial five-year contract lasted almost eleven years.

Proudly Waco recounts: “I treated the company as my own and we made some great inroads into the Asian market. The carrot to stay for the second five years was that I would get the chance to join the ownership group.”

Waco went back to university to get his MBA, and completed a four-year course in two years, studying part-time. Waco was highly engaged and enthusiastic about having a real say in how the business would be run.

However, when an offer to head up the business in Hong Kong fell through, Waco resigned. “I walked out just prior to Christmas in 2005. The only thing I took with me was a chair. It was a very expensive chair, handmade in South Australia. I pulled the roof down on my convertible Mercedes, stuck it in the back seat and drove home.”

In reality though, Waco left with way more than just that chair: “I went away from that job with a full understanding of the supply chain industry.”

More pieces of the puzzle were fitting into place.

Waco’s view now is that, “very rarely do you find a CEO or business owner who has a complete understanding of both architecture and supply-chain management. It’s the biggest point of difference PowerHouse Homes has over our competitors.”

However, there was still one more venture before Waco would set up PowerHouse Homes. It was another piece of the puzzle that would prove vital to the success of his business.

It began towards the end of that eleven-year stint with the third-party logistics company, and sprang from an idea he’d presented to management who were rather unimpressed.

At that time “they said ‘you’re too ahead of yourself, you’re full of it’, to which I replied, ‘if you don’t like it I’m walking out, I’m going to do it’.”

Waco set up a global logistics company based in Shanghai using his own money – “I even gambled with the kids’ school fees.”

He realised warehouses on the Chinese ports were under-utilised, so he made agreements to rent part of them and then set about attracting business from companies from around the world which were having difficulties making inroads into China.

In a bold move, “I forged a user-pays agreement with the warehouse owner, based purely on the amount of space I used. In just five months I had thirty-three companies lined up. They thought I was representing a large enterprise, but it was just me.”

In Waco’s mind however, “I was large where it mattered: in my heart, in my desire and in my vision. My biggest asset was my knowledge, and knowledge is power.”

Then the Global Financial Crisis hit. It was 2007 and the failure of the international financial markets killed his idea.

Looking back now Waco asserts that “I still believe in the model, especially for small-to-medium sized businesses. The one saving grace was that I hadn’t borrowed any money – it was all my own money invested.”

For several years prior to that Waco had been talking at business conferences, mainly those aimed at the Asian market. It was only four or five times a year, but he had a policy of encouraging people to interrupt him if they had a question. Fortunately for him, “you could never kill my train of thought.”

It was one of those ‘rude interrupters’ who helped Waco add the final piece of the puzzle to establishing PowerHouse Homes. “I was talking about my attempt to set up the Shanghai business and this guy shouts out from the crowd ‘that’s blue ocean strategy’.”

Waco had replied ‘yes it is’ at the time, “but I really had no idea what he was talking about.  I did remember buying a blue covered book that mentioned strategy in its title though.

“As soon as I got home, I read that book from cover to cover, and agreed with that guy. I’d started a business in a field which no-one else had done. I was meeting a need that needed to be met. If it wasn’t for the GFC, it really would have worked.”

Waco realised that if he had done it once, he could do it again. All he needed was an idea. That idea hit him squarely between the eyes while on a flight, circling Sydney airport, becoming agitated about a meeting for which he was running late. “I looked out the window and saw all these containers lying idle.”

These were the same containers he’d used to ship goods into Australia, and the same containers which would have been used to store goods in China. Containers which are vital in the supply chain industry, but only have a working life of about ten years.

For Waco, “It was a light bulb moment. While these containers are replaced after ten years, their life expectancy is a lot longer; they rust a bit but they don’t break down. It costs more to break them down than having them sit there doing nothing.”

Waco had read an article in the in-flight magazine about the housing crisis in Australia. “I thought Australia doesn’t have a huge population so the labour force is small. When it comes to building homes to satisfy demand, because demand is high and supply is low, the cost of homes is only going to grow.”

The idea which flowed from these two trains of thought was “what if I could use these containers to build homes? I couldn’t wait to get off the plane and start doing my research.”

That research took Waco eighteen months, and in March 2009, the puzzle was finally complete and PowerHouse Homes was born.

From a boy named Erguniang who liked to build model ships, a company which builds model homes had emerged.

In a reference to his Asian culture, “whenever I do something I have an English and a Chinese name for it. But Chinese people didn’t initially understand it, because for them ‘powerhouse’ is like an engine room in terms of Chinese characters.

“I explained it does make sense, because with an engine room you empower people. What’s the big dream for Australians? To have your own home. So I created an engine room to empower them to achieve that dream.”