Meet Jamie Beaton, the 20 year-old worth $40 million
WHEN Jamie Beaton made his first big pitch in early 2014, no one knew quite what to make of him. Slight, but making up for any lack of physical presence with a well-calibrated motor-mouth, he'd only recently reached an age where he could take over directing his own company from his mother.
The preternaturally precocious Beaton told a host of potential angel investors that he had seen the future, and that was the path he had just walked.
He says he is not religious - "I'm probably agnostic, borderline atheist," - but is an evangelist for data-driven self-improvement and the American-flavoured cult of the startup.
He says he wants to shake up New Zealand, and then the world.
"I want to cleave the culture as much as I can and make it so that people really are aspirational in nature -- the kind of aspirational hope that exists in particular religious groups, or in places like Silicon Valley, where people are dreaming sky-high," he says.
Accountant Janine Manning had known Beaton for nearly a decade and was invited along to the 2014 Ice Angels investor showcase by the teen who thought she might enjoy the parade. She threw in her lot with his company, Crimson Consulting, almost entirely on the strength of its teenage founder.
Crimson's business is about helping students do what Beaton himself has done - win entry to the world's elite universities, such as Harvard, Stanford, Yale and Oxford - against competition from thousands of other ambitious young people. Revenue comes from charging fees for tutoring and other services to help clients achieve that goal.
"At that time he was only 18 and still had his braces on," says Manning. "He thought if I was putting in $100,000 I'd be taking too much of a risk, but I would say in the beginning I was backing the jockey more than the horse."
Sixteen months on, the braces are gone and Beaton is juggling overseeing Crimson from Boston, studying at Harvard, where he has close to double a normal course load, and a job finding investments for Wall Street heavyweights Tiger Management.
It could be tempting to dismiss Beaton's pitch as hype over substance, but he has bent the ear of financial titans and quietly assembled a list of shareholders that even multibillion-dollar Silicon Valley powerhouses would be proud of.
According to Companies Office filings, no fewer than three billionaires have recently taken personal stakes in Crimson Consulting after pouring millions into the venture, making Beaton a youthful, world-leading success in business in the same way that Lydia Ko is in golf, or Steven Adams in basketball.
Manning shrieks with laughter as she tries to downplay the significance of the 20-fold increase in her initial investment and her coming move to Britain to expand Crimson. "I'm the only adult on the board. And like my husband says, the gain is all on paper at the moment," she says, struggling to keep a straight face.
Beaton's mother, Paula, also struggles to keep herself grounded.
Speaking as an unbiased mum, I did an MBA and it's given me just enough to realise he's a genius. Sometimes I wonder if I actually gave birth to him; there's times I see him as a mother, and other times I'm just in disbelief.
Recent deals have set a US$60 million value on Crimson. That value is enough to make Beaton, the company's biggest shareholder, a US$26 million manchild.
In New Zealand dollars, at current exchange rates, Beaton's share works out at $40.5 million -- enough to be knocking on the door of the National Business Review rich list (minimum wealth needed, $50 million) even though he is yet to celebrate his 21st.
Beaton's 21-year-old girlfriend and Crimson co-founder Sharndre Kushor, fresh from finishing a degree herself in public health at the University of Auckland, now works for the company full-time and her 12.8 per cent stake is worth $11.8 million. "It's been a fun ride, but we've still got a long way to go," she says.
Video: Paula Beaton talks about her son Jamie
Beaton doesn't dispute the valuations, but says he is kept the champagne corked - and not just because he is still to reach the legal drinking age in the United States.
"My investors? Yes. Me? Not so much. I'm all about free thinking and clear minds. I've never drunk alcohol, never had a cigarette," he says. He's also seen no need to splash out on a car, preferring the convenience of Uber to automobile ownership.
The sole vice he'll admit to is poker, but even then, he treats the game played in casinos not as house-always-wins gambling, but a game of strategy he can profit from.
"I only play poker because, and maybe I'm stupid to think this, but I like to think in some games I have positive expected value. The idea with poker is I can, hopefully, with analysis and strategy, have an edge some times."
Beaton developed his edge in St Heliers, in what appears to have been a near-perfect advertisement for private education hot-housing. Progressing from St Kentigern to King's College to Harvard, with numerous tutors along the way, may scream private privilege, but the Beaton family home doesn't stand out from its neighbours.
For a leafy Auckland suburb it has a fairly average rateable value of $1.25 million. And while Beaton doesn't have any brothers or sisters ("hopefully you can't tell I'm an only child just by looking at me," he says) and his mother Paula was the sole primary caregiver for almost all of his first five years after a divorce, the household was also crowded by a third generation - Jamie's grandparents - sharing the home.
Paula says her parents emigrated from Britain in the 1950s on one of the "ten pound boats" and pressed upon her the importance of education. "My dad, he's 87, he literally doesn't understand a thing that Jamie does - he doesn't know the nuts and bolts - but he just bristles with pride," she says.
I was three or four, and have these funny memories of sitting in places like Wendy's and I'd have all these folders or notes and mum'd be helping me, highlighting things and giving me guidance about how to study.
Jamie, for his part, has early recollections of even trips to fast-food restaurants being turned into teachable moments. "I was three or four, and have these funny memories of sitting in places like Wendy's and I'd have all these folders or notes and mum'd be helping me, highlighting things and giving me guidance about how to study."
He also remembers being the sole Pakeha student attending an almost exclusively Chinese weekend school in Pakuranga during his middle years, but Paula says his attendance there was more down to chance than any grand plan: the school inhabited a building overseen by her business managing body corporates, so his attendance was practically workplace childcare.
By high school, Jamie says he was left driving his own education, leading to ever-more-ridiculous courseloads as part of his oft-repeated mantra to "be the best me I can be". He says he determined early on that with appropriate support, he could often learn more effectively outside the classroom than in it.
"As I got older I realised how silly it was to roll the dice in a lot of these classes and leave the quality of teaching down to chance. I would use tutoring to learn 150 hours of content for a subject in about 30. In my last year I ended up doing 10 A-levels when most people only do three or four," he says.
His ambition to study abroad, actively targeting dozens of Ivy League and Oxbridge universities, crystallised into plans to dominate academic and extracurricular honours boards in his senior year - culminating in a race for dux that eventually saw him share the crown.
He expresses some disappointment at King's for what he calls "nearly violent opposition to my style" of raw ambition, blaming that for failure in his quest to also be chosen as head boy.
"In my last year, I would say I definitely cut out of a lot of time spent on fun. But that was the year I was applying to Harvard, Yale, Princeton, Stanford and others. And I was competing with this guy for dux for the final time - it was very high stakes and at that point I couldn't stomach any time wasted," he says.
While Beaton can hardly be accused of wasting his youth, Manning says she has given up trying to convince him to slow down and enjoy it. "I told him, 'you're at university, it's the time you should be having fun.' But he doesn't want to go to frat parties and drink beer. It turns out negotiating, cutting deals, making things happen, this is his fun."
But such fun, at such an age, can come with hurdles. Seeby Woodhouse, who founded internet service provider Orcon as a teen before selling out aged 30 and banking a $20 million cheque, says there are definite hurdles in being in business so young.
I think once you make the money you get the respect. But until that time it was hard to be the young business guy. That attitude has changed a bit with Mark Zuckerberg, who has shown young people can do amazing things.
David Ager, a senior fellow at Harvard Business School who taught Beaton in a class and has kept in regular contact with his former pupil, also brings up the now-billionaire Facebook founder. "Many students aspire to be Mark Zuckerberg, but those are few and far between. That said, what Jamie's done is pretty exceptional. It's not Facebook, but he's in a very, very small group of Harvard students. And while starting business is de rigueur, I don't see many US$60 million companies started by my students," says Ager.
Beaton is on track to graduate this May with two degrees after only three years at the university. Typically, an undergraduate qualification alone takes four. Of the 2500 students Ager has taught over the past 12 years - and the pool of Harvard students is stacked with high achievers -- he says he can recall only two others who have progressed through the system with such speed.
Beaton, says Ager, is a "very driven, very energetic, very curious young man."
Crimson largely brands itself on this young man, using Beaton both as an aspirational role model and in selling an adapted version of his tutor-heavy network to guide students through the maze of international university admissions. In effect, Crimson tells parents: we can rebuild your child; we have the education technology.
As to why the business justifies being tagged with a $90 million valuation, there are hints of lucrative revenue streams in complaints from prospective students, who have told the Herald of quotes for tutoring alone - as part of Crimson's effort to win an Ivy League placement - that run to $10,000 or even $20,000.
Beaton doesn't dispute the figures, but emphasises that Crimson also provides cheaper lecture-style offerings, some pro bono assistance to talented students who can't afford specialised tutoring, and has a client base that is diversifying away from its private school roots.
But he is unapologetic that his company aims to make a profit. Investors would not be prepared to put money into the business if it weren't, he says. "We've validated that our methodology gets results. Our methodology also generates revenue - people are willing to pay for it - and it also has strong impacts."
Crimson has so far used much of its capital in rolling up smaller tutoring operators in the Australasian market. Beaton is keen to point out that, thanks to the acquisition of tutoring service Medview, more than half the students accepted into the University of Auckland's medical school this year were Crimson clients. Crimson is now making a tentative expansion into Europe and has an eye on China in the medium term.
Video: Seven tips from Jamie Beaton
The for-profit education sector is fragmented, Beaton says, with online-learning, tech-based companies having reach but lacking the track record and hard results of their bricks-and-mortar counterparts. "Finding the right model hasn't really yet been done. I think we will crack it, and I think we are the closest to getting it right," he says.
Or, as Crimson's token adult director Janine Manning puts it, a truly multinational educational business whose brand becomes a byword for the industry has yet to emerge. "There is an opportunity for someone to become the Coca-Cola, or Apple, of education," she says.
Beaton is guarded in talking about his billionaire backers -- who may be hoping he reaches such dizzy heights -- wary of upsetting his employers, mentors, and capital-providers. He does say, however, he is "an A-plus cheerleader" for Tiger Management founder Julian Robertson, given his support for Crimson specifically and education scholarships generally.
Requests for comment from the Tiger trio who are listed as Crimson shareholders resulted in a response from heavyweight public relations executive Fraser Seitel, who has also represented the Rockefeller family. The reply, in its entirety, says Beaton is a "staff member in good standing".
His studies at Harvard, working towards a masters degree in applied financial mathematics, and work for Tiger as an analyst, have given him an insight into international finance that he says diverges markedly from popular opinion. "I think there are many mischaracterisations about finance and what it means, and a lot of the pop-culture stereotypes are The Wolf of Wall Street or that Wall Street movie starring Charlie Sheen," he says.
Shkreli did this on a small scale, and then all these investors got rolled in public markets. The whole biopharma sector earning multiples contracted from 18 to 12.
Non-fiction recently provided another whipping boy financier, with notorious "pharma bro" Martin Shkreli attracting bad headlines after splashing out on multimillion-dollar hip-hop records, buying the rights to drugs and then jacking up their prices, and finally getting arrested for alleged fraud. Beaton says Shkreli fits the bill of villain and deserves all the opprobrium, but the episode also reveals how small players can poison wells.
Beaton had been analysing companies in the pharmaceutical industry for Tiger while this new figure rose and then imploded, and he watched first-hand as ripples from Shkreli shook up the market. The sudden media and regulatory scrutiny of the pricing of drugs, alongside Shkreli giving the sector a bad name, wiped out billions of dollars in capital.
"Shkreli did this on a small scale, and then all these investors got rolled in public markets. The whole biopharma sector earning multiples contracted from 18 to 12."
Despite his obvious fascination with the field, he is not willing to commit to staying in it, preferring to keep his options open. "I think activist investing and private equity are really interesting fields. If I were to keep doing finance, I would drift towards these," he says.
Paula Beaton laments her son's inability to iron his own shirts or operate a washing machine, and expresses hope that he will eventually turn his childhood dreams of politics into reality. "I wouldn't be surprised to see him run for political office," she says.
Beaton is undecided. A fan of former financier and current Prime Minister John Key - "but not like a Young Nat or anything" - he is unwilling to speculate on where he might end up when he himself reaches middle age.
"Forty is 20 years away; I'd struggle to guess which industries would have collapsed or grown by that stage, never mind what I'd be doing. Whatever I told you, I bet I wouldn't be doing it. Get back to me when I'm 30."
The billionaire backers
Eighteen months ago, Crimson Consulting was effectively being run out of a Boston dorm room and was parading itself in an Icehouse angel showcase, trying to score a couple of million dollars in capital.
Early New Zealand investors, who went on to tip in $1.4 million, have since enjoyed a 20-fold increase in their investments' value, as a quartet of global heavy hitters took personal stakes in the company and poured in millions more.
Robertson rose to fame, and acquired the nickname "The Wizard of Wall Street", after founding hedge fund Tiger Management and growing US$8 million in start-up capital to over $US22 billion at its peak in the 1990s. Now 83, he has taken more of a back seat at Tiger but has developed ties to New Zealand, owning the luxury lodges Kauri Cliffs, Matakauri and The Farm at Cape Kidnappers, and is involved in art and educational philanthropy. Robertson is worth US$3.4 billion according to Forbes and has built up a personal 13.5 per cent stake in Crimson, mostly in a US$5 million allotment in the middle of last year that is said to have valued the company at US$50 million.
Known formally as Charles Payson Coleman III, this 39-year-old New Yorker rose from prep schools and lacrosse teams through the ranks at Tiger to strike gold with early investments in Facebook and later became the firm's managing partner. His "Tiger cub" hedge fund was the world's best-performing in 2011 according to Bloomberg, with annual returns of 45 per cent. Forbes values the personal fruits of his labours at US$2.3 billion and according to the Companies Office, Coleman holds a 7 per cent stake in Crimson.
Third son of Tiger founder Julian Robertson (who jokes Alex was an unexpected outcome of a 1979 family holiday to New Zealand). He worked with Senator Elizabeth Dole in 2002, but later followed in the family footsteps and was made president of Tiger in 2012. Robertson junior is recorded as holding 6.1 per cent of Crimson.
This Japanese billionaire, valued at US$1.06 billion by Forbes, built his fortune on the back of education services and publishing company Bennese Holdings. Just before Christmas, Fukutake used his New Zealand holding company EFU Investment to acquire a 1.7 per cent stake in Crimson, understood to be in return for US$1 million - valuing the business at US$60 million.