How a fast-talking tech entrepreneur turned a $4m company into a $100m company overnight – without the assistance of customers, just accountants. Michael West reveals chapter three in the story of Lakeba Group and its amazing chief executive Giuseppi Porcelli.
Nestling among the elite finalists for CEO Magazine’s gala 2022 Executive of the Year Awards was Giuseppe Porcelli, the founder and chief executive of little-known Lakeba Group.
There was Giuseppe, top row, top left, flanked by the chief executives of global leviathan Unilever and pokies group Redcape (picture below). It was another remarkable achievement in a stellar career of self-promotion by the colourful entrepreneur from Sydney’s Northern Beaches.
It’s the stuff of dreams. Literally. Giuseppe, whose Lakeba Group has customer revenues of just a few million dollars, had not entered himself in the CEO Magazine’s award for chief executives with turnover of less than $100m. Pfft.
Rather, Giuseppi jumped straight in with the big fish, the awards category for CEOs whose companies had turnover of $100m plus. Here are the finalists:
Top row, from left: Giuseppe Porcelli, Lakeba Group; Nicky Sparshott, Unilever Australia & New Zealand; Daniel Brady, Redcape Hotel Group. Bottom row, from left: Tarsi Luo, (formerly) Bellamy’s Organic; Tristan Sternson, ARQ Group; Garry Korte, Hancock Prospecting. Image: CEO Magazine
But how, you may well ask, could a company with customer revenue of just a few million dollars rank itself alongside the CEOs of the giant Unilever or Gina Rinehart’s Hancock Prospecting, whose CEO was also a finalist?
Not by virtue of cash coming in the Lakeba door. The Maserati-driving entrepreneur, who has a long line of disgruntled investors, three of which have taken him to the Supreme Court over allegations of misleading revenue claims, had achieved it via a corporate metamorphosis, by changing shape. Magic almost.
It really is a lesson for anybody who would like to be able to say “I run a $100m company”.
Smooth Talker: Lakeba entrepreneur Giuseppe Porcelli takes tech punters for a rude ride
In short, this is how he did it. Giuseppe decided to use accounting wizardry to turn Lakeba from a humble software development company into a high-flying investment company. This allowed him to claim the increase in the value of his multiple separate ventures as revenue, without the need to have much real customer revenue. He hired an “independent” valuer, whose identity remains a secret, who revalued the businesses.
ASK, and you shall receive
His faithful valuer put majestic valuations on the start-ups and Giuseppe booked the increase in valuations as revenue. Hey Presto, a $100m revenue company! Now all he had to do was find an auditor to validate the accounts. Enter ASK Audit and Advisory, a small firm based in Edmonds Park on the outskirts of Sydney. His motto? “You Ask – We Deliver”. And deliver they did, in just a few short weeks from appointment.
This new strategy to climb into the corporate stratosphere was outlined to shareholders at Lakeba Group’s first ever AGM in December. Although few shareholders were able to attend due to its careful scheduling close to Christmas, those who did attend were keen to hear from the company’s recently appointed auditor how this dramatic growth had been achieved and validated. Would it ever lead to a dividend or other return for their investment?
Several shareholders had even taken the time to write letters to the auditor asking detailed questions about this amazing transformation into an investment company managing its own fast-growing but small-revenue ventures. Unfortunately, the auditor came down with Covid that morning and there was no-one else available. The letters remain unanswered to date.
Over promise, under deliver
MWM has spoken with a number of Lakeba’s piqued investors, each fatigued from years of excessive promises and depressive outcomes, and each expressed complete surprise that the tiny ventures created by Lakeba Group could be worth that much, let alone have increased in value by $100m in the last 12 months. Some with knowledge of the rules surrounding classification as an “investment company” told MWM they doubted that Giuseppe’s reinvention of Lakeba was kosher, at least under prevailing Australian accounting principles.
“You can’t call yourself an investment company if you are the majority, controlling shareholder in the businesses you invest in,” said one. “That would make a nonsense of it.”
Giuseppe is not easily fazed by such rules and regulations however. Although he was unavailable to speak with MWM for this story, as was his accountant, CEO Magazine has been euphoric in its coverage of this irrepressible Italian businessman.
Smashing goals, and other stuff too
“Lakeba smashed these goals with its unique incubator/venture studio/venture capital fund business model and the strength of that combination, which allows it to achieve more than others, mostly because of its innate synergies.
“We are global leaders in truly diversified investment technology,” Giuseppe reveals. “Lakeba engineers future technologies that accelerate businesses towards a better tomorrow.”
There is yet to be a better tomorrow for Giuseppe’s investors, or a better yesterday or today for that matter. But CEO Magazine is a true believer.
“Hyper growth”, “a forward thinking neo-bank”, Giuseppe Porcelli “knows no borders”, and has “perpetual focus” enthused the publication. You could almost be forgiven for thinking Giuseppe wrote the article himself.
Spanning the world?
“And for Lakeba – with a team of 160 spanning the world in places like Argentina, Brazil, Australia, Italy, Germany, India, China, the UK, Canada, the US and Nepal, with titles ranging from data scientists to marketers, developers and engineers – it’s more important than ever to be aligned. However, more than words, Giuseppe believes a culture needs to be lived.
“Culture is vitally important, but at the same time, you must ensure it does not become abstract,” he points out. “Actions are louder than words and when defined, but not delivered upon, can become your worst enemy.”
More than words indeed. MWM has sought unsuccessfully to establish the operational presence of Lakeba in Nepal and Argentina, or Germany, Brazil and Canada for that matter, but we are prepared to give him the benefit of the doubt.
Certainly, he may well have deployed the use of offshore software engineers in these places.
CEO Magazine has chronicled the rise of the “global tech disruptor” and his “cutting edge”, “first-mover visions” from as far back as 2018.
And let’s not forget the global partners such as IBM, News Corp, Optus and Microsoft. What has happened with them in the last 4 or 5 years? Who knows?
Lakeba partners: Lakeba.com
“The Group co-sells several products with tech giant Microsoft, including its services Shelfie, Ezidox and 360dgrees. “Having co-sell accreditation means our solutions are embraced by Microsoft’s global sales force who can offer our solutions to their global customers,” says CEO Giuseppe Porcelli. “Therefore, Microsoft gets to offer the latest innovation and software solutions to its customers, and we benefit from exposure on a global scale.”
This is where dreams are made, but not real revenues it seems. Well, not yet anyway…
Until now, Giuseppi Porcelli has tapped the private capital markets – well-heeled friends and acquaintances that is – for capital for his Lakeba Group, and introduced new partners by taking a controlling stake in their tech businesses in return for shares in Lakeba.
But he has his gaze firmly set on the Big Time, the ASX, where capital flows thick and fast for those who talk thick and fast. The financial press had been talking up this one below, Bricklet – a fractional property investment play. Giuseppi even managed to get property giants Stockland and Mirvac on board as keystone investors, investments which they politely declined to chat about with MWM.
The aim was to launch it on the ASX in a float, and possibly still is.
Ocean view, or really a carpark view? ASX property float a tough sell
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.