If only more rich people realised that they didn’t need any more money, and started using their money for good, or for fun, or for anything except just trying to make more of it.

An interview with Dick Smith in Ethical Investor magazine
21/11/2000

Ethical Investor: Are you an ethical investor?

Dick Smith: No, because I don’t invest. I don’t have any shares in anything.

EI: Why not?

DS: Because it’s too risky. I don’t take risk like that. How would I know what was going on with threse companies, they could be well run or badly run or anything. So I just don’t have any shares, never have.

EI: Is Dick Smith foods an ethical investment?

DS: Well, yes it’s a small business that I operate and yes it is an ethical investment for me  – but I don’t have any shares in any other thing just my own business.

EI: What makes Dick Smith Foods an ethical investment?

DS: Exactly the same as Dick Smith Electronics and Australian Geographic it’s run by honest principles that not only comply with the law but my peers will accept as being honest and the right thing to do for Australia. That’s important to me because I have to live with my peers.

EI: Isn’t there a larger ethical project there, which is that you’re trying to steer investment back towards Australia

DS: Yes, well that’s part of it. It’s important for the future of Australia that we support our own businesses, I believe. I support a free marketplace but I wish to see a balance and we don’t have a balance at the moment. Most of our companies appear to be overseas-owned. So I’ve invested in Dick Smith Foods because it’s supporting Australian farmers and I think that’s ethical

EI: Will you list at some point?

DS: No I don’t plan to because then I’d be totally bound to this company and obligated to outside shareholders, and I don’t want to do that. It’s too much of a strain and worry

EI: Because I imagine a number of people that consider themselves ethical investors would like to be able to support you

DS: Of course they would, I get literally hundreds and hundreds of requests. People looking to buy shares in the company.

EI: Isn’t there some way to tap that enthusiasm for what you’re doing?

DS: Well, how? It’d be OK if they were competent and they could work and run the company but if people just want to invest, I have enough money. I don’t want any more money, so that doesn’t help me at all.

The problem is that I can make decisions which are non-business decisions whereas the minute I have other investors I can’t. For example, I can make a decision which means we won’t make any profit but which means we help Australian farmers. If I had shareholders in this company I couldn’t do that because I’d have to make sure they get a return. It’s completely against what I’m trying to do.

EI: Do you expect to get a return?

DS: Well, no I don’t. I don’t want any return. I’ve got enough money. We’ve made $12,000 in nine months net profit and we’ve given away about $500,000 to four charities: the Salvation Army, the Smith Family, the Exodus Foundation and Care Australia.

EI:  and the environment?

DS: In Australian Geographic we put millions of dollars into environmental concerns and that money we could’ve taken as profit but we gave it away.

EI: Do you feel alone in the project you’ve undertaken here? Or do you feel like there are a number of Australian companies, wealthy Australian people [who are supporting similar causes].

DS: I think there probably are. I don’t know of any, but I’m sure there are. They probably do it silently but I don’t know. I’m not in that field. I don’t mix with business people or with wealthy people so I don’t know what they’re doing but I’m sure they would be doing that. Hope so, anyway.

EI: It’s come up that you should start a bank

DS: Well, I wouldn’t want to do that. See, I don’t want to make any more money. So why would I start a bank? I’d have more worries. I’m basically helping Australian farmers. It’s very simple. I can assist Australian farmers with my marketing skills. I don’t want any more money, I’ve got adequate money.

EI: What about when you go and do something else? Or retire?

DS: Well, I think eventually Dick Smith Foods will fail. I tend to agree with the university professors. If you look at our website there are articles there that say unless you spend vast amounts on advertising, that people will just go back to the companies who spend the most amount on advertising. It’s propaganda. I tend to agree.

When I say fail, it will just become a small niche market because the big foreign companies who spend 10-100 times more than we can on marketing Australians will just go back and buy from them, because that’s human. We all succumb to propaganda. In the 1930s, normal rational people supported Adolf Hitler, because he ran a great propaganda network. It’s exactly the same in Australia. These big multinationals spend an absolute fortune on the best psychological testing and the best marketing and – that’s what we buy. We’re manipulated.

EI: So, do you think there is a constituency for what you’re doing? You say you get hundreds of people wanting to invest?

DS: Yes, there is a tremendous amount of people that are very concerned about our free- enterprise system and that want to invest in ethical companies, who believe there’s more than just making money.

Big companies basically lose their conscience. They have ethical people there but they’re so big, that something that’s so big can’t really have a morality to it. It’s too big. And that’s why I’m opposed to these huge large takeovers that are going on. I think in the future we’ll see legislation from democratic governments that will reduce the size of companies so they truly compete.

I have a feeling we’re going down the wrong track at the moment. It was Marx who predicted that capitalist will eat capitalist and in the end the whole thing would become inefficient and I think he’s right. His system wasn’t much good but if we end up with a system where you have two major fuel companies in the world, and two major retail companies they no longer compete and they no longer can go broke.

So that’s why people who are investing in ethical, small companies  – especially if they’re small, not too big  – I support it.

EI: Is it anti-globalisation, what you’re doing?

DS: Not anti-globalisation, because globalisation is on us. There’s nothing we can do about it. We are one world. We live all in this one world. But we must understand the disadvantages and then use laws, democratically created laws, to minimise the disadvantages. A good example,

EI: Global laws?

DS: Well they might be global, for these big multinationals. You either need global laws, for these big multinationals, or sovereign countries need to bring in laws which limit the size of the multinationals. It’s probably a combination. But I’d much rather see local laws. I don’t like big. Human beings can relate to things of a certain size. If it gets too big you can’t relate to it.

EI: To what extent does Dick Smith Foods touch on a xenophobic element? Do you feel like One Nation voters would be buying your peanut butter?

DS: I don’t know, but I’ve constantly just talked about a balance. I think One Nation is against free trade. Well I’m totally for free trade. I think other nations should be allowed to raise their standard of living to ours. That’s what going to happen if you have free trade. People complain about low wages in other countries – well the wages will be lifted if they can sell their products to Australia.

So, I’ve got quite different opinions to One Nation there, but, I think you should support your own team. You see, Bulletin magazine twelve months ago tried to say that because I wanted a balance in trade that I was against free trade. Well, no, I want a balance. I want Aussie farmers to be able to export but I don’t want $100 million a day more going out of Australia than comes in. I think that’s pretty fair. I’m pretty moderate.

EI: What about the argument that we’ve always needed foreign investment? We’re a young country

DS: I support foreign investment. If companies come in here and take risk and create jobs I support it. Look at the website. What I don’t support is selling off existing well-run Australian companies and then sacking twenty per cent of the staff, putting up prices and taking the profits overseas. I don’t support that.

I do support foreign investment but I think it should be roughly balanced. That companies that invest here should be roughly balanced with Aussie companies that invest overseas. If there’s not a balance it doesn’t work properly.

EI: What should Australian governments  – federal, state, local  – be doing to support you? Should they be stocking your products?

DS: No, they shouldn’t be doing that. But they already have a law, which is nothing to do with me, which prevents the complete sell-off of Qantas. They should have more laws like that.

EI: You don’t want to be on government purchasing lists

DS: No, I don’t want any government involvement in my business. They should just buy whatever they think is the best product and whatever gives them the most satisfaction. Now, most Australians would get satisfaction from supporting Australian farmers rather than American farmers. American farmers are far wealthier than Aussie farmers and, look, it’s all about just supporting the home team. If I go to a football match I support Manly, because it’s from my local area. It’s fun, it’s nothing more than that.

EI: Fun? So is ethics the wrong word for what you’re doing? Is it an ethical enterprise?

DS: Yes of course it is, but I don’t quite understand what it means. I’m doing something that gives me satisfaction. If it’s not honest it wouldn’t give me satisfaction. But if I don’t think I’m supporting the underdog, I like supporting the underdog, it gives me satisfaction. So my enterprise is one set up to give me satisfaction by doing the right thing.

EI: So you recognise there are people interested in backing companies that are doing more than just making money. There is a gray area there, where companies can make a difference

DS: Oh definitely, my company does because it’s not set up just to make money. It’s a very unusual company.

EI: What about the growth of ethical investment? Interest seems to have grown the last year

DS: Well I have to say I didn’t know it had. I don’t know anything about it. I don’t know what an ethical investment is and what an unethical one is.

EI: If Dick Smith was a listed company, ethical super funds might be able to back you, for instance this year a number of ethical super funds have been launched into the market.

DS: So why would they back me and not, say, Kelloggs?

EI: Well, because they might have as one of their ethical criteria that they support community investment  – that is, reinvesting in the communities profits come from rather than taking money elsewhere

DS: Well I support that, I think that’s good. I think what you’re getting at is I suppose if people can invest their money and get some satisfaction as well as getting a return, they can make themselves feel good, well I think that’s good.

EI:  or avoid investing in companies that damage the environment.

DS: Well, I think that’s good because that will then encourage all companies not to damage the environment. So I support that. I think it’s just another way of voting. You can vote by putting a tick in a ballot box or you can vote by moving your money to a company that will give you more satisfaction than one that won’t. So I support it, even though I don’t invest in any companies.

EI: Do you have super?

DS: I think the money’s just in a commercial building, or something like that I don’t know.

EI: You might find that your own employees’ super is invested with a competitor, like, Kelloggs

DS: Well, that’s OK. I support Kelloggs being here I just want them to be ethical.

EI: There is a nexus there with average Australians contributing small amounts of super that represent huge pool of money that, if it was applied to an ethical purpose

DS: Well, that’s good. The problem, I suppose, is ‘what’s ethical’? What’s ethical and what’s unethical it’s just so hard to make the decision I don’t know how these people do it. To me, I would consider Kelloggs ethical, I would consider Phillip Morris unethical. I support ethical investment, I wouldn’t invest in a cigarette company. If a cigarette company wanted to rent one of my buildings I’d say no, get lost. I really would.

EI: What if you found out that your employees super was being invested with Phillip Morris?

DS: Well, I wouldn’t be enthusiastic. I’d say hey let’s see if we can invest where it’s not with a cigarette company that’s exploiting our kids.

EI: Who manages the super at Dick Smith Foods?

DS: It’s tiny. We only employ two people. We’ve only done $34 million turnover in nine months. I think they do it themselves [asks staff, ‘does anyone know where our super goes?’] it goes to AMP. There you go, I didn’t even know. But I always thought AMP were ethical anyway. I’m sure someone would’ve told me if it goes to Phillip Morris. Maybe AMP invest in Phillip Morris?

EI: It’s possible – it could depend which fund you’re in.

DS: Right well, if they had an ethical fund we’d probably say, if the interest is about the same, let’s put it in the ethical fund.

EI: They will have an ethical fund soon, I think

DS: Well, I’ll support it!