Eddy Groves, the founder and former chief executive of embattled childcare group ABC Learning, has made his first public appearance since leaving the company, speaking at an Ipswich Chamber of Commerce lunch in Queensland yesterday.
In a wide-ranging speech, Groves has blamed short-sellers and rumour-mongers for causing the sharp drop in ABC’s share price in February, which forced Eddy and his wife LeNeve to sell their shareholdings to meet a market call.
“I saw rumours that were rife about the most ridiculous things I’ve ever heard,” Groves told the lunch. “As that starts to happen, the media starts to build up, the share price starts to fall, and it becomes a self-fulfilling prophecy.”
Groves also admitted the company was not well enough prepared for its expansion into the US, but said the then soaring Australian dollar and collapse in global credit markets took the company by surprise.
But he said the decision to go into the US was partly driven by investors desperate for the company to keep growing.
“There is an enormous amount of pressure that the public market can put on a company to continue to grow. Even though you tell yourself not to fall into that trap, it’s very difficult not to, because the share price continues to grow, the returns were continuing to grow, and people want you to maintain that pace."
When it was clear that ABC was in trouble, fear set in.
“That’s a scary place to be, when you feel like you are holding back a dam that is about to break – and the reason why it is about to break is not because of the foundations of the dam but because there is so much water coming,” he said.
“No matter how strong the foundations are, it’s going to knock it over. So, of course, during those times there were a lot of dark moments, a lot of lost sleep.”
Groves, whose personal fortune was valued at $350 million when ABC’s shares were at their peak in early 2007, says the loss of his fortune has taught him about the real value of long-term success.
"The one thing I have learnt over the last 12 months is crystallised very well in my mind, that certainly success is not driven by personal wealth.
"As quick as it can come, it can go," he said.
Groves also admitted he did not fit the normal mould of a CEO, but he urged budding entrepreneurs not to be scared off by his experiences.
The organisers of the lunch presented Groves with a book called Fat, Forty and Fired.
According to reports, Groves denied he was fat.
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