Instant channel recipe

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One-year old system integrator Ethan SI is attempting to poach salespeople from established channel companies to form subsidiaries with unlimited credit, in a move intended to fuel its ambitious national expansion plan.

Two Sydney-based entrepreneurs, lawyer Andrew Rayment and accountant Tim Maher, are seeking established salespeople to set up subsidiary companies pushing products and services from their startup Ethan SI Pty Ltd. The 20-person company wants an office in every state capital by next year.

Rayment, Ethan's MD, said the Sydney company would retain 51 percent of each subsidiary and offer salespeople extensive business assistance including "unlimited" credit, access to Ethan project engineers and pre-sales technical resources, immediate top-tier vendor relationships, internal systems, accounting, management advice, warehousing and inventory management tools.

The plan is being partly funded by Ethan SI and Rayment's and Maher's other four companies, publicly-listed debt administrator FSA, litigation support firm Law In Order, youth lifestyle TV show Spin, and a new corporate advisory firm as yet unnamed. "It is a bit of a gamble, but it's a gamble we can afford to take. I never take a bet I can't afford to pay out on," Rayment said.

"Normally, if you try to get credit as a startup company they'll give you $50,000 to $100,000 and not much else," Rayment said. "The effective Ethan investment in each subsidiary is millions [of dollars]."

In return, Ethan SI gets experienced, quality salespeople with a ready-made client base," he claimed.

"People do business with people, not so much with a company," Rayment said. "We wanted to get great salespeople into our company and we wanted to give them equity but there's not enough equity [in Ethan] so the answer was to give them their own businesses."

The company has as a result already formed one subsidiary, Equip IT, with four sales executives who defected from online reseller Harris Technology in April.

A second sales subsidiary could be operating by June, with negotiations by another third party well underway, Rayment said. "We want to grow by about 15 people a month if possible," he said.

First subsidiary Equip IT is led by former Harris enterprise account manager Nick Stranks.

Stranks had been with Harris for four and a half years but was seeking new opportunities due to "policy and procedure".

"I believed that becoming part of a much larger organisation was to customers' detriment," he said. "I had offers from other large resellers but it was just doing the same-old same-old, whereas this gives me the chance to develop a company structure. This will make money for me too if it works."

Ethan SI expects $30 million in annualised turnover as a result of the business model. Its revenue grew from $100,000 a month last October to $2.4 million a month on a consolidated basis, Rayment said.

Ethan SI is Rayment's first foray into IT, which he sees as an area which still holds plenty of growth potential. "People think [IT] is declining but it's actually growing 10.5 percent per annum, outperforming the economy two to one," he said.

The system integrator so far boasts 14 vendor agencies - the likes of HP, IBM, CA, Global Switch, Microsoft, Novell and Cisco - and will focus mainly on "hot areas" such as storage and security. Ethan SI expects to make a foray into managed services next year, he said.

Rayment has had an interesting past making headlines in 1998 with celebrity stockbroker Rene Rivkin when they formed Justice Corporation, a company offering legal assistance to litigants who cannot afford counsel.

Rayment left the company two years ago and no longer has anything to do with Rivkin, he said.

In 1997, Rayment and then-girlfriend Kym Wilson were the last people to visit former INXS frontman Michael Hutchence before he died, leaving Hutchence's hotel room a few hours before the estimated time of death, but were cleared of any connection with the rock singer's suicide.

Wilson later told her story to gossip mag New Idea, but Rayment has always refused to talk to journalists about the suicide. "It was private and very sad. He was a nice guy," Rayment said.

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