I cleaned toilets in Gatwick Airport for a bit, but that’s the only real job I’ve ever had,” says John Spence, founder and chairman of The Karma Group.
A university drop-out, the hotelier and resort-owner originally became a tea boy for a music agency. Before long, he was representing bands like Culture Club, Bananarama and the Eurythmics. “Going into the music business was always my plan, but I don’t think I would’ve liked to have stayed. When I was a kid, I was into archaeology. I wanted to be Indiana Jones, brandishing a whip. I’m still passionate about ancient history – I’m just still trying to follow that one up!”
Save the stint in music, Spence’s entire career has been the hospitality business, focused on timeshares. Aged 24, he started selling property in Tenerife for Global Group. “I was drafted into them in the early 80s. The early 90s were the time – the only time – when I thought ‘I want to be an entrepreneur’. And that was because I could see an opportunity to do a better job.” Spence was speaking at a conference in Goa when he spotted the opportunity: to develop resorts on India’s west coast.
“The original plan was to sell [fractional ownership] to foreigners, but there’s a huge amount of wealth in India that hadn’t been tapped into.” In 1993, Spence started the Royal Group, selling timeshares to the domestic market. He opened offices in Mumbai, Bangalore and Delhi, then started selling to non-resident Indians working in the likes of Dubai and Kuwait. “It was difficult to physically keep up with demand – it was incredibly popular. People in the industry had assumed all Indians had no money, and that wasn’t the case.”
Four years later, and Spence had 70 offices around the world. Now, under The Karma Group, he has 27 luxury resorts and an arsenal of brands, including Royal Resorts, Karma Estates and the soon-to-be-launched Karma Ski. Locations range from Bali to France, from Australia to the Scillies.
When I meet Spence, he’s just landed from Singapore via Goa and Munich. Via Monaco and London, he’s off to the States and Australia, before taking a holiday himself with his family in Antigua. Timeshares, says Spence, are increasingly popular – even among younger people. “A lot of what you’re seeing in our market is a change of definition. Timeshare is still the biggest thing to do, but we call it membership. Airbnb – you could say timeshare. It’s just a different spin on the same commodity.”
At the helm
When he’s talking about his company, Spence repeatedly says “we” – “we know it’s increasingly about providing an experiential package”; “we had 33,000 people sign up to our pay-as-you-go package in the first year ”. But he says this is a royal “we”– he just means him. Spence has never borrowed any money, or given away equity, to build Karma – he owns 100 per cent of the business. Granted, he was able to sell $1m luxury properties during the 2000s, but, save mortgaging his flat to get started, this is a firm expanded on its own success.
With fellowships at Yale University and UCLA, Spence has honed a way of describing what makes an entrepreneur: “most of the successful entrepreneurs I know are under-educated chancers who have had a passion to make it work. It’s about risk-embracement – everyone will make mistakes but knowing what to do after and doing it quickly is vital. I am the board of my company, so if a decision needs to be made, it will be made now. Taking decisions in a corporate environment is like turning a tanker. In an entrepreneurial company, it’s a speed boat. That sends up a lot of spray, but it can manoeuvre fast.”
At Yale, he teaches a course on “anti-entrepreneurship”. “They’re taught that you can learn how to be an entrepreneur, applying it to any industry. That’s bulls***. Entrepreneurs are passionate about something, then they find a way to monetise that passion. Malcolm Gladwell, one of the few businesspeople I respect, says 10,000 hours of practice will make you an expert, and it’s the same with entrepreneurship. People are working on the same thing for 24 hours a day – it’s what you love. You have to love it, then you become good at it.”
Spence’s entrepreneurship has always gone further than business, though. “I’ve also always had a passion for CSR, and I find others’ lack appalling. When I first flew to India, Thailand, Bali, I was immersed in the more appalling poverty. I chose ‘Karma’ as a name because I wanted a firm that was morally good.”
The Karma Community Care programme funds at-risk children and rising talented sportspeople. Spence built and pays for a school for 900 in India, and has an orphanage in Bali. “The fact we do so much has huge commercial value. The staff love it, our members love it, local communities can see us as different, and that means we have a symbiotic relationship. In life, it is a case of there by the grace of God go I.”
Now, Spence knows he’s about to take radical decisions for his firm. “Our problem is that we’ve gone from a small company to a huge one. We’ve brought in experts and chief executives… it’s incredibly hard personally. I don’t want to be presiding over some evil empire – a corporate giant. But our five-year plan (we do have one!) is to get to 60 resorts. We’ve always had a very tight policy (i.e. not done it) on borrowing money, entering joint ventures, split equity deals. That means we’ve grown, in the main, at a modest rate of 15-20 per cent a year. A lot of people in the market would’ve gone down a different route, but I’m comfortable with ours.”
Be that as it may, Spence is now planning how to accelerate growth via a new route. “I don’t know what the answer it yet, but I am conscious that taking on debt means this business will have to become more corporate.”
These might be uncharted waters for Spence, but he comes at them with experience and an open mind. “I want to explore ideas. I’m open to listing, open to a trade sale. I want Karma to be a global business and double the size, and I’ve got five years in which to do it.”