Stephenson tries, and fails, to take full responsibility for Collar’s demise

Episode 1 of The Ephram Stephenson podcast dropped last week promising, “In this raw, unfiltered interview, I dive deep into the how, what, and why addressing every tough question raised in media articles, LinkedIn comments, about COLLAR, my previous ventures and criticisms received from competitors.

Nothing is off-limits. It’s my way of honoring (sic) your questions, sharing the unvarnished truth, and turning pain into purpose.”

The YouTube version included, “Watch the episode and share your thoughts—I’m listening,” but unfortunately comments were turned off, so if you had any thoughts about what Ephram said you were not able to share them (on that platform, at least).

The 108-minute marathon was hosted by one COLLAR’s former vendors, Jeff, “(I) helped you out with the photo and video production of Collar’s marketing and advertising material….”

Jeff did his best, but if you wanted somebody to ask the hard questions, recognise the deflections and probe until you got to the heart of the various issues Stephenson promised to tackle, then Jeff wasn’t your guy.

There was a lot of time taken up with unnecessary context about the other businesses Stephenson had started. That information might be relevant for another podcast episode, but it was just tedious and irritating when the promotion of episode 1 was about his role in the demise of Collar.

You might have thought, given what was promised, that once the topic turned to Collar that a full and unreserved apology to all those people who lost their job, are still owed money and suffered significant disruption to their life would have been the smart way to start.

Instead we got “…over the three, three and a half years that Collar Talent Group was operational, it was, it was extraordinary. The growth was unprecedented. The scale in which we grew was, had never been done before…”

He forgot to add what had also never been done before in the Australian recruitment industry – a company collapsing with debts of nearly $20 million.

The first mea culpa wasn’t too far away, but the full acceptance of responsibility for what happened proved a difficult hill for Stephenson to climb.

“I am sincerely sorry for the way that it ended, and certainly in my wildest dreams did I ever anticipate it kind of going the way that it did, you know, that there’s a genuine, I guess, reason for why things happen, and, you know, a lot of things were absolutely out of my control, 100% there was things that I could have done differently, and if I had the time to do it all again, I certainly would.”

The cause of the mounting scale of Collar’s ATO debt problem was skipped over like a crack on a path, “Where we started to in getting to trouble was the last financial year. We’re going from basically from …$45 million to $90 million turnover which is our second full financial year and the tax debt within the business basically grew to a point where we needed to go on to a payment arrangement.”

At various points, Stephenson mentioned potential investors in Collar, including $12 million from Swiss private equity, but it seems Stephenson did not accept any offers, or if he did, the transaction(s) did not finalise before Collar’s ultimate demise.

The sequence of events, from Stephenson’s point of view, was that a payment arrangement with the ATO was discussed in late 2023 and not formally in place until March 2024, by which time the company’s sales were, contrary to forecasts, falling, not rising. Within two months of the ATO payment plan being formalised, Collar failed to meet its obligations, triggering Stephenson’s Director Penalty Notice in May, which led, very shortly afterwards, to Stephenson calling in the administrators.

Undoubtedly Stephenson invested a lot of money in paying, accommodating and investing in his employees, the scale of which was revealed by the interviewer, “You sent the heads of the different departments all across Australia to our retreat, which was a four-day intensive retreat, basically helping them regulate emotions, focusing on them and not the business side.’.

What was revealed was, “It wasn’t cheap. It cost a lot of money to do that.”

At what stage of Collar’s growth this happened is not identified, but I can only assume the business was of a scale that the extent of indebtedness to the ATO must have been well into the millions of dollars.

Stephenson continued on his theme of investing in his employees and winning awards for doing so, “We were doing things that no other agency was doing. We were putting our staff first. We were giving them a no-threshold target, so they could then commission every single dollar they built, which was paid monthly.”

It’s great to invest in your people, including providing a generous commission scheme; however, if it’s while you are simultaneously incurring huge monthly losses and not paying your tax bill, then those investments can only be described as not justified at best, and reckless at worst.

Stephenson seems disconnected from his decisions that led the company off a cliff, “I’m just one person. I was backed by an incredible team that all had the same vision, all had the same passion a lot of the time. But again, we were in, a lot of the time, uncharted territory.

“I had a leadership team from Hays. I had a leadership team from Chandler Macleod. Arguably two of the best recruitment firms globally. We had some incredible leaders from both those businesses in our business. But I think, again, in hindsight, looking back, where I went wrong, and where the business went wrong was we didn’t hire people who’d done startups.”

People leaders in businesses like Hays and Chandler Macleod don’t have to worry about cash flow because other employees in those companies have that responsibility. Stephenson was a founder of two start-up recruitment agencies, so he should have intimately understood the importance of cash flow to the growth prospects of a recruitment business.

It’s either naïve or disingenuous to lay any significant cash flow responsibility at the feet of the leaders he hired. As Collar’s CEO, Stephenson had ultimate responsibility for managing the company’s cash flow, and you don’t need to be any sort of business genius to understand that your company’s outgoing cash can’t substantially exceed your incoming cash for any prolonged period if you want to stay in business.

Again, Stephenson tries to accept responsibility for Collar’s cashflow crisis, but he just can’t bring himself to do it.

“….voluntary administration was my only option, if I didn’t want to personally carry the debt of the business. Now, absolutely, it was my business. I was the sole director of the business, but I wasn’t solely responsible for not achieving the revenue streams that we were all aimed to target towards, you know, and maybe that’s a cop-out, the way I’m kind of saying that, I don’t mean it that way, what I’m trying to say is that Collar wasn’t just me, Collar was multiple people involved, who all had a part to play.”

Yes, Ephram, that is a cop-out.

Stephenson, in another incredible display of naivety, honestly believes that if only the redundancies had been handled better, all could have been saved.

“I believe that it would have been a different narrative had those redundancies been handled differently and we haven’t received all the bad publicity from, you know, from the press, from peers, from competitors. I mean, competitors were having a field day with it.”

Stephenson explained his many months of silence since Collar’s collapse into liquidation as being spent dealing with mental health issues; dealing with threats including those of physical harm (including a person insinuating they knew where he lived and another threat, via text, that questioned the value Ephram placed on his fingers and toes and suggested he would be “walking with a limp” the next time they saw him); time with family; consideration of moving overseas or starting again in another industry.

The reasons Stephenson offered as the major reasons for Collar’s failure were many; too many employees in non-fee generating roles; a commission scheme that was too generous; too many offices; hiring too many senior leaders who lacked the necessary start-up skills and mindset; contracts that were underpriced; and investing too much money in tech products (including building their own CRM);

Many questions were left unanswered.

Cashflow questions such as:

What cashflow reports did you receive? How frequently did you receive them? How were these reports used to make decisions? What advice or input did you receive about your cashflow, specifically as it relates to meeting the company’s ATO obligations? If you received such advice, when did you receive it and how did you use it? When did you realise the company could not meet its financial commitments from current cashflow?

Personal responsibility questions, such as:

Did you contact any staff who were made redundant to offer your personal apology for their loss of employment? If yes, how many staff did you contact and how was your apology received? If no, why not? Do you intend to contact any of your former employees now to offer an apology? Which person or group of people did you let down the most and what would you like to say to that person or group of people?

Character questions, such as:

What have you learned about your character strengths and weaknesses as an owner and leader? How would you apply those lessons next time you build a recruitment business (if there is a next time)? How would you ensure you continue to remember and apply those lessons?

Stephenson signed off the interview with the perfect summary of how firmly he clings to the narrative of how Collar was a genuine success, fuelled by his sincere intentions and he just wants to keep looking to the future, rather than get bogged down in the confronting reality of truly owning how reckless his behaviour was.

“Again, (I) sincerely apologise to those people that were made redundant and everybody that has been affected by the Collar fallout. Apologise to my suppliers for those that got caught up in it because, again, it was never our intention.

And just anyone affected in any shape, way or form. Filled over 40,000 jobs as a business in three years. We invoiced a shy of $150 million in three years. It’s never been done before. And it’s something I’ll always be proud of. I’ll always fucking have the scars as to how I tripped up along the way. But, you know, there’s a lot of people that Collar’s life touched. You know, the sponsorships that we did, the grassroots stuff we did, the charity stuff that we did, you know.

It’s something I’ll be forever proud of. I genuinely will be. But, you know, I am also extremely sorry for anyone that this has affected. So the podcast, the business, people who know me well know that, you know, if I’m doing something, I’ll give it my best crack. And that’s all I’ve got. Just give it my best go and, yeah, that’s what I’ll keep doing.”

 Related blogs

 Stephenson publicly re-emerges from the ashes of Collar Group’s collapse

Stephenson retakes control of Collar but history is not on his side

Collar creditors stuck between a rock and a hard place

Collar’s future in the balance with founder under fire

Can Collar’s phenomenal growth continue? Ephram Stephenson sure thinks so

It’s easy posting online – how about doing the work?