The Spliffs were formed in Townsville in 1985 by university friends, Ian Christensen on lead vocals, Andrew Reid on drums, Tim Corcoran on guitar and vocals, Jamie Forsberg on lead guitar and John Watson on bass guitar.[4] They entered a local heat of a battle of the bands competition, where they played their four-song repertoire to win.[4] Besides original material they covered 1960s guitar pop.[4]
The Spliffs' debut single, "You Know What They'll Say", was released in 1986, Watson recalled, "We recorded it in a garage in Kuranda, and then had to sit around glueing the sleeve covers together, the usual independent method."[4] The group relocated to Sydney at the end of that year, where the Harbour Agency (see Michael Gudinski), "picked us up. They helped us a lot, we got a lot of gigs through them."[4] The group issued a seven-track extended play, House of Seven, in 1987, which was produced by Alan Thorne (Hoodoo Gurus, Paul Kelly, Weddings Parties Anything).[4][5]