Elaine McFadden
October 2, 2015

Perfect storm for IoT of buildings

Perfect storm for IoT of buildings

Deb Noller: don’t look for funding. It’s easier to get revenue than it is to get funding.

Rewriting one’s business is no easy feat. And it can make or break a company, especially when it comes to rewriting the entire technology that company is based on.

Luckily the foresight on Switch Automation’s part paid off when it recognised that cloud technology was here to stay.

Switch Automation is a cloud-hosted enterprise operations platform for managing buildings and building data.

So everything from secure access, lighting, blinds, temperature and plumbing can be monitored and managed remotely.

Pretty nifty for any property portfolio these days and handy that the Internet of Things has become the tech phrase of the last five years, in the time since Switch Automation re-launched its platform in 2012.

Born and bred Australian, the company has been around since 2005, operating almost entirely on its own sourced funds and with assistance from the likes of Commercialisation Australia – the now closed business accelerator AusIndustry program.

It’s interesting then that January of this year saw the old-hands at IoT secure private funding for the first time in its existence.

A business progression that has allowed the company to open permanent US based offices with CEO Deb Noller (who is also the co-Founder with her business partner John Darlington) at the helm there.

Ms Noller concedes that it’s going to be what’s best for the company at the end of the day, when it comes to expansion decisions and further funding but she’d like to keep things Australian for as long as possible.

Nurturing talent here is something she’s incredibly passionate about, proven in the note shortly before we spoke that the company just made a significant announcement with the hire of Christina Hughes, a well-known and respected Australian sustainability community executive, as National Accounts Manager for Australia and New Zealand.

I spoke with Ms Noller in San Francisco about what is next for Switch Automation and where she sees the challenges in bringing an established Australian business to the next level.

 

To begin, tell us a little bit about Switch Automation and your story so far?

Deb Noller: We’ve actually been in this industry since 2005. We started in home automations and pivoted into multi-residential.

Then along came the cloud and the underlying technology to support scale, and we realised there was going to be a much better technical architecture for how to use this kind of technology.

So we rewrote everything from 2010-2012 and launched in 2012 with a cloud based platform.

We realised then that the biggest value would be in delivery to companies with large portfolios of buildings.

 

You secured funding earlier this year that allowed you to open offices in the US. What are the plans from here, for expansion beyond Australia, and the US?

Deb Noller: Well firstly, we have always been extremely well supported by Australian Government funding. We recieved a $2 million Commercialisation Australia grant in 2011 (over two years), and we had to match that - we had to actually go and find $2 million ourselves also.

So that was a significant kick along for our business. Every year, we get R&D funding from the Australian Government, which is a significant contribution to our cash flow.

January was the first time we ever raised funds externally.

We had been completely self-funded and boot strapped, with assistance from the Australian Government, since our inception.

So now we have to make a big call. We are at the stage where we have permanent offices and presence in the US, we have started hiring US employees, and we have got some pretty big, lucrative customers there. Our whole strategy is, Australia, US and then global.

 

You guys have gone through periods of high growth, and stagnant periods, and then high growth again. How have you managed those challenges of scaling up so quickly and moving overseas?

Deb Noller: For a start we have an unbelievable team.

It starts with the fact that John [Darlington] and I, who are the co-founders of our company, are an extremely strong and resilient partnership.

We have been in business together for 23 years and this is actually our fourth business. It starts with that as a foundation but then we have got unbelievable staff, and they are the ones who have really helped us to expand and keep the wheels going.

Everyone works ridiculously hard and they are all really talented people and they know the industry really well, and understand exactly why Switch is doing something different and why we are going to disrupt the space, and everybody is very passionate about that.

 

So what’s the plan to achieve that disruption?

Deb Noller: I see it as a perfect storm right now.

We have always been Internet of Things - it has only just received that title of late - but we have always been IoT and buildings.

It is actually really useful that the phrase has come into the market because it makes it very easy for us to explain what we do now, compared to say, three years ago.

A lot of people are engaging in conversations with us now that potentially weren’t interested in businesses like ours a few years ago.

Large enterprise customers weren’t really looking at smart building programs [back then] and now we are seeing really big, quite conservative companies with lots of buildings, looking to work out how they should adopt a smart building program. 

So the customer is here, ready and willing. And [our technology] has scaled for thousands of millions of data points and millions of buildings and across multiple markets.

The final leg of this perfect storm is that all of the edge devices - the sensors, the meters, the lighting controls and all of those things that we are connecting to – have all suddenly become enabled for software like us, they have all started to adopt standard protocols and go into IP communications.

So it’s like everything has sort of met at the same place and we just happen to be at the crossroads, which is quite an incredible place to be.

 

What could the Australian Government do better to assist more high growing Australian companies like yours through to disrupting and innovating?

Deb Noller: Generally speaking, I’m hoping the appointment of Malcolm Turnbull as Prime minister changes things dramatically, and in what I see as a huge brain drain from Australia into the US, and I am seeing that in renewable energy.

I was at the forty-niners game two weeks ago and this guy was gloating to me about how he was hiring every PHD out of Australia, because we have basically shut down our renewable power industry.

It is just ludicrous that we would let California have that opportunity.

We have to recognise that Australia has smart, intelligent people in a small market, and if those people are going to be successful they will be targeted by the US market.

We have to keep the IP and the future potential revenue and taxes in Australia.

We have to create an environment where businesses like ours get funded out of Australia, so we stay Australian, so all of that money that was put into our business comes back to the Australian people in terms of taxes.

I just find it really tragic that we support older industries and we let the new innovation go off shore.

This could not be truer of our business. We will seek funding in the next 6-12 months, we will be looking for a $10 million raise, and I can guarantee you we will get a better valuation out of the US than we will in Australia and it’s because we don’t have the right incentives here.

I am going to have to make a challenging and difficult decision about whether we stay Australian.

I have been on record before and I will go on record again, I passionately want to stay Australian but at the end of the day I have to do what is right for everyone that has invested in this business, so I will make a decision based on the right offer that comes with it.

 

Given that fact, what advice would you have for companies starting out, or looking for further investment, when looking for funding at this stage in Australia?

Deb Noller: My advice is always - don’t look for funding. It’s easier to get revenue than it is to get funding.

You have to have a product, which customers are prepared to pay for, and you need to do have that as quickly as possible.

If you divert into looking for funding, then it’s a wasted effort because you won’t get the funding unless you’ve got something that customers have demonstrated a willingness to buy.

So put all of your efforts into trying to get revenue at first and when you’re starting to get revenue then look for funding.

Unless you’re lucky, honestly I know so many start-ups and very few of them get funded, I think you need to be extremely well connected to get that early funding. 

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