An uncommon pursuit via the ASX
Nick Gonios: Building always-on, SaaS platforms from existing software businesses
8common is a small Australian software company with big plans. Since its IPO on the ASX in August 2014 it has more than doubled in size, and now has more than 70 staff and revenues of $3.4 million.
It is capitalised at around $10 million, depending on how the share price fluctuates. CEO Nick Gonios describes it as a “small business with a global footprint and global aspirations.
“We are small for a public company, but when you consider some of the companies in Australia that have listed over the last 18 months with zero revenues, we’re quite substantial.”
8common has three main product sets: Expense8 (travel and expense management), Perform8 (for measuring employee engagement and productivity), and Ubertor (for real estate agents to build and maintain their website – in a product area called Realtors8).
The company now has 70 staff, across five cities – Sydney, Singapore, Kuala Lumpur, Manila and Vancouver. The North America operation is based largely around the Ubertor package, which was acquired from a Canadian company, while Expense8 is the main product in Australia and Asia.
The common strand across these three product groups is productivity and performance, explains Mr Gonios.
“We are focussing on identifying, acquiring, transforming and growing existing software businesses into the Software-as-a-Service (SaaS) model and extend them across the Asia Pacific region,” he said.
“We try to buy good software companies that have a specific B2B niche presence and proven track record, even though they might be very small, and transform them from the licence and maintenance model to SaaS always-on model with the high service levels people expect.
“We look at businesses we can grow and scale.”
Mr Gonios says that 8common is currently going through a phase of “getting processes, people and the right culture in place to drive our organisational growth. Then we’ll be looking for more acquisitions in the productivity and performance space.
“We are currently doing a rights issue to raise further capital. We’re in the early stages of what we’re doing, we’re not going to rush it.
“When you buy companies you buy certain ways of doing things. As part of our transformation phase we are trying to build a start-up culture, but with the corporate acumen expected of an ASX listed company We are trying for the best of both worlds,” he says.
“We have many different types of people from our acquisitions and we need to bring people together in a cohesive culture. The important thing is that we have consistency and commonality across all that we do.”
That’s where the name comes from – ‘common’ is that commonality, and 8 is the lucky Chinese number. The initial investors are Malaysian Chinese. Lead investor and founding CEO was Nic Lim, one of the founders of Catcha, a web portal with a focus on South-East Asia.
Mr Gonios, formerly COO, became CEO in January 2016, with Mr Lim moving to the executive chairman role. Mr Lim and the other initial investors still own more than 80 percent of the company. Their shares are escrow until August 2016, but Mr Gonios says “they don’t want to go anywhere – it’s still early days.”
Mr Gonios says the biggest challenge he faces is people. “We need to find good people, and get the right people into the right roles, and keep them. We try to get people to specialise in doing one or two things extremely well. We want them to achieve the right outcomes for themselves, both personally and professionally. I’m a big believer in Richard Branson’s idea that happy employees mean happy customers.”
8common has built up an impressive customer list, including the Australian Department of Defence, BMW, 7-Eleven, Woolworths, AMP, Wesfarmers, Century 21, and many government departments.
“When you get into large accounts you tend to stay there a while. That’s where the value is. Total contract value is a key metric for us.”
Mr Gonios believes the best way that Australian governments could help the Australian software industry would be more sympathetic procurement practices. “We need a more level playing field. Current procurement policies favour large multinationals. There needs to be a commitment to local product.
“It’s hard to enforce from a regulatory point of view, but one way would be for small local innovative companies to be scored better as part of the government procurement process. There could be some sort of weighting for local software companies that are investing in local developers and support, and in ensuring the infrastructure and data remains in Australia.
“It should be a no-brainer. We get massive ticks on all those fronts. It’s a key differentiator, and it should be taken into account.
“It should also be easier for us to bring in international help when we need to, to ramp up our skill set, to transfer knowledge and experience to our local team. Good enterprise SaaS people are hard to find locally.”
Mr Gonios says 8common is at a critical stage of its growth. “We’re in different phases of transformation for our three product groups. We need to bring them closer together, while pursuing geographical growth.
“We are looking for more acquisitions to extend our capabilities in productivity and performance. The ultimate aim is to build a world class enterprise SaaS software company in our region. There’s a natural wave towards SaaS, and we want to ride it.”