Nuix trawls the heart of deception
High Growth Focus
Eddie Sheehy: You will find us in the bowels of most major digital forensic investigations
Digital investigation software from Nuix has a habit of turning up in the guts of many of the most juicy investigations of modern times and that gumshoe trail is leading the Sydney firm into brand new markets like adaptive security.
Nuix’s digital investigation and document discovery platform helped crack the Utegate scandal of 2009, was used extensively during the wash up to the global financial crisis and is now helping trawl through the 2.7 terrabytes of Panama Papers.
It has over 1500 customers spread across 60 countries with sales and or development offices in the US, the UK, Singapore, the Philippines and Germany and more than 250 employees.
Not bad for an Australian software firm that got going in the early 2000s, long before the current hype, government policy interest and relatively deep funding assistance for startups.
“You will find us in the bowels of just about every major digital forensic investigation in most parts of the world,” says CEO Eddie Sheehy.
Nuix was founded by Jim McInerney in 2000 who led the development of a processing engine for unstructured data called the ‘New Universal Intelligence eXchange’ or Nuix.
After four years of development, Mr McInerney landed his first major contract with the Department of Defence, but then died weeks later at the age of 75. Control of the firm passed to his wife Agnes. Mr McInerney had told her Nuix would make a fortune one day.
Nuix was subsequently restructured and re-capitalised and Mr Sheehy was brought on board in 2006 with a mandate to prove that Nuix was a real business and then take it to an international market.
“At that stage there was two developers left and myself,” says Mr Sheehy, who says he had always had a yearning to build a large business from very little. He’s an Irishman who had an early career in London in venture capital and high risk lending, was attracted to Australia by the 2000 Olympics and subsequently married and settled here.
His first revenue month at Nuix drew in $6000, his second nothing and his third garnered $54,000. “That just about paid all the bills,” he says.
During that time Mr Sheehy went on a steep managerial learning curve, doing cold calls, taking care of the office vacuuming and pitching in on occupational health and safety by getting the data cables moved from the floor to the ceiling.
“We had very lean early days and grew up the hard way. We have been profitable and self-funding since 2008 and grew the business up on just $3 million of capex.”
The company’s first four customers were all federal agencies with a big need for digital forensic tools: Defence, ASIC, the ATO and Customs. In 2008, the firm completed its parallel processing Nuix Engine framework which gave it the ability to scale dramatically.
Nuix scored an almost instantaneous entre to the American market when the US Security Exchange Commission took on the platform in 2009 as its mainline tool for digital investigation and discovery over the companies under its regulatory umbrella.
“What was beautiful about being sole sourced is that the SEC had to publish the reasons why they sole sourced us. In doing so they had to publish the stats and facts about why we were so much faster and how we could do something in 24 hours while our competitors took seventeen days.”
“After the (Wall St) crash lots of people wanted scalps and all the regulatory agencies started getting funding. When the regulatory agencies saw how fast we could get through it, they then demanded much faster response times from the banks, so they needed to buy our software. They needed to respond to the SEC in the time the SEC knew it could be done.”
The mess unravelling within the big Wall St investment banks created a virtuous circle for Nuix’s expansion into the US market.
Meanwhile, back in Australia, Nuix software scored a lift from the Utegate scandal of 2009.
At the time, senior Treasury official Godwin Grech claimed an adviser of then Prime Minister Kevin Rudd had emailed Grech demanding special assistance for a car dealer friendly to Rudd.
Nuix software helped investigators establish that the email was a forgery.
The Sydney-based firm recently donated software to the International Consortium of Investigative Journalists (ICIJ) that has been trawling through the terabytes of leaked documents from Panamanian law firm and offshore company specialist Mossack Fonseca.
The company’s next steps come with the release of the petabyte scaleNuix 7 and a move into adaptive security market where Nuix will take on cyber security big names such as Fireye.
From 2010 on Nuix noticed its software was being increasingly used for remediation and investigation of cyber breaches which led to a development effort around monitoring and stopping the breaches in the first place.
“We have spent the last two and a half years developing a series of technologies that we are just about to bring to market. One is monitoring what is going on in people’s computers, laptops and servers and identifying bad activity and stopping it. If something does happen that we didn’t understand we have the ability to get in there very quickly and remediate the situation. Typically remediation can take weeks, we have reduced it to a matter of minutes or hours.”
Mr Sheehy is a fan of the federal government’s Cyber Security Review and Strategy.
“It took a long time to come, but I am very happy they took the time to get it right,’ he says. ‘It put money there and if there is no money there, nothing happens.”
He also likes the move to promote cyber security health checks for businesses. “It doesn’t matter where they are today, what matters is how quickly they improve,’ he says.
As for the financial future of Nuix Mr Sheehy says there are no immediate plans for an IPO, but it could happen within the next 24 months.
“There are benefits and attractions to doing an IPO but what I am most focussed on for the next six months is how do we productise the Nuix 7 environment.”
If an IPO does happen, it is far more likely to be here than in the US. “Practically, Australia’s tax rate is lower than the US. There’s a lack of sophisticated, successful tech companies here so I think there’s demand for tech company stock here and there’s a wealth of money here through super for tech stocks.”