WiseTech, the old-school Unicorn
High Growth Focus
Richard White: A minimum viable product for the enterprise is "oxymoronic"
Richard White, Australia’s newest member of the Unicorn club, has a problem with minimal viable products – he thinks they’re oxymoronic for enterprise software companies.
“People often produce something that is minimal – but in most cases it's not viable,” says the founder and CEO of recently listed Sydney software company WiseTech Global, which sells cloud-based logistics solutions.
For breakthrough technologies, the notion may have value; “Sure, the first version of Facebook was minimum and viable – but we are in an area where we are trying to extend the abilities of complex logistics companies to do very complex things.”
“I've never been able to deliver a product to any workable sense as minimalist – you have got to have a very full suite of capabilities to get customers to use a product, particularly business to business.”
Mr White outlined what amounts to his innovation manifesto in the prospectus ahead of the WiseTech float on the ASX in early April which announced the company as the latest Australian tech unicorn, with a market valuation above $1 billion.
There’s a condensed version on his LinkedIn profile, which also outs him also as a “software nerd” and music aficionado.
He notes in the prospectus that it’s been a long haul to overnight success. “This business has grown and improved over many years. Major innovations and break through products don’t happen by accident — they can take years to develop and commercialise.
“We have a long track record of innovating continuously and successfully (with over 600 product releases last year alone). Today we have a significant pipeline of innovations at various stages of ideation, development or commercialization,” Mr White said.
“The words ‘Slower today, faster forever’ are spoken amongst our teams frequently: to remind people that it is critical to do it right and that a rushed product that is buggy and incomplete is not an innovation, no matter how smart the idea is.”
Founded in 1994 the company supplies logistics solutions – principally CargoWise One – to 6,000 customers in 115 countries, generating $48.5 million revenues, and $3.1 million in net profit in the six months to the end of December.
With an issue price of $3.35, the company had intentions to raise $167 million worth of capital to fund rapid growth plans, through the issue and transfer of 50.8 million shares in April. By close of trade on the first day the shares were trading at $3.89, valuing the company at over $1.1 billion.
At the time of writing the share price is $4.79 which is a 23 per cent increase on the listing price a month ago.
It signals a market that is comfortable with the company’s strategy, and last week’s first post-IPO purchase of airline messaging distributor Cargo Community Network for $2.7 million delivers $1.5 million of additional annual revenues.
“We never buy technology,” says Mr White – instead he talks about buying market “footholds” or “adjacencies” that extend WiseTech’s reach.
In 2012 – with an IPO already being canvassed – the company bought TransLogix for an undisclosed amount, beefing up its capability in the domestic logistics sector.
“We think of innovation as a cyclical process that iterates, gives you small but important steps and the process of cycling through this iterative process has you approach perfection. Software is never going to be a perfect thing – but you approach perfection one iteration, one set of features at a time.”
According to Mr White in a software company everything is an evolution and “nothing is a revolution”.
That lack of revolution and the control that Mr White exercises in the company jars for some of the company’s former developers who have taken to social media sites to bemoan the bottlenecks they feel frustrated their attempts at innovation, and a technology stack some consider old-fashioned. CargoWise leverages Microsoft’s SQL database server – though the latest version of the software.
When the company decided to transition from an on-premise to a cloud solution in 2008, very little of the software code was changed. Because, according to Mr White, it had been designed right the first time (he led a rewrite of the stack in the early 2000s).
“I would suggest our stack is fresh, clean and clear. We do have parallel developments to refresh the stack from time to time,” he says, pointing to a plan outlined in the prospectus to enhance the mobile and web capabilities of the system.
But he’s aware of the criticism of the company. “You’re never going to please everybody and I'm not going to try,” says Mr White.
“People that come in from university - some come in with relatively nascent ideas about what constitutes commercially viable technology and you will always find that the latest programming language is always what people want to have, even though you simply cannot make those changes in any commercially sensible way.”
Mr White, and his chief architect Brett Shearer share technical oversight of the business and the products, also the team of over 250 developers. Organisationally the company runs teams of developers ranging from six to 14-strong, charged with a particular task or focus.
“We have tiny teams focussed on development, but (we’re) very large in that we have a lot of those teams. We break teams down deliberately - grow them and split them, grow them and split them to grow a larger environment."
New developers are also sent on WiseTech’s “defensive programming induction bootcamp” to instruct them in the company’s way of doing things. Meanwhile he, and 90 other WiseTech employees, have completed ViAGO’s Black Belt in Thinking bootcamp – another clutch of staff is being shipped off to a mountain retreat to participate in the camp this Friday.
Mr White is adamant that despite his lynchpin role and majority ownership status the company has a relatively flat management structure.
“We have a principle in the company - anybody can speak to anybody at anytime for any reason. That's documented policy. Importantly no manager can say ‘you report to me you tell me first’ - that's not possible and not reasonable.”
He however has final say on whether what people suggest is “doable” – “if they don't come at a large value and they don't have a reasonable certainty then they're not a very valuable suggestion I suppose.”
At 60 he is still very content to play that gatekeeper role and doesn’t feel he’s slowing down. His stake in the listed company is in escrow until 2017 and he has a three plus three year contract to remain with the company though there is a succession plan (which he declines to share).
In any case, he says; “I don't think that my age is anything like a problem, in fact quite the reverse. The experience I bring is probably the biggest single value.”