Property Hub - Investment Insights & Inspiration - Get Invested: Part 1: Steve Baxter on seeing what others don't

Starting point is 00:00:00 When you realise through a computer you can read so much, you can see so much, you can communicate a lot more widely. To me, it was an obvious way the world was going to go and I wanted to be part of it and I was somewhat frustrated. I think a lot of the army was. So I saw an opportunity to get out and I saw the opportunity to start a business, that being a dial-up internet service provider. I was actually in a rented army marry quarter and I thought,

Starting point is 00:00:28 oh, I need to start this business, I need to install 14 phone lines. People ask me, was that hard to get permission to install the phone lines as well? I knew they'd say no, so it was a pointless conversation, so I just went and did it. Welcome to the Get Invested podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how and where they invest their time, their skills, and their money, and the benefits that this has created. you see the truth is that everyone invests every minute every day we're investing our time our skills our energy and our money in something some of us are investing consciously some

Starting point is 00:01:05 unconsciously sometimes for good sometimes for bad sometimes for no impact get invested will help you to start living by design not by default i'm going to help you to make it happen not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can live more, work less, and leave a living legacy by investing now. Listen to the show to discover the top tips on how to get started, make the most of your investment journey, and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushimartin.com.au forward slash getinvested. Thanks for listening, and now let's get invested. Hi Freedom Fighters.

Starting point is 00:01:54 Have you ever had a great idea? You know, a light bulb moment for a breakthrough that could change the world? Or have you ever seen or heard of a groundbreaking opportunity or technology that you just know is the way of the future and you just know you need to be part of it? What did you do about it? Or what will you do about it? Are you dreaming about earning millions or even billions of dollars by launching and investing in a business around that idea or this new disruption?

Starting point is 00:02:26 So what are you doing about it? Like today's very special guest, are you just going to grab the bull by the horns and just go ahead and do it? Because this is one of the key ingredients that separates wannabes and gunners from the true entrepreneurs. The rare ones that see an opportunity, back themselves, and just have a crack. So, do you want to become an entrepreneur? And do you really have an entrepreneurial spirit? What's your image of entrepreneurs? And what does it take to be a successful entrepreneur?

Starting point is 00:03:03 And what else separates successful entrepreneurs from the rest of us? well today we're going to answer all of these questions and given the stature of today's very special guest along with the depth of our great wide-ranging conversation we're rolling it out in two parts this week we'll look at what it takes to be a successful entrepreneur alongside our guest steve baxter's own journey while next week we'll delve into what makes a successful start-up business and how you go about evaluating and investing in them. So to kick things off, when I mention the term entrepreneur, what image do you see in your mind's eye?

Starting point is 00:03:46 Let me paint the typical picture that's so well captured by Mark LaRusty. Imagine a dude with a beard on a TED Talk stage wearing a baseball cap backwards or sideways, while donning a crumpled, lived-in black t-shirt with a single word on it. It goes with their board shorts and flip-flops or sneakers with ankle socks. And the dude starts by taking a selfie with the crowd as a backdrop. And he posts on Insta with the hashtags living the dream, hashtag winning, hashtag crushing it. And their life is just so amazing. They wake up at 5am every day without an alarm with a big smile on their face because their passion drives them.

Starting point is 00:04:29 they enjoy some power yoga and a meditation before hopping into a cold shower where they visualize their goals and then down a green smoothie while jumping on as a celebrity guest on a podcast interview and all of this before you've even had time to open your eyes and scroll through your first social media feed for the day now unlike us mere mortals these entrepreneurs have the freedom to decide how they spend their days and go on holiday when they want and wherever they want and we know this intimately because we follow their dream life posts of snaps with the rich and famous and exotic places on instagram because their first last and middle name is success now this is the romantic and idyllic illusion that has been created for the growing legion

Starting point is 00:05:19 of entrepreneurs that are supposedly changing the world with a keystroke and then selling their idea for mega millions so they can sunbake in a hammock on the beach of a tropical paradise for the rest of their life while sipping bottomless pentecostas. But is this dream the reality? I think you already know the answer. Before we get to that, let's start by defining what is an entrepreneur. An entrepreneur is defined as an individual that starts their own business to make money on their own terms.

Starting point is 00:05:51 Another definition reveals that an entrepreneur is a sole proprietor that has the majority shares in a particular incorporated venture. In today's world, entrepreneurs are individuals that start their own business, whether it's a tech startup or a make-up company. You see, for me, the term entrepreneur is another one of those overused and largely misunderstood and misinterpreted terms that's become very trendy, sexy and aspirational. to the point where just about everyone calls themselves some sort of preneur. At last count, I could find about 27 different classifications,

Starting point is 00:06:33 which, according to Tyler Horvath, range from entrepreneurs, intrapreneurs who develop innovative ideas within the company they work for, solopreneurs who are business people that operate completely on their own. Then there's infopreneurs, mumpreneurs, socialpreneurs, and ecopreneurs that create eco-friendly services and products. Startuppreneurs are startup founders that have an idea for the next great company. Then we get into an endless stream of ever-increasingly specialised forms of preneur classifications that cover just about anything you can tack the term preneur on the end.

Starting point is 00:07:16 webpreneurs are individuals that earn their income solely through interactions online the e-preneur is an entrepreneur that focuses their efforts on e-commerce and e-preneurs like webpreneurs operate their businesses solely on the internet e-preneurs can operate any business ranging from an extensive online store to running online shopping platforms like ebay freepreneurs are defined by the way they use low-cost methods to start and run their business Freepreneurs do all they can to source their resources and materials without having to invest their own money

Starting point is 00:07:52 Expatpreneurs refers to an expatriate who chooses to start their business abroad Then there are also Vetrepreneurs who are veterans that start their own businesses We also have Minipreneurs who make money based on their skills, interests and knowledge and use the entrepreneurial spirit to monetise their knowledge and experiences

Starting point is 00:08:16 Now, to me, this is just a fancy word for a freelancer or a consultant. Then we have skepticpreneurs who describe business people that are cynical of making particularly risky business decisions. Studentpreneurs are entrepreneurs that start their businesses while they're still students. And then there are also Twitterpreneurs who make their money through their entrepreneurial efforts on Twitter by building their audiences, increasing their authority

Starting point is 00:08:41 and turning a profit through their social platform. I recently heard the term comfortpreneurs, who apparently are business owners who refuse to adapt, improve, or change their business structure and strategies, and tend to run their businesses in the same way older generations have, which sounds to me like a recipe for disaster. And here's another good one, wingpreneurs, who are the wingmen of the entrepreneurial world. Apparently, wingpreneurs provide knowledge, support, funding, skills, and the like to

Starting point is 00:09:13 entrepreneurs that are just starting a business. Now, that sounds like a fancy word for business consultant or mentor. Then we have the passivepreneur, who's an entrepreneur that focuses on creating a stream of passive income. Now, I thought they were just successful investors. And then we have the antipreneur, which is the opposite of the entrepreneur, where the antipreneur is against large corporations and they work to build their own business but want to completely avoid the traditional capitalistic corporate route.

Starting point is 00:09:44 In other words, they change the world while living off the smell of an oily rag like starving artists. And I love this one. Entrepreneurs. Entrepreneurs have the desire to be an entrepreneur but haven't quite found a way to follow through with their dreams yet. They're missing the self-direction, the motivation, the capital and the daily routine that true entrepreneurs have.

Starting point is 00:10:08 They're what I prefer to call wannabes and gallers. a further derivation of this are the fauxpreneurs who aspire to be entrepreneurs but aren't they have different concepts and product ideas but fail to have a solid plan to develop a company they focus on building apps and aim to get rich quick but they just don't follow through now i don't know about you but this is starting to feel like the canine world where the original wolf has been bred, cross-bred and inbred into an endless array of dogs of all shapes, sizes and colours that suit just about every situation and circumstance. On top of this, we've now got multi-preneurs who are entrepreneurs that are involved in

Starting point is 00:10:53 multiple projects at the same time or have multiple businesses on the go at the same time, a bit like one-armed jugglers on a motorcycle. and of course the creme de la creme goes to the cereal entrepreneur which i used to think was someone who created a new brand of muesli or breakfast cereal but it's often code for the fact that you've had a trail of failed startup and startups and are still trying to find the holy grail now in conjunction with this almost viralpreneur pandemic we used to have ceos and MDs. But now everyone's become a founder or a co-founder. Big titles that may not have much substance. A bit like one of my good father Bushy Senior's favourite country farm

Starting point is 00:11:40 sayings. They wear big hats, but have no cattle. Many are kings without a kingdom. So it feels like everyone has become a preneur of some description. It seems that anyone who works for themselves from home using their laptop and mobile phone, operating on the kitchen table, their bedroom or out of a coffee shop, is an instant entrepreneur. Entrepreneurs have become very hip and very cool. But does the hype match the reality? Certainly not in my experience. When we started our first and ongoing businesses, and when we've worked with other entrepreneurial startups, cool was certainly not a word I'd use to describe the lifestyle. Most of the time, entrepreneurs, startups, and new business founders who have

Starting point is 00:12:30 quit their corporate nine-to-nine jobs, sidebar, used to be nine-to-five, but those days are long gone, and they've taken the leap of faith off the financial cliff to become their own boss and enjoy the supposed bottomless flexibility, freedom and success that goes with it are actually lonely, worried about their business and constantly stressed about money and how they're going to afford to pay for their next meal. It doesn't matter if you're a one-man band or a business with a thousand employees. And it doesn't matter if you have a hundred social media followers or a million.

Starting point is 00:13:05 The resounding feeling for all early entrepreneurs is how tough the journey is. And the scary stats support this. Out of 5.5 million businesses in the UK, 76% are started by people who employ no one but themselves. So it starts as a very lonely journey for three out of every four. But this hasn't stopped the literal explosion of entrepreneurial start-ups, with over 300 new businesses starting every hour of every working day, according to Oberlo. which equates to over 627,000 a year. And according to Dragomir Simovic,

Starting point is 00:13:50 there are currently about 582 million entrepreneurs in the world. But according to First Sight Guide, there are currently only 600 unicorn start-ups around the world that are valued at $1 billion or more. And the highest valued private start-up in the world is ByteDance from China, worth around $75 billion with Elon Musk's SpaceX sitting in 4th place

Starting point is 00:14:18 with a $33.3 billion valuation. So if we measure the 600 unicorn startups as a percentage of the total number of entrepreneurs that's a mere 0.0001%. Or in other words, a 1 in 970,000 chance are reaching this level. Not great odds. And where's the best place in the world to be an entrepreneur? Well, with a Global Entrepreneurship Index of 83.6 out of 100 according to GEDI, the US is the best country for entrepreneurs. Now this Global Entrepreneurial Index or GEI

Starting point is 00:15:03 is a numerical representation of the climate a country creates for the development of small businesses. This index takes into account numerous factors to create one comprehensive overview. So on this GEI scale, Switzerland comes in with an unexpected second place with 80.4, followed by Canada, the UK and Australia in fifth place. So we actually have a great supportive entrepreneurial culture. So when someone says entrepreneur or startup, we usually think of various success stories and exponential business growth. However, in reality, not all startups are successful. We usually only hear about the winners, but this doesn't tell the whole story. And here's the interesting stat. According to Bloomberg, 8 out of 10 entrepreneurs fail

Starting point is 00:15:56 within the first 18 months, and according to First Sight Guide, 9 out of 10 startups don't make it at all. That's a 90% failure rate, with 70% of startups dissolving within 10 years and only 40% of startups ever being able to become profitable. And recent work by Professor Michael Freeman from the University of California studied the link between entrepreneurship and mental health issues and found that one in three entrepreneurs suffer from depression and it's easy to understand why when the chance of an entrepreneur's first or second startup ending in survival is only about 20% with the odds getting slightly better after the first two attempts at 30% according to Forbes which is actually still

Starting point is 00:16:46 pretty terrifying. So have we been sold the dummy on entrepreneurship and what separates successful entrepreneurs from the rest? Well, according to Mark Rusty, the rise of superstar entrepreneurs like Elon Musk, Richard Branson, and Steve Jobs has given birth to the new aspiring celebrity of the 21st century, with a deluge of social media and magazine front covers, making it all sound sexy and cool, which feeds into our need to be recognized, famous, and rich, especially when compared to what many consider as being trapped on the treadmill, stuck in their mundane jobs where 87% of workers worldwide feel emotionally disengaged, according to a Gallup study. So against this backdrop, imagine this job ad, borrowed again from LaRusty.

Starting point is 00:17:42 People wanted for hazardous journey, small wages, bitter cold, long months of complete darkness, constant danger, doubtful self-return, and the only reward, honour and recognition in case of success. Would you apply? And do you know what this ad is for? Well, according to Julian Lewis Watkins' book, The 100 Greatest Advertisements, this ad attracted 5,000 applicants for Sir Ernest Shackleton's ad for his third expedition to the South Pole in the early 1900s. But given what we've talked about, the ad could just as easily apply to any bold entrepreneurial venture or startup. And interestingly, Shackleton sorted the 5,000 applicants into three groups, the mad, the hopeless, or the possible. So which category of entrepreneur do

Starting point is 00:18:37 you fit into? It's a bit like what I was told before I went to work as an architect in New Guinea for two years way back in the late 70s, straight after I finished uni. Everyone said that to go to PNG, you had to be either a missionary, a mercenary, or a madman. I'm still trying to figure out which one I fit into, so I'll let you be the judge. So what separates the best entrepreneurs from the rest? Well, according to research conducted by Amy Wilkinson from Stanford University in the US, it all starts with how successful entrepreneurs see things and the world differently. For example, her research shows that we all catch things out of the corner of our eye, like when we're traveling to work. We might catch something

Starting point is 00:19:23 or see something that looks unusual. And the vast majority of us just dismiss it because they're in a routine. But entrepreneurs and entrepreneurial individuals individuals jump on it and start asking questions. They're curious. They notice something that's unusual or a glitch and find a gap to explore it. So it starts with being alert and curious. Now, in the financial investment world, we call this arbitrage. There's a glitch, and if you capitalise on this and trade quickly, you can make a lot of money in that arbitrage moment. And this exists in the entrepreneurial environment as well. If you can see a glitch or detect an anomaly and go for it,

Starting point is 00:20:07 you can potentially harness a big entrepreneurial outcome. And in order to spot gaps or unfulfilled problems and needs, many entrepreneurs observe what's working somewhere else and then ask the question, why isn't it working here? What's working with it over there and what are the fundamental underlying principles that make that work? And then reapply it here or somewhere else. Consider this example.

Starting point is 00:20:35 In the early 1970s, an entrepreneur named Howard Schultz was in Italy and he observed the awesome coffee culture. He went to a conference in Italy and he fell in love with the fact that the Italians all left home and before they got to their conference or arrived at the office, most of them stopped at a coffee house. So this was the third place they all went. If home was their first place and the office was their second place, then their third place was their local coffee house.

Starting point is 00:21:08 So he sees this, he loves this, and then he picks it up and brings it back home to Seattle in the US. And initially, he cut and pasted, but it just didn't quite work. In his first coffee shop, the staff all wore bow ties and customers drank out of small white porcelain cups, standing up at a coffee bar with opera music playing in the background. It all looked, felt, smelt and tasted very Italian, but this didn't work in Seattle. So he adapted the third place model to a local flavour.

Starting point is 00:21:42 That became, who do you think? Starbucks. And Starbucks created a coffee culture that's now the world's largest coffeehouse chain. Yes, it's now a much more casual setting. you can sit and work on your laptop, you can talk with others, and it can be a workplace for many people as their third location. So this is the entrepreneurial idea, that you see something elsewhere and you transport it with a twist. You can move and translate across geographies, as well as sectors, or bring old ideas up to date, or move across

Starting point is 00:22:21 time. Here's another good example. Entrepreneurs Larry Page and Sergey Brin saw the Stanford Library ranking system of old card catalogues and applied that old idea of searching to the worldwide world. And what was born? Google. Now at the time, there were a heap of other search engines like AltaVista, but they managed to take an old idea and bring it into the new world of work that created something really powerful. So this is another way to spot a gap. Just look for something that works, fly it across somewhere else and give it a little twist. And academia calls this reason by analogy. There's a lot of powerful research showing that if you compare and contrast, if you draw analogies, then you access more of your brain

Starting point is 00:23:15 power. Now, another way that Stanford has identified successful entrepreneurs who see things differently is that many act like an architect, which is, of course, easy for me to imagine, given that I practiced as an architect for 25 odd years before shifting into full-time investment. So the concept here is that architects are always spotting design opportunities and solving complex spatial problems through clever design. You take in a space and you design and build from the ground up. Just as an architect designs and builds a brand new building in an open area, successful entrepreneurs find a space or a problem that hasn't yet been addressed. It's a friction point, a bottleneck, or a problem for you or others. In this regard,

Starting point is 00:24:01 Elon Musk is a good example because he's in the world saying, designing and building solutions to solve humanity's problems. And so Tesla is solving the problem of sustainable transport. while SpaceX is solving the problem of making life multi-planetary. Now, these are huge problems. Musk literally believes that SpaceX is the vehicle and the next step to helping humans take life to other planets, and Mars is the planet he believes we should inhabit next. He's an architect because what he's doing is designing

Starting point is 00:24:36 and building something from the ground up. So if you take SpaceX, he went to NASA and asked, when is the US space program going to Mars? How come we're not doing this? The problem hasn't been solved, so there's an open space. Then he travelled to Russia and asked them if they were doing it. And as they weren't, he also talked to the Chinese, but no government was building rockets that would go to Mars.

Starting point is 00:25:01 And so SpaceX was born as a private company to build a reusable rocket by reasoning from first principles. This means breaking things down to the fundamental elements and the basic axioms, which is the way that many mathematicians and physicists reason, as Elon was originally trained as a physicist. You figure out the fundamental truths and the elements and then build piece by piece from the ground up. In this fashion, SpaceX has taken over the contracts

Starting point is 00:25:28 to resupply the International Space Station and is doing it at one-tenth of the price that NASA was. So this is solving an unsolved problem by building something with the elements in a different way from the ground up. The next type of entrepreneurial thinking is what Stanford calls an integrator. An integrator is a person that looks at putting things together that haven't been put together before by mashing and smashing concepts together. Sometimes this works and others it doesn't and then occasionally it creates extraordinary opportunity. For example, in the past you had luxury car sedans or big all-terrain four-wheel

Starting point is 00:26:09 drive vehicles that were completely different. But if you put these two together, you end up with a luxury SUV, which has now become a huge segment of the car market. This is an example of being an integrator, of putting two things together and creating a new category. So successful entrepreneurs go out in the world and look for things to combine, like online retail sites and discounted luxury good auction sites as an example. So successful entrepreneurial integrators mash and smash things together and create novelty at the intersections. The next key quality of successful entrepreneurs is their curiosity that unlocks the ability to spot opportunities. As I've said on many occasions before, it's increasingly important to every single one of us

Starting point is 00:26:57 to continue to ask questions and continue to believe that we can discover and probe and learn more and more every single day. But the Achilles heel here is that many people believe they're experts and anyone who already believes they have expertise stops asking questions, which is very dangerous and very limiting. But an entrepreneur who wants to spot opportunity and wants to create something new in the world or wants to keep up with a rapidly changing world

Starting point is 00:27:28 needs to adopt curiosity as their best friend. Curiosity is a tool to be alert and to see things that other people don't see. But unfortunately a lot of our questioning nature has been bludgeoned out of us by our conformist education and our world of compliance. So rediscover your childhood curiosity

Starting point is 00:27:50 and continuously ask why. so you need to be very clearly and understand you need to very clearly understand the problem you're solving and know that the problem is big enough and of the right quality that people will pay you handsomely to actually solve it and so that's a very key point right there but creating innovative solutions to unsolved problems and needs is just the starting point and it's only just scratching the surface when it comes to being a successful entrepreneur. Ideas are nothing unless the right action is taken.

Starting point is 00:28:29 So what else does it take? Is it being a born go-getter? Is it having an extroverted personality? Is it being charismatic enough to persuade customers? While some entrepreneurs may hold some of these traits, they rarely define the characteristics of every successful entrepreneur. Not everyone is born with a drive to change the world. In fact, many successful entrepreneurs today

Starting point is 00:28:55 are people who you may have actually underestimated in high school or college. A living example of this is Bill Gates, who famously said, if I had a dollar for every time someone made fun of me in high school, I wait, I do. now anyone has a potential to become a successful entrepreneur however according to ben walker from forbes there are a few key personality traits that all or almost all successful entrepreneurs

Starting point is 00:29:27 have in common firstly they have an unwavering belief and focus belief in themselves and total focused belief in the benefits of the problem they're solving they're unshakable and almost fanatically undeterred about solving the problem. The solution may change and evolve over time but the commitment to solving the problem is absolutely ironclad. They have a steely resilience that never gets thrown off course. Secondly they have a very robust and disciplined and almost obsessive work ethic. They'll work around the clock to get things done. They're the ones who always have work on their mind even when they're enjoying personal time. Thirdly, they develop a deep passion for what they're doing. And work ethic and passion go hand in hand. It takes worth ethic to keep

Starting point is 00:30:18 the business strong and it takes passion to feel motivated enough to maintain a good work ethic. They're successful because they choose to do what they love. Fourthly, they're motivated self-starters. A self-starter doesn't settle for a draining nine-to-five job. A self-starter doesn't give up at the first sign of struggle. And a self-starter doesn't hold things off until it's too late. A self-starter is someone who does what needs to be done without being asked or encouraged to do so. They take the initiative on their own projects and they lead themselves. They recognise that when things get hard, it's a challenge that helps them grow as an entrepreneur and makes the business stronger. Entrepreneurs have to be

Starting point is 00:31:07 self-starters to help their businesses scale rapidly in today's cutthroat business world. Next, they're flexible and adaptable. When plans need to change and an entire project needs to be redone, a successful entrepreneur shakes off any inconveniences and starts from scratch without getting into a huge rut. In fact, most entrepreneurs will tell you that their business has turned out much differently from what they had originally envisaged. They use a mental GPS instead of a rigid roadmap so they can roll with the punches and go in different directions that take them closer to the desired end result. It's about being open to possibilities and options and going with the flow, taking new opportunities as they come,

Starting point is 00:31:49 not getting stuck in a certain mindset and being receptive to changes and even criticism. Successful entrepreneurs can take a bad situation and spin it around to their advantage. They see obstacles as opportunities, not as roadblocks. In my humble opinion, to have any chance of being a successful entrepreneur, on top of your curiosity and creativity, you need to have a single-minded focus, an unwavering belief in yourself and your idea. you need loads of discipline persistence and patience you need the ability to fail fast fail often and fail forward you need to be flexible and adaptive to evolving the business and have the

Starting point is 00:32:32 rare ability to attract persuade and motivate other great people to fulfill the dream and vision and turn it into reality as well as the ability to surround yourself with people that are better than yourself and potentially be comfortable doing yourself out of your job. So the chance of successfully coming up with a groundbreaking idea, seeing it through, making it profitable and then selling it are tougher and less likely than winning a gold medal at the Olympics. So this is no mean feat. This is a big ask so you can see why successful entrepreneurs are very rare commodities. And someone who possesses all of these entrepreneurial qualities in spades

Starting point is 00:33:18 and has the demonstrated business success on multiple occasions to prove it is today's very special guest, Steve Baxter. Steve is one of Australia's most successful tech entrepreneurs, an active investor, a mentor to start-ups and a shark on Channel 10's very popular Shark Tank Australia. He's the living epitome of the old saying that today I'll invest in what others won't, so tomorrow I can do what others can't. In 1994, at the tender age of just 23, Steve put his total life savings of $11,000 on the line

Starting point is 00:34:00 to launch his first data, the pioneering internet service provider, SENet, from the spare room of his Adelaide home, as you'll hear in detail during our chat today. And it was around that time that I had the pleasure of first meeting Steve, as his business partner was a mutual and long-term friend of mine, Chris Foote, or Dick, as my brother and I affectionately called him. And we were in a number of rock and roll bands with Chris over the years, and Steve, Chris and my brother all got together to celebrate Dick's wedding.

Starting point is 00:34:33 So a big shout out to Dick and my brother Ian Bushy Jr. on this one. Growing rapidly to service more than 35,000 customers, SE.NET was eventually sold and acquired by Aussie Mail under the stewardship of its founding director and past Prime Minister, Malcolm Turnbull. In 2001, Steve then teamed up with a schoolmate to launch his second start-up, Pipe Networks, a provider of wholesale telecoms infrastructure that was listed on the ASX in 2005. Eight years later, they sold it to TPG Group for the princely sum of just $373 million. A truly hard-fought and life-changing moment.

Starting point is 00:35:20 Steve then spent a year working with Google in California in 2008, leading a project to deliver high-speed telecommunication systems across North America. Since 2010, he's become an early-stage investor in start-ups through his investment company, Transition Level Investments. This led to the founding of Brisbane tech start-up hub, River City Labs, and the creation of start-up catalyst and river pitch programs. And he's been championing Australian start-ups and entrepreneurs ever since. He's also been on the list of boards of VOCUS Telecoms,

Starting point is 00:35:56 Indoor Skydive Australia Group and other levels, as well as being on the board of Commercialisation Australia. Steve's also been heavily involved in the early days of founding numerous industry groups and forums such as the South Australian Internet Association, the South Australian Internet Exchange, Australian Domain Name Authority and a host of others. Steve now runs 1013,

Starting point is 00:36:19 an investment syndicate platform for sophisticated investors to invest alongside him and the experienced transition level investments team as unlike many venture capitalists Steve puts his own cash on the dash to the tune of an average of 15-20% of every seed deal 10.13 understand that to get great returns

Starting point is 00:36:43 you need to invest in global companies so they built a global portfolio across five continents with a portfolio value of over $2 billion in their first 18 months. So if you're a sophisticated investor looking to diversify your portfolio and invest in top-caliber technology companies, reach out to Steve and his high-caliber 1013 investment team who want to take exhaustive due diligence before they invest in tech startups. And if you want to start investing in your knowledge,

Starting point is 00:37:15 Join me and many other like-minded investors in our Get Invested community right now. I send a free and exclusive monthly email full of practical self-health and wealth wisdom that our current Freedom Fighters subscribers can't wait to get every month. It's full of investment and lifestyle tips, my personal book recommendations, apps I use to enhance life and so much more. Just visit bushimartin.com.au and sign up at the bottom of the page because this is just the beginning. as Steve Baxter has said so well in the past it's never been a better time to start a business or

Starting point is 00:37:50 invest in the business as it's exceptionally inexpensive and there are a lot of great tools you can use so don't die wondering give it a go and the best way to get motivated to get invested is to enjoy part one of this great conversation with Steve Baxter Hi, Freedom Fighters. Now, in the continuous radical uncertainty of our post-COVID world, which has turned things upside down and created a catalyst for massive change and opportunity, it's become clear that the future of our great country hangs in the balance. As an island nation, we continue to stick our heads in the sand and continue to do what we've always done. Then we're going to see our covered way of life gradually die in the vine like frogs in the boiling pot. Or, alternatively, we can rise to the challenge and reposition Australia at the forefront of the emerging new world by investing in new and exciting tech startup business opportunities with global reach.

Starting point is 00:38:48 So, to make sense of where we're at and open our minds to this massive opportunity, I'm joined by a preeminent leader in the tech startup world, both as a successful founder and entrepreneur, and now as a tech startup investor, Steve Baxter. So, welcome and let's get invested, Steve. Hi, Bushy. How are you doing? Great, mate. Been looking forward to catching up with you for ages because I really enjoy your very forthright, no-nonsense and straight-to-the-point approach. So getting straight on to that, mate.

Starting point is 00:39:18 For those who've been living under rocks in this country, mate, and don't know who you are, can you give us a rundown on who you are, what you do, and most importantly, why you do what you do? Yeah, no problems. I suppose I'd categorise myself as an early-stage tech start-up investor, which typically means that we're one of the first institutional money into very early stage technology, primarily software

Starting point is 00:39:41 businesses. I've been doing that for about 10 years, I suppose. Prior to that, I was a twice-washed telecoms entrepreneur, which is essentially how we know each other. A friend of ours, my first business partner is a mutual friend of ours, Chris, from down in Adelaide. That was a business we had down in Adelaide. I started when I was 23, called SENIP, and Chris came in about a year into my journey

Starting point is 00:40:05 and he came on as a, we call them co-founders nowadays. We used to call ourselves business partners back then, but nowadays we're called co-founders apparently. Yeah, it's more trendy these days, mate. Yeah, it's a lot more trendy. We used to be managing directors and directors and now we're CEOs and co-founders and all sorts of snazzy names.

Starting point is 00:40:17 It's awesome. And then I had a business in Brisbane called Pipe Networks, which I started with a chap I went to school with up in Rockhampton. So telecoms, which led to a couple of pretty good exits. And then now I'm basically an investor. I've got no real desire to run an operational business. We do run an investing business, so that's a bit different.

Starting point is 00:40:42 And I'm sort of out there backing people's dreams and success, their dreams for success, I suppose, and hopefully they find it. Yeah, love it, mate. Well, I wouldn't mind sort of digging into some of the prehistoric history there for a tick, if you don't mind, because I think it's a pretty interesting journey. and you one of the things that uh i like having done the google stalk mate is that uh you're one of the other few people i've come across like myself who started school at four and and finished

Starting point is 00:41:11 school at 15 so yeah yeah it's it's interesting isn't it nowadays that you know um golly you wouldn't send a four-year-old to grade one nowadays would you no you wouldn't mate yeah how did that affect you mate because i i know that i was always a foot foot shorter than everyone else and undeveloped in a lot of ways, which means I had to work a lot harder to achieve the same things. How did that influence your journey, mate? I don't know. It's probably best to ask people who observed me, I suppose, rather than myself. I never particularly noticed it. I do recall my mother in particular sort of later when I

Starting point is 00:41:47 was a young teenager, ruling that she sent me to school so early, which is a curious memory to have. I wasn't too fussed, I suppose. um i didn't do too bad up until grade 10 grade 11 i just fell in i don't know you know just young boys you know your your boys are different right regardless of what they say boys are different yeah um and so you know there's some pretty when you're going through puberty there's some pretty raging stupid shit that you do and i probably fell in a bit of that in grade 11 i was lucky that you know i actually left 15 and went and joined the regular army back when they could recruit 15 year olds so i signed up for nine years as a 15 year old how scary is that um

Starting point is 00:42:25 And I loved it, you know, Boys Own Adventure. I wanted to carry a rifle. I wanted to, you know, in inverted commas, defend the country, you know, all that sort of patriotic stuff that I still believe in, but I probably, I had a little more, I understood it less when I was 15 than I do now, I suppose. And, no, it was great, you know, with Boys Own Adventure, made some great mates and learnt some awesome lessons.

Starting point is 00:42:49 Yeah, let's talk about some of those lessons because the sort of discipline and the hard-nosed, no-bullshit approach and probably a fairly hierarchical approach, I'd imagine, mate. What sort of an imprint did that leave on your future journey, do you reckon? And I get asked this a lot, understandably, given, you know, it was nine of my first 23 years, so, you know, it does make a lot of sense.

Starting point is 00:43:12 So I think what I take from that is I take it gave me one hell of a work ethic. um look the technology i learned last in the army i was in a it was in a phase of um i suppose electronics and systems that did a radical change in the sort of early mid 90s went from i suppose very basic uh components and integrated circuits to exceptionally integrated and exceptionally high density stuff so there was a real step change in electronics and you basically didn't repair this stuff you sort of if it stopped working you threw it away so a lot we learned It wasn't as applicable.

Starting point is 00:43:47 But, you know, I suppose on the work ethic side, it was a very honest organisation. If you're a second late to work, you might as well just take yourself straight to jail because there's usually no violence and handcuffs involved in getting you there. So I have an absolute disrespect for anyone who doesn't respect work hours.

Starting point is 00:44:06 You know, just be polite. Turn up to the bloke who's paying you or the person who's paying you. It's just politeness is an amazing thing. being able to do the job regardless i mean we used to we used to work hard and party hard um and i don't really cared how hard you partied probably and turn up into the job you could have stopped drinking two hours before you were doing your your 5k run it doesn't matter how many vomits you had during the run before you got it finished no one really gave a stuff if you know what i mean as soon as it impacted your job then there was a problem yeah and then problem it

Starting point is 00:44:34 literally it was a very a lot of the feedback was exceptionally martial if you could interpret that as you please um but it was a martial occupation if you can't take a clip around the ears you're probably no good to bayonet charge so um you know that's just a factor of the job right yeah i heard you say once uh that uh the derogatory term if you have a cop as a jack was uh was was pretty embarrassing just just share that story with us jack is jack is something never leaves never leaves an Aussie digger i think you know and the term dig is interesting you know i tried to the army brought me back to a few of these army and very very generously brought me back to these things called um army innovation days and i want to thank um colonel karen joyce for that i mean

Starting point is 00:45:15 his dad just joined the air force as a wing commander but he got me back involved there which is great um and so i did a lot of thinking about that because i've had to i was addressing a room full of colonels and generals at one point i was a corporal for christ's sakes you know i used to carry these guys bags if you know what i mean so um it was all very generous it's for sure and i had to have a good hard think about what it meant to be a soldier and the term digger to me is a bit special i think you know if you know the australian history of that term it should be special if you respect the australian history of that term it should be special yeah um and and you don't become a digger by enlisting it at some point when you're accepted as being assaulted by

Starting point is 00:45:52 your by your mates and by your comrades that's when you become a digger and and at some point it happens and you don't realize it so um and that's sort of pretty cool so but the term jack is is almost opposite to the term digger jack jack was some guy in world war one or two who did the wrong thing and was basically just an arsehole to his mates essentially, he was lazy wouldn't do the right thing, wouldn't pitch him with a team and to be called Jack is just, it's the opposite to Digger

Starting point is 00:46:18 so he never wanted that, you ran a thousand miles from that I'm showing my age now Steve, but when I was a kid we used to call each other Digger all the time and it was a real term of respect for someone who

Starting point is 00:46:33 knuckled down. It was an old term for mate Digger or Cobber, sort of the same thing wasn't it really it was yeah and as a country boy like yourself uh we used to throw that around a fair bit actually and it's funny when i catch up with those guys that went to school with in the country you know donkeys years ago now we still call each other digger and copper and it's uh yeah the best part is it's funny when all like we get together mates quite i know i've got quite a few blokes that's over there in the city and you know a couple in the nearby suburbs as well and we've done the 20 uh 2025 and re-year your 30th reunion 35th was supposed to be in

Starting point is 00:47:15 january it's not going to be now it'll probably be like later september next year once we once this stupid nation gets its head back on straight after covid yeah um so um but you know it's funny you get together and and you know a lot of the functions a lot of these are social outlets you know our families come along to our wives and partners and whatnot and the way we talk to each like my wife put aside at one point said you know i didn't know you people were friends i thought a fight was going to start because we literally it's just it doesn't matter that you're joined at the same time and you might have been the same unit but you know i was an electronics technician and they used to call us boffins and and the vehicle mechanic used to call grazers and that

Starting point is 00:47:50 you know the the fitter armors we call black trades and the the the the um the carpenters and joiners were all chippies and stuff and sometimes a term depending how you said it it an insult for a time of endearment you know what i mean and she just sit back and goes you know if i didn't know you're all friends i honestly thought a fight would have been it was about to break out so um it's just this is what blokes this is what i think about people not blokes was plenty we were one of the first intakes that had had females involved a couple of those still come along to the um um to the reunions and the marches and whatever as well so you know just people in those sort of closed confinements and those sort of really quite um i don't even describe it but

Starting point is 00:48:27 But, you know, matey is probably not the right word. But those environments, it's just you do it. You know, you just know. You don't take the shit to heart. Yeah. Do you think we've lost a bit of that, mate? I just – I think we've got soft, don't you? We're letting ourselves get soft, if you know what I mean.

Starting point is 00:48:44 So, I mean, the more you give into it, the more you let it happen. So, you don't give into it. No, well, that's what I think. There's this sort of growing victim mentality in that – I don't know about you, and I don't want to go off too much of a tangent here, but having travelled around the world a bit we we're the most over-regulated over-compliant uh country on earth and i i can see it stifling innovation and and what it tends to do is put a safety net and drop everything down

Starting point is 00:49:10 to the lowest common denominator where we're catering for the the full uh rather than empowering the the bright uh what what's your view on all of that yeah i agree with all that um look i'm um So I spent a year living in the U.S. in 08, 09. So that taught me a lot. It was funny when I first got there, I had this, I was working with Google in California and in sort of the Bay Area, California, Mountain View, and I thought you'd have these moments where you'd think, why are those people doing that?

Starting point is 00:49:45 Why isn't someone stopping them? Why is the government letting that happen? You know what I mean? It was weird, and you wouldn't say it out loud, but you'd think like, oh, my God, look at them. How crazy are those? why isn't someone stopping them? And to the point, and I was only waiting like 15 months,

Starting point is 00:49:58 I want to say maybe 14 months, and came back to Australia and in the end we're sort of going, why aren't they letting us do that? I'd turned around that fast. You don't realise just how suffocating it is. It is truly, truly suffocating. And the lunacy we're seeing right now with the COVID response is the apex or I hope not the thin edge of the wedge of what's going on. so yeah no definitely over regulated i mean the thing is is that you know that that the weird

Starting point is 00:50:27 thing is what we've done to australia i mean you know i talk about entrepreneurs going up and saying the u.s and i sort of there's a few cautionary tales there like you know that depending how you count them there's something there's there's nigh on 10 000 taxation jurisdictions in the u.s right yeah so um because every little every state every every city county etc and unincorporated areas which have no which have no sort of locals local um authorities over them can do their own thing so to speak um we see that as a we see that as a bug because americans see that as a feature they'll go move to the area that actually suits their lifestyle and how they want to contribute the community the best if you know what i mean to the point that we have um you have new hampshire

Starting point is 00:51:05 i want to say that's um yep hampshire um you know whose state motto is live free or die which i think is a fantastic state motto um but they're one of the biggest libertarian states that they're literally then they're talking about seceding from the union which i think it's rubbish personally but you've actually got people out there who just really really really want to be left alone you come back to australia so you have this choice to move these massively freedom loving areas or you can go to the or you can go to the the you know the high government touch suffocating areas washington state california etc etc um you come to australia and the only because we've homogenized our society and literally corporate taxes same everywhere literally we are purposely

Starting point is 00:51:46 trying to make every part of australia like every other part of australia so the only choice you get where to live is weather that's right what sort of climate do you want i mean that that's just ridiculous i i think sorry i'm ranting a little bit here bushy but no you're not mate i'd said this is uh this is a sort of conversation that we don't have yeah i think i think it comes down to the fact that our federation uh for our modern times is fundamentally broken and we broke it for good reasons back in back during world war ii when we're basically removed when we centralized taxing powers with the federal government so um and so you know that i'm a huge fan of state governments and people sort of i'm actually a huge fan of more government not less government

Starting point is 00:52:22 excuse me more democratic representation not more public service more democratic representation because i think the closer you get democracy to the people the better the outcomes are because people can make their own decisions yes you know i would fear people talk about eliminating the states as a level of politics in australia could you imagine i imagine that you're still you're in adelaide is that right or yeah i'm based in adelaide we're actually yeah down the morning peninsular and noble at the moment, mate. Thanks to COVID, but... But you can imagine, as

Starting point is 00:52:52 someone living in Adelaide, you imagine having to petition Canberra for money for a new hospital, for example, in competition with Hobart, where Tassie has 10 senators, right? Yeah. So every 30,000 people gets a vote for their senator, whereas in

Starting point is 00:53:08 South Australia, we have 120. No, I think we need more political representation closer to the people. That is not more public servants. by god that's not more public servants that's just more political representatives so um so i think and that's what i think you saw out of brexit as well you actually saw people wanting their own control over their own future yes for example so getting out of that those those those larger political unions um so and so i think that you know by long story short sorry man i'm rambling

Starting point is 00:53:37 here no this is good man it's very very very keen to um see that you know i'd love to see income taxing powers devolved back to the state now we should keep the ato as a central place you send your money but the state should then say so you know because you you do want a a minutely simple way to actually do this but the states can just say let's say that you know the commonwealth had the first 20 so from zero to 20 that's commonwealth take for example and then the states get to levy everything above that yeah so you know so if if queensland wanted to and so the problem you've also got you've got lots of problems sorry man i am going this is good good that's great but what you got is and i like this is that the federal government can't

Starting point is 00:54:14 buy us one state over another which i think is great that's how it should be but as a result the federal government can't can't sort of say for example well we have a problem in north queensland we have all these all these resources all this water but no one lives up there how do we get people up there now the easiest way to move people around is actually give them a financial incentive not not give them subsidies give them a financial incentive yes so it'd be like you know okay so let's say if you live north of the tropic of capricorn for example in queensland then your your max your max um power your max taxation rate's not 47 cents whatever it is in the dollar it's only 38 for example you can't actually do that because of that non-buyer stuff in the

Starting point is 00:54:47 in the in the constitution so if those taxing powers would devolve back to the states the states can do that so so then all of a sudden the queensland government could say right how do we how do we get massive growth in north queensland okay so max max income rate in northern queensland is let's say 40 cents in the dollar after you don't pay anymore and you'd empty sydney into in North Queensland. Yeah, well, it's happening right now because of COVID, mate. That's Melbourne, right? Thanks to Dan Andrews, the bloody Muppet.

Starting point is 00:55:12 But anyway, so, yeah, for me, so it comes down to, yes, I think we are over-governed, but we've done it to ourselves and somewhat gleefully, and it has been the boiling frog to your analogy in the intro, I think. So, but let's hand back. And so right now you've seen during COVID, you've seen these states just doing the dumbest things and then not just begging to Canberra,

Starting point is 00:55:32 but insulting Canberra for more money. and canberra giving it to them which is even worse so um so i've got no problems with with individual jurisdictions undertaking their own coronavirus own health or whatever might be policies they just should be forced to pay for it yes yes and that would then actually generate a real conversation with the electorate that would say yes we we don't mind strangling our economy in order to have an xyz outcome or maybe there's or maybe just maybe there's a middle ground if you know what i mean which we haven't totally which we haven't explored this at this point well the the over governance and over compliance has created this sort of subservient

Starting point is 00:56:09 sheep-like response at times which means that those hard conversations don't get had and i'd don't know about you but i think we've in a bit of a leadership void right now and i'd as a country boy i come from a world where we operate under a what i affectionately refer to was the 100-0 formula. That is 100% personal accountability and zero excuses. But what I see a lot of leaders, both in government and even in the corporate sphere, mate, they operate on the opposite. It's 0-100, zero accountability and 100% excuses.

Starting point is 00:56:43 But what's your read of all of that? Oh, you know, it's, you know, I don't disagree. Look, you know, I think that good leaders are hard to find, if you know what I mean. And in some respects, you know, good leaders, because good leaders, you know, really good leaders usually only come out of adversity, right? Yeah. So there's a natural ebb and flow to life where, you know,

Starting point is 00:57:07 that certain people are required during certain times. And I think coming out of this COVID and coming out of the absolute dead headache and the next person I hear and say, but we've done so well during COVID. If you ignore the credit card bill. And I'm sorry. You're not the chairman of a company who just stood down 85 people the other day either, are you?

Starting point is 00:57:26 Because they weren't essential workers, which I think is the most grotesque statement to come out of this entire thing. All work's essential. I find it to be just the level of cognitive dissonance or something about how people can just view others, the lot of others, is freaking astounding. If you can sit at home behind a keyboard, then who really cares?

Starting point is 00:57:48 Who are the guys who operate the CNC machine or the person who's got to go and service the tower or whatever it might be. Yep. The real jobs of Australia who actually keep things going. No, I find, you know, I'm not much of a real estate or a landowner. We've got a whole house and a house and a couple of leftover rental properties that we've just got some lovely tenants in. We don't want to put the rent up or sell, if you know what I mean.

Starting point is 00:58:13 Yeah. But I really consider buying 200 acres during this COVID thing and putting seven strands of barbed wire around it to keep my fellow citizen out. in this right now what's been demonstrated is that 51 percent would vote to jail the other 49 percent of us we have no inherent rights it's it's it's it's the one thing to say about the u.s is they're not a democracy the u.s is not a democracy they're a constitutional republic and the citizens have rights that politicians cannot take for as much as they're trying to

Starting point is 00:58:38 take them away that they can't take away through the first 10 whatever is amendments to the constitution the bill of rights yeah so you know you have the right to free speech you have the right to bear arms um for as much as australians might find that statement a little bit interesting given our history and our our subservience when it comes to the i'm an ex-soldier i don't think that we should possess military style weapons i think they're designed for one thing and that's to to quickly and effectively murder as many people as possible and in the hands of soldiers that's what you have to do yeah in the hands of you know so i think there are limits there but do you want to you know have you ever seen u.s police act like melbourne police having those

Starting point is 00:59:15 rights no never know what that they're scared the crowd is armed yeah yeah now i'm not saying i don't want to arm crowd i don't arm people but my god that's a hell of a balance is that i've i've never seen police in the u.s act like that it during those back black black matter black lives matter rights excuse me they pretty well just put a bit of it back but they tried to keep the rights contained yeah you know they didn't get in there with freaking paper balls and plastic bullets and all the rest of it and that disgraceful you know we've and the whole thing about us you know we country boy and i i heard a good podcast the other day a lady called helen dale i met at a conference a few years ago she's she's an author who got cancelled in australia because it turns out that

Starting point is 01:00:02 she culturally appropriate culturally appropriated a character i always thought authors were meant to culturally appropriate characters. But, you know, apparently that's part of the description of being an author, right? But she gave a great interview on a podcast, I want to say, called Trigonometry or something. I was listening to you. Yep.

Starting point is 01:00:17 And she was saying that, you know, Australia, while we have this opinion that we're the descendants of convicts, you've got to remember the jailers are also amongst us. And they're the police. And honestly, they're the police, the public servants. And I'm like, yeah, I get it. I actually totally get it.

Starting point is 01:00:36 Yeah, that's a pretty good analogy, actually, mate. That sums it up pretty well. I know we've sort of... We've traded, haven't we? We haven't, but... It's all components, especially. It's a great conversation, because this is something I wouldn't mind your thoughts on as well,

Starting point is 01:00:54 because I just think that we've sort of lost the pathway in relation to resilience, mate. We sort of pussyfoot around and we overcompensate, Particularly our kids and young, we sort of wrap them in cotton wool and we don't allow them to make mistakes. I'm just a little bit fearful where that's going to end up. What's your read around resilience and sort of getting back to some real resilience given what we're seeing

Starting point is 01:01:25 in some of the citizens these days? Yeah, look, I think that if we're worried about, I am concerned about resilience in young people and I think that it's us who are to blame because we're the ones who've actually allowed it to happen. So, and all for the right reason, you know, what is it, the road to hell is paved with good intentions, right? So, how many more of it?

Starting point is 01:01:56 We literally do, you know, we used to, I had a speech, I used to, I love, I've been asked over the last few years to be an Australia ambassador. So I go to these beautiful little towns on the outskirts of Brisbane-esque and similar places and do an Australia speech. It's even 10, 15 minutes.

Starting point is 01:02:13 It's quite nice. You get to see the local fate. You know, they've got some sort of, you know, some sort of historical reconstruction going on. People dressed up. It's just, they're lovely guys. I love them. Yeah.

Starting point is 01:02:21 And I talk about the resilience of the Australian, if you know what I mean, about what we can do and what we can't do. um and and it does it does concern me you know we are you know we're the we're the we're the people who storm you know we literally are the bronze sons of anzacs is how i how i think about ourselves we have an amazing heritage that we don't give enough kudos to um we treat very very glibly i suppose and a lot of people out now hate which is even worse so um yeah yeah so you Now, I – resilience, mate.

Starting point is 01:03:00 Sorry, we were going, weren't we? Sorry, I'm sort of getting a bit lost here. No, you're good. You're good now. I think that coming back to that common element, the military background, when I was in the States, I was really shocked by the difference in the way the military were treated versus the way they're treated here because even to get on a plane from the military,

Starting point is 01:03:23 you go straight to the front of the queue and straight to the best seat and everyone almost bows down with deference to anyone who's in the armed forces in the States. Very, very different exercise here. And that goes to, I think, us turning our back on our history as somehow bad or I don't know what it is. I'm not sure why we don't respect that heritage and respect the people who put their lives on the line

Starting point is 01:03:53 to create the freedoms that we now enjoy. What's your read of all of that? Yeah, there's definitely a lot more difference paid to the armed services in the US. Just sort of like, I think it's a bit over the top at times, to be honest. I don't think we should be, I think my preference would be for the armed services to be respected but not lionised, I think.

Starting point is 01:04:16 So... So I think we probably are missing a treat there. I believe the – I love Anzac Day, for example, if you know. I mean, I didn't march. I've only marched in the last couple of years. I didn't deploy an active service, so I didn't see Anzac Day as being a thing I should be marching at because, to me, it was about returned servicemen, not ex-servicemen.

Starting point is 01:04:36 Yeah. And up here in Brisbane, some bloody Muslim ratbags were threatening to come out and start some trouble, so I thought, that's it, I'm in. So I went and marched. didn't happen thankfully which is great, it was just some gobs in the press yeah

Starting point is 01:04:52 so I think it would have arrived in Australia for the most part there's been some disappointing stuff recently with some of the fallout of what occurred in Afghanistan and investing in a couple of businesses we chapped out of the special forces community

Starting point is 01:05:08 in there you hear an interesting side of that I suppose yeah um no i think i think we've mostly got it right to be honest we don't we don't want to we don't want militaristic society i don't want the military in the streets i don't want to i'm just being i was depressed when i saw the military even being in a logistical form being used during the covid stuff i'm like yeah have we really gone here have we thought through this very hard um yeah no i've very little during covid except dominic peritoneum the last couple

Starting point is 01:05:37 of days is impressing at this point in time yeah i don't listen to the news makers it's all bad news but obviously, what gives you that impression from him? Oh, well, he's basically, he held a news, I think his first full day in the office, he held a news conference without New South Wales' Chief Health Officer in attendance. He went and asked why. He said, well, why isn't the Chief Health Officer there?

Starting point is 01:06:01 Isn't this a health crisis? He said, yes, it's also an economic crisis. I've taken advice from her, I've taken advice from Treasury, and I'm here making decisions. Love it. Oh, thank Christ, I've got time. Love it. I'll just paraphrase what he said.

Starting point is 01:06:11 I'll probably get a bit of that wrong, but, you know, that's my understanding of the paraphrase. Well, that's refreshing, mate. It's very refreshing. Yeah, so we have a way through this. We have a way through this. Let's just hope we can get there. Yeah, totally agree.

Starting point is 01:06:24 Well, I'm going to do a big circle back and go back to the stage where you sort of entered into the yes-ing exercise. I was just interested in getting your thoughts on, you know, you're in the Army. uh you know that that's a full-time exercise right there uh you've decided to to go down the road i just love i know it's a long time ago but i'd love to sort of dig into what was your thinking why did you even veer down that pathway and and i'm assuming you you basically started the business uh when you're still with the army can you talk us through your thinking and and

Starting point is 01:07:03 where that all led to at the time yeah i'm not too sure i was thinking very much at the time be honest um so um and it was a long time ago so look i um i i really enjoy my time as a soldier however i was predominantly serving in a peacetime army there were some peacekeeping missions that were going on but for the most part we weren't doing what i wanted to do in the army which was to deploy overseas and and be tested to the fullest of what i've been trained for um fight to be quite blunt yep um so my job was to support those he fought but nonetheless that was you know I wanted to – I wasn't getting that, and I was somewhat frustrated. I think a lot of the Army was.

Starting point is 01:07:42 So I saw an opportunity to get out, or I saw the opportunity to start a business, that being a dial-up internet service provider. Why there, mate? I'm just interested in the thinking, because that would have been a needle in a haystack at the time. What was the attraction? What was like, shit, I'm going to have a crack at this? No, well, no, it was the only way to do it at the time.

Starting point is 01:08:02 I don't know whether, I'm not too sure how to phrase your needle or haystack term there, but essentially the way you accessed the internet back in 1994 was you bought a dial-up modem between 2,400 bits per second and 14,400 bits per second, and you plugged it into a computer, plugged it into a telephone line, and hopefully three times out of five it worked. That wasn't as horrible. It was horrible technology.

Starting point is 01:08:25 It was slow, and it would drop out, and you name it, but it was the only game around, right? Yeah. um and it was just spectacular that those you know that first when you realize through a computer you could you could read so much you can see so much you can communicate a lot more widely um to me it was an obvious way the world was going to go um and and i wanted to be part of it and i've done a little bit of study the thing about the army when you go on these exercises you do like you know between what five weeks and my longest was about four and a half five months and they were

Starting point is 01:08:56 mostly very boring um literally you'd take lots and lots of books um for your audience you had an older audience so they don't remember books i imagine the older audience these things used to make out of dead trees um um and uh and then i i i enrolled in a part-time fully external computing degree essentially and just did that because it was you know it was something to do um yeah i i think you're playing it down a little bit mate because it hindsight's really easy when you look back now and go oh well it's obvious the internet was the future but it wasn't the future of the time mate it was the brave new frontier yeah well i suppose when i saw it when i saw it when i saw that because i'd gotten into if you recall the bbs services where you used to

Starting point is 01:09:40 dial up just the guy's private computer he had a bigger computer than yours and bigger hard drives and more files that you could download so you dial him up and you download his stuff is my only way to get pirate software basically and um and then you know then it became then all that didn't become internet that sort of stayed as is to be honest but then the internet came and it was this amazingly larger bigger more incredible well-connected bbs type thing um and to me it was dang obvious you know i i didn't think i i was asked to talk years later and and i was told you know what and i was forced to go back and think about when i started that business what did i why did i do that what did i see was going to change so i sat down and recall some of the

Starting point is 01:10:22 things and remember back then we used to buy cd roms we used to buy yeah you know in music and and also um software content i instantly i knew that i instantly knew that okay that's going online that stuff that's just data that's going to come over this this thing will get faster it'll come over that and you know you can see a lot of i can see banking because banking to me was just a dead end thing you can transfer bits on a screen as easy as you can walk into a branch and transfer bits using a deposits form excuse me if you know what i mean so there was some really easy things to see that were going to go online travel booking off and it is you know the fact that flight center still has some shops in supermarkets amazes me but but you see some things actually really going

Starting point is 01:10:59 online quite well some things i never ever would have guessed buying mattresses buying shoes buying dresses that that still surprises the daylights out of me um but that's got probably more to do with the southeast asian or primarily the cheap china manufacturing miracle which is you know come back to buy this now that miracle excuse me um so uh so that you know about the culmination there between i think a rising middle class in china and what they did for the price of goods uh increasing technology but and so some of the things that were enabled and made possible i think i never dreamed of but i probably got i don't know i've got about four of them right i think to be honest so yeah yep well i mean i'm guessing you might be started the business on

Starting point is 01:11:42 the kitchen table and uh after hours pretty much and then and i wouldn't mind you just sharing the growth story on that mate because that'd be a bit of an eye-opener for for uh yeah right so uh so started um this is where i met our mutual frank chris um started going along with these things there's a computer user group like a club social club in adelaide um in in sort of 93 94 ended up hosting a lot of the meetings at my place just to learn more about these weird computer operating system called linux at the time yeah and um once you got it going you realized that you could plug modems in the back of it and other people could dial you and more importantly you could dial up that bigger internet link further upstream and you could become a part

Starting point is 01:12:23 of the internet which is just like so cool um so you know we had an 11 000 home loan deposit myself and my now wife my then fiance we'd saved yeah um we're living in flagstaff hill and which is a great little suburb in adelaide chris just live around the corner um and i thought well there you go yeah what's i was actually in a rented army mary quarter and i thought well i need to start this business i need to install sort of you know i need to install 14 phone lines and people ask me was that hard to get permission to install the phone lines as well i knew they'd say no so it was a pointless conversation so i just went and did it um so so i installed 14 phone lines in in the regs army mary quarter we're not buying the house next door and then reason well there's

Starting point is 01:13:06 two reasons we bought it i was for sale and the people owned it lived across the road mate they told us that the rock dollar bottom price they'd take for it which was in their price range accidentally without knowing we're in the market and then it was actually and the cable had more slack on that side so i could pull it towards so you know we actually had enough room to pull out the the telstra cable without telling telstra because i was going to cost us 60 000 bucks to relocate so i just went and dug the thing up and did it myself um then sort of told telstra later so uh so that they moved from one house to the second house and then probably about eight ten months after that i got it that was i started the business in november 94 i got out of the army

Starting point is 01:13:43 i took a month off leave without pay in in may 95 and it just went nuts absolutely crazy went back and saw my boss in the army and said uh major shanks was a fantastic man and um so you know boss of it's going well i'd like to get out and the unit i was in i think had had um had slots of my trade stream. I think it was about five of us. And I was the only one left. And we're the air defence unit for the nation. And he's like, well, you know, Steve,

Starting point is 01:14:12 I can't really let you go type thing. But there's a big exercise coming up, Kangaroo 95. So it's due to get out in the following January. So look, if you play the game, do the right thing, I'll put recommendation and freely discharge, which is the best I could hope for, to be honest. And I was two days into the exercise and he said, You know, he basically signed, I think it was an accident,

Starting point is 01:14:35 but he essentially approved my discharge about 10 days after I got back. So I got out in September that year. We ended up first bought into the business soon after that. Then we ended up moving from Flagstaff Hill down into Grote Street, 222 Grote Street, Adelaide. And fantastic, fantastic premises, fantastic place. And just it took off like you wouldn't believe. Yeah, definitely got $11,000 back.

Starting point is 01:15:05 Renting the first 160 metres, renting the place next door and another little place at the back and a place over the road and having about 70 staff by the time we were done. Massive growth spurt. The challenge of that would have been pretty big, mate, going from zero to a pretty large business in a very short space of time. Those growing pains aren't easy. Talk to us about what you went through then

Starting point is 01:15:32 And then why sell? What was the decision to sell? What forced a hand in that regard? Yeah, right So the I mean, I look back now It was Everything's, you know

Starting point is 01:15:45 Nothing's that simple But it was There was nothing too titanic to get over Aside from what prompted me to want to sell I suppose Yeah I mean, I remember in the late Christmas Some of our

Starting point is 01:15:55 One of the biggest problems was I think we had like our an armed robbery insurance for cash, something like 17 grand. I can't remember. I think it was in the teens, 17, 13 grand, something like that. Would sometimes have to go in and down the bank. You could go and put the money safe, the big metal safe on the outside of the bank building.

Starting point is 01:16:14 You could put your deposits in, your deposit box. Yeah, I remember. We sometimes had to visit that three times a day. What problem do I have? I know. But if that was every day, that would have been fantastic. so obviously if it's in that deposit box then it's got more insurance than we can carry

Starting point is 01:16:29 so we made sure we weren't going to get knocked over by it because obviously South Australia is a place where people enjoy the herby delights of certain bushes so so the reason is also we were at the behest of Telstra

Starting point is 01:16:46 and my second business as well, this is somewhat similar although I'd learned a lot going into the second business but Telstra is an evil organization i mean everyone you know people in there are quite nice but it's a formula former government department term monopoly and then privatized and then basically given permission just to be an absolute thug yeah so uh with very deep pockets so that's a pretty dangerous combination it is yeah um and you know they're they're the sole almost

Starting point is 01:17:15 your sole provider of external services and also your biggest competitor it's dreadful position to be so and we have one instance where they actually install a piece of equipment on premises in order to get us telephone lines installed faster our biggest problem is actually putting enough telephone lines on in order to actually keep it with demand yeah they pull this thing in which everyone now knows the term of a rim because it's got back from the dsl broadband days everyone you know if you're on a rim you knew you're actually in trouble because they're terrible for high speed yeah they put this rim into our premises on the promise they could provision lines faster and they could but you know we went from getting i want to say at that stage we were

Starting point is 01:17:50 probably at um the max modem speed was about 38.4 i want to say at the time 38 400 board that was the latest tech and we went from you know went from people averaging probably that down and the poorer quality of the telephone line the less of a connect that um the point you know if you recall back in the dial-up days a lot of people if you had a 38.4 modem and you and you connected at 33, excuse me, it was 33.6, not 38.4, get a 33.6 modem, and you connected at 29,000. You didn't hang up and start again because it was 10% too slow. So then our average connection speed started being like 24, 25,000.

Starting point is 01:18:24 We went from putting on 50 people a day to losing 20 a day. And that was just horrific to go through. We ended up getting a confidential settlement at Telstra. I can't remember what it was for now, but it was just basically just an absolute fat, dumb configuration mistake. but it took like i don't know about six or eight weeks yeah that was just like that was that was that was horrible yeah what it means scary so you sort of read the writing on the wall that it was better to well that was a mistake right what if i actually put if they're meant to do it they

Starting point is 01:18:51 we're done we're cooking yeah so they've never actually gone and actually done that if you know what i mean and so when it got to our second business we learned that because once again And Telstra was our biggest supplier and our biggest competitor. We've become old, haven't we? But here's the thing, though. The good news about that and the smart thing that you've done about that, whether you did it by design or it just happened that way, is that you set yourself up in a position where you become

Starting point is 01:19:18 very attractive to those bigger animals and as a consequence of that can reap the rewards and take some chips off the table. Yeah, that's what we did, I suppose, yeah. So out of that, we started those conversations with a few people and ended up exiting out to Aussie Mail at the time, although it ended up being MCI Worldcom. Because as we were selling to Aussie Mail, they were required by MCI Worldcom. So they actually ended up exiting out to those guys.

Starting point is 01:19:45 Same company, just, you know, it was just a corporate sort of shell game. So, and that was, you know, the only really disappointing part of that was that the first half was under the old CGT regime. Yep. The second half was under the new CGT regime, so it was better. The second half was like 55% or 60% in the first bit, and then the remainder in the second trench. It was a little bit over half the first time

Starting point is 01:20:08 and the remainder the second time. Yeah, okay. So, yeah, that gave me a new interesting respect for taxation, that's for sure. I bet it did, mate, because that was pre-the CGT discount in those days too, I think, wasn't it? Yeah, I think it's going to take half. Thank you, we'll take half.

Starting point is 01:20:27 Yeah, bang. yeah for all that work let's bridge into pipe networks then because you moved back to queensland uh you obviously saw another opportunity um uh in the same sort of sphere to talk to us briefly about about that and and uh again the reason for exiting uh to then sort of take you into what you're currently doing yeah cool so uh moved back to brisbane um ended up getting a job for a little while working as a i quite enjoy the technical stuff so i end up working as a um network uh engineer for double apt um which is which is fascinating which is sort of good we had a big bank contract um we're doing at the time yep um deploying lots of networks and hardware up to

Starting point is 01:21:12 these remote locations it was a lot of fun uh the but then i sort of realized i was somewhat unemployable at point in time to met up with an old chap i used to go to school well we were we're separate grades and mum's the best friends we used to play tennis together on weekends things like that so okay quite well um and and he was pushing a few ideas around and wanted someone to assist him in on the technical side of discussion with some vcs he was talking to which i did um and that never never went really went anywhere that dot-com crash happened sort of during that as well which wasn't helpful for those sort of discussions yeah and then you know the way it was being proposed was pretty sub-optimal anyway i said well look we did it this way a lot of ways

Starting point is 01:21:51 proposing i've done uh as part of running this in it and doing some of the wholesale interconnection stuff that we did in adelaide with all of our um people we cooperated with who were essentially our competitors um so pipe actually stood for public ip exchange okay so we set up a system that allowed people to interconnect through a trusted third party being us pipe um to uh exchange traffic so to basically cooperate with their competitors without having to talk to them directly okay um check clearinghouse a lot of people called it was you know described as like a network check clearinghouse which isn't an okay turn i suppose yeah um and that was good it was a good business you know we we recut that we then we funded it

Starting point is 01:22:29 ourselves and instead of the i know ben was trying to get a million and a half fund i can't recall the time actually was at least a couple of million bucks back in 2001. we had funding with 150 grand between us yeah um and then just you know the first six months was slow and then and we finally We started to get it and get traction and move it forward. So, and then we got into the data, primarily just interconnecting ISPs together with a little bit of co-location data space. Data centre is a big industry now, obviously.

Starting point is 01:23:00 Yep. And then we started building our own fibre networks between the locations that we needed to do. And then the fibre business became the bigger business. And the next biggest one after that was the data centre business. And then there was the interconnection business. That brings us to the close of part one. a Bushy's Great Chat with Steve Baxter. So stay tuned for the rest of the conversation next

Starting point is 01:23:20 episode, where Steve talks about the life-changing sale of pipe networks, where he became financially free beyond most people's dreams, then went on to work in the US for Google, before becoming a shark on the popular Shark Tank show and entering the world of venture capital and angel investment. Don't miss it. You get a summary of all this investment gold in the show notes. Just email me on hello at khgroup.com.au. That's H-E-L-L-O at khgroup.com.au. Or check us out at www.bushymartin.com.au forward slash GetInvested.

Starting point is 01:24:00 I look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening. And as always, dream as if you live forever and live as if you die tomorrow. Thank you.

Property Hub - Investment Insights & Inspiration - Get Invested: Part 1: Steve Baxter on seeing what others don't

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