In this episode we speak to Rob Silver the founder and CEO of Rivium, a data analytics and cyber security business. We explore Robs journey, including his various failures and set-backs – his first real venture of over 10 years failed. Robs tenacity and resilience allowed him to start over and eventually build a successful business which was bought by a listed cyber security business called Tesserent (TNT) late in 2019. Learn how Rob, was able to have his cake and eat it as well.
Rob is currently the Chief Executive Officer of Rivium Pty Ltd, a machine data analytics company focused on cybersecurity. Rivium is owned by Tesserent Limited (ASX:TNT), Australia’s largest dedicated ASX listed cybersecurity business. Throughout his career, he has serviced the needs of a broad range of large enterprise customers and government agencies with a strong focus on financial services, online and utilities.
For more information, please check out the Rivium website.
Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interests for you.
Michael: Welcome to the troubleshooters podcast with me your host Michael McGrath. Now, my guest today is a fantastic troubleshooter. Robert Silver is the founder and CEO of Rivium, a technology business in the cybersecurity and big data analytics area. Rob started, built and then sold his business to a listed company called Tesserent late in 2009. Tesserent is a fast growing cybersecurity business listed on the ASX. Rob operates as CEO at Rivium, which is now a wholly owned subsidiary. He swapped some of the start receiving shares in session along with some cash, he continues to run and build the Rivium business job done, you might say, easy for him. Another instant success story in technology. Not true. Like most thing, the devils in the detail. I’ve known Rob and his team for over a decade. And I can tell you that Rob is a great example of a troubleshooter, even in the face of adversity. His first business of 14 years failed. So sit back and enjoy our conversations we explore the reality of Rob’s journey. So, Rob, first things first, welcome to my new podcasts. It’s great to have you on. How have you been doing down in Melbourne there with the second wave going on.
Rob: Thanks, Michael. Great to be here. Yeah, interesting times, it’s really hard to know what’s going to happen next, really for business, it seems to be going quite well, mainly because our operations have probably increased to cybersecurity monitoring for working from home arrangements. Business wise it’s been very good for us.
Michael: So you’re one of the lucky winners Rob, out of this. So yes, there’s not that many. But there is a few Look, there is no doubt been many changes for you. Since selling Rivium to Tesserent late last year, how those changes will affect you. How is it been gone? any regrets?
Rob: Well, back in the early days, it was jumping in the deep end, it felt like but it didn’t end up being that way. The transition was almost seamless, basically business as usual, continuing to trade and offer exactly the same products and services that we’re offering pre acquisition. And it’s still continues to be the case 12 months in so yeah. Now what’s happening is I guess, I’m starting to see some of the strategic objectives come through that we were trying to get as part of a strategic acquisition as well. So it took a bit longer for that to happen. But I can really see that it is starting to happen in the businesses starting to evolve and grow into what was intended.
Michael: Great. Look, we’ll come back to that. And we’ll talk a little bit about the reasons that he decided to sell the business but cybersecurity, I know that Rivium is a data analytics company with a sort of focus on cybersecurity and obviously Tesserent is very focused on cybersecurity. In fact, I think it’s the largest listed dedicated cyber security business in Australia. Is that right?
Rob: That’s correct. Now, yes.
Michael: So look, I have to declare a bit of an interest. So you and I do go back a little while I think I’ve been helping you one way or another for about nine years in terms of providing non exec input one way or another and obviously we helped arrange that sale last year. Now cybersecurity a pretty hot topic at the moment though, isn’t it? I mean, in the last few weeks alone, we’ve got you know, fin review every day is got cybersecurity type stories reporting breaches. I’m just reading a few headlines now from the fin review. cyber regulatory mishap exposes nation to attack. US accuses China, nationals of hacking the Australian defence sector. Russian spies are targeting organisations who are developing or trying to develop a vaccine for the Coronavirus. I mean, this is pretty heavy stuff, right?
Rob: It is heavy and look, it took quite a while for cybersecurity to actually become a major board agenda item. But these days, it’s the hottest topic on the board agenda. I think because you are seeing extremely large companies being impacted by some very, very serious breaches, we’ve only got to look at companies like toll and what happened to them across the logistics operations for almost a week. And that’s a huge impact on business and revenues, and also customer loss and dissatisfaction. So yes, it is a hot topic. And obviously the government’s very concerned with all of the initiatives that they’ve been announcing just over the last month or so. So, there is a heightened interest in it. And that is probably what I would say one of the fastest growing segments in the IT sector at the moment as well. So very,
Michael: look, I think the stock market agrees with you because this won’t have gone past you but Tesserent had an extremely good day on the market yesterday. Didn’t it? I think the shares went up by eight or nine cents.
Rob: yeah, yeah, probably a little bit more than that even okay. Yeah. And look, there were a number of reasons for that. It’s not just the market. I think Tesserent is an organisation and making some very smart decisions and announcing those to the market. The market responded quite as well.
Michael: look at the geopolitical level, right. You know, a lot of the audience that we go to is small business owners. At the geopolitical level, we read about people talking about bad actors. We’re not talking about Hugh Grant here are we? I mean, when we talk about a bad actor in sort of cyber security what’s, what’s going on?
Rob: Someone told me I looked like Hugh Grant once in a lift.
Michael: Yes without the posh English accent.
Rob: Yeah, I was lacking in certain aspects. I’m not a very good actor either. But no, you’re right. When we talk about bad actors, what we’re talking about is people who are stealing organization’s credentials, and then trying to pretend to be an authorised person on a network to then undertake some malicious activities, whether it be data, or still revenues, or things like that.
Michael: So stealing basically espionage. Yeah, exactly. I suppose we shouldn’t get personal here. But basically, we’re talking about China and Russia.
Rob: To a large extent, you’re seeing huge investments in that sort of activity. And so they’re quite sophisticated. You are also seeing a lot of Rogue individuals out there who are running their own little show and sometimes doing very well out of it, but eventually getting caught as well.
Michael: I saw last week Twitter was hacked, and they got into Bill Gates’s account, apparently Kim Kardashian or than what they were going to find their Elon musk that isn’t already out there. Barack Obama even and apparently, the FBI were very concerned at one point that Donald Trump’s account might have been hacked by a complete idiot. But apparently, it turns out that for as well, and his account hasn’t been hacked, so it still remains in charge. I mean, the nasty side of that is that they hacked the account pretended to be those people and started to, you know, do people into sending the money.
Rob: But what it also tells you is that a lot of people think that strong brands are a safe option. But even some of the strongest brands in the world have been hacked. Lucky’s got a look at Sony Corporation several years back. So people that do have to be mindful, I guess as to how much data of their own they want to share, and how much they want to make accessible to people online and everything as well. So it’s quite scary.
Michael: I love this quote from Jack Dorsey, the CEO of Twitter who said, he tweeted this afterwards, a tough day for us at Twitter, we feel terrible that this has happened. On a serious note, if you come down a bit, we’re inclined to think of small business owners that this stuff is all geopolitical. It’s big brands, it’s high level. But actually when I was doing the research, 43% of cyber-attacks are on small businesses and 64% of businesses have experienced these kinds of testing. You know, if you look about the areas for attack, we’ve got phishing, which is not a fishing rod, it’s fishing with emails, and we’ve all had these these kinds of emails that purport to be one thing, but actually turned out to be another. And that’s one of the most common things that we end up with. So to tell us a bit about phishing.
Rob: Yeah, phishing is more about Yeah, people pretending to be somebody else. And we’ve seen some amazing phishing activities undertaken some I can’t even talk about where people have posed to be an organisation with unusual domain names and things like that. And then people click on links and emails that go to this domain that looks like the domain, but it’s not a one letter missing or something like that. And then they enter their credentials to log into the site. They’re then captured by the phishing organisation or individual and, and then they use those details to log directly into the actual site itself and transfer funds from the site to overseas bank accounts or something like that. You can protect it quite easily through known bad links, or known bad domain names and all those sorts of things. But then you’ve also got the people creating domain names consistently, that have a very short life. And so they’re not on those bad domain name lists. So those domains then get through on emails, and then people click on those links and then get bought out. But what it really comes down to is training of people and making them more aware about what they’re doing sometimes, like, let’s just say they’re banking with ANZ and they get a malicious email that pretends to be am ANZ. Don’t click on the link, go to the website, type the domain in and then go and log into your account that way instead of pressing a link, just sort of behaviour can help protect you from 99% of the incidents that we actually see.
Michael: yeah, I did read somewhere that 95% of breaches are human error. I mean, the other one that I might just mention is ransomware. you know, I do know small business owners that have fallen foul of the ransomware had their data locked down, maybe you could talk a little bit about that.
Rob: Yeah, I’ve seen similar, it’s quite disastrous, and it is a lot of these smaller organisations, you don’t hear about it in the press, because the media don’t tend to get so excited about small, unknown brand names like they do the larger corporations that I’ve seen organised. It’s happened to one organisation four times, and they didn’t patch the issue that allowed it to happen. But fortunately, they were able to restore from backup for the first three times. But then the fourth time, the ransomware company actually got their backups as well. So then they eventually had to pay $60,000 to get that data back.
Michael: Its incredible. Look I mean, I gave a talk a couple of years back to about 2530 CEOs. And because it was in the paper, I asked them just to get a sort of temperature, has anyone experienced a ransomware incident in their business. So these are small business owners, you know, probably 5 to 50 mil and of the 24, three of them had one of them had not paid and lost the data, and the other two paid up and they got their data back. So I thought that was pretty significant, you know, three out of 24. I mean, apparently 77% of companies don’t have a cyber Incident Response Plan, yet 54% of companies have had an attack. So there’s quite a few companies out there that are thinking that if they’ve been done once, they probably won’t get done again.
Rob: by one organisation, but then there’s another one that will do the same. And look, the problem with it is it’s completely preventable. And that’s the sad thing about it, and smaller organisations probably are easier targets because they don’t have large IT departments. And quite often they don’t keep their infrastructure, fully patched and up to date, and if they kept it fully patched and up to date, then they’re closing all of the holes or gaps that hackers used to actually get in and access to the data. So if they did that alone, again, that would almost eliminate the potential of them being hacked. And then on the other side of it, we see many organisations that have no one responsible for cyber security, like you say, and Tesserents target is I guess, a lot of those companies because they’re trying to provide security as a service. So then an organisation who feels they don’t have the budget to fund headcount to deal with cyber security matters can outsource some of that in a more cost effective way to an organisation that provides the services that they need to keep them safe?
Michael: Yeah, well, look, let that be a warning to everyone listening. Apparently there’s a hacker attack every 39 seconds. So be warm. Look, we will put it in the show notes. But there is a small business cyber security guide on wwe.cyber.gov.au, which is actually quite good. I looked at the weekend, you know, by all means, go and visit that. But look, Rob, back to you. Let’s kind of go back a bit. We’ll talk about your more recent success towards the end. But let’s go back a bit in your background. So you know, were there any entrepreneurial tendencies emerging? Rob, when you grew up? Were you the guy that was going to be an entrepreneur right from day or? Did it come to you later?
Rob: Look, I was always quite a busy child busy doing things my parents call me scooter, which was indicative of me scooting around doing things all the time and keeping myself fully occupied on on doing different things. And it was quite funny. I come from a very strong public servant background, all of my family were in public servant based roles. So I was a bit of a black sheep. And I guess I did sort of show some exploratory entrepreneurial sort of activities in the early days, even whilst I was doing another job working at nighttime, I started a web dev company at one point, which was a didn’t work. But it was an online content directory of Tasmania, that was the state I was originally born in and whilst I secured a few customers, it didn’t really take off. I think it was a little bit before its time. So I moved on to other things.
Michael: So how did you get into tech? Like, you know, are you a nerd? Were you the original nerd? you Did you always have your head in a computer?
Rob: No, I Well, my parents would never buy me a computer. So I had to save up my own pocket money to buy that and I ended up buying a Amstrad computer notebook back in the early days for $3500 which ended with a significant amount of money back in those days.
Michael: Well the good they were grey, weren’t they the Amstrad? They were Yeah, green screen.
Rob: Correct. I still remember it but that getting it, that wasn’t really where I was originally headed. I mean, my home class in high school was the computer room. So that gave me a little bit of exposure to computers and helped me sort of define an interest in it. But I was always very good at Computer Aided drafting and woodwork and all those sorts of things wanted to eventually become an architect. So after grade 12, I decided to go work for a little while, have a bit of a break from school, and secured a role as a computer draughtsman, Junior draughtsman at an architect’s office who then whilst I was there, I started getting into CAD and so I picked up on that pretty quickly.
Michael: So Rob, just tell people what CAD means.
Rob: Well, Computer Aided drafting so my original role was using inked pens and a scalpel to scratch off any errors and things like that off the tracing paper.
Michael : You don’t look that old You don’t look old enough to be around them, I must admit.
Rob: yeah, yeah. And, and look, I got really got into the computer drafting side of things, a few of the other draftsman were really not into the whole tech thing and thought it was all really wrong. And then I guess just fighting the change. So I got into that. And I, I became one of the main people in the organisation who was doing all of the CAD work. So the architects would mark up drawings, and then I would do all the CAD work to make all the changes and draft them all up. And every year. The problem with that was it then skewed my thinking and pushed me more into technology direction than it did an architecture direction. So after I think it was about two years, I then decided to go back to university full time and do an applied computing to variable electronics.
Michael: Well, smart move. So how old were you then when you went and did the degree? 19 or 20? Okay, so you still pretty young, but you didn’t go straight to that? Yeah. So you’d had a couple of years working, basically.
Rob: Yeah, yeah, I often get distracted by things. So while I was at university, in my second year, I started to show a bit of an interest in student organisations and things like that. In my second year, I started the Computer Society, which didn’t exist on campus at that point. So basically, got a whole heap of nerds together.
Michael: You are in there, but you were kind of Chief nerd. I mean,
Rob: yeah. Yeah. So I kind of wasn’t I wasn’t. Yeah, but I did enjoy talking tech and everything. Yeah. That’s what nerds love talking about.
Michael: Look nerd, right used to be a derogatory kind of term. And but I remember Tom Peters in 2000, the management guru, he put in one of these books, the nerds have won. I think Bill Gates at the time became the richest bloke in the world. And I ain’t that the truth. Now with the, you know, the top five companies in the world are all giant technology businesses that didn’t exist that years ago.
Rob: Yeah. I mean, the nerds are the cool kids on the block at the moment. Like I said, I mean, client sites and things like that. They’re all very highly paid. And they’re all Schmick dressed, and everything as well. So so that things have really changed in terms of what a nerd is. And it’s the new call, I guess. Yeah, yeah. So yeah, anyway, so I started that Computer Society, and then that went off running itself. And so I then decided to depart that then I became president of the Student Union. So went through the whole election process and then became president and decided to continue my university degree part time. And one a second term. So I did two years as president going through two quite vicious elections, student elections can be quite vicious. They’re pretty, pretty much training grounds for people who budding politicians really. And so you then start to get this, this caucusing going on and the labours and the liberals and really fighting. And so sometimes it could be quite vicious. And so going through that process and winning those elections, second one, I thought I was well and truly defeated, became out on top of one that made me quite a resilient and strong person going through a lot of hard situations, but strong in the sense also that it gave me an opportunity to get a lot of experience in real life, things that you don’t get to experience, even in your own jobs today, or even while you’re having your education. There are things like releasing press releases, being you know, articles in newspapers, doing radio interviews, doing television interviews, and all those sorts of things. And even participating on university boards and getting exposure to, I guess, governance and those sorts of things that are used to manage organisations. So quite an exciting time. And I learned a lot from that they’ve put a good foundation under me to, to then go off and do some of the things I’ve done more recently.
Michael: So you eventually, you know, finished up there, you got your computer science degree, you know, you really were the beginning of this computer. Wave really, weren’t you? I mean, that was what the mid 90s or the early 90s.
Rob: Yeah, so look, education, a big focus on computing education in universities in the early to mid 90s, which then pretty much translated into a larger skilled workforce being available to accelerate what we call the web era as the internet, which kind of really boomed in sort of around the 98 to 2000 sort of timeframe. But there was still a lot going on pre 98, where it was finding its way and HTML was slowly starting to develop into something and kept on evolving into something better and better. And into what we see today, I guess
Michael: your jobs Rob just quickly right, when you got into work. You had some pretty early success, didn’t you?
Rob: It was pretty hard. After finishing the university degree to decide what to do in Tasmania, the jobs are a little bit more limited. And the competition for them is quite strong as well. So I ended up becoming the examinations officer at the university. So running and coordinating examinations as part of that I was heavily involved in manipulating the software used to schedule the examinations.
Michael: When you say manipulating you mean in a good way. Rob, not a bad.
Rob: Oh, no, definitely not. No. Although I did have some very, very valuable examination papers in my storage room with big law. on it and everything that every student would have been so keen to get access to that room. So yeah, modifying the code and everything to get smarter with scheduling the examinations so that there were no clashes, there was no AI or machine learning back in those days, it was all just pure thinking and writing out your own algorithms and all those sorts of things. And by year three, I managed to get to a point where examinations were being run without a single clash for a single student. So that was a good outcome. But after that, I guess obviously, the lacklustre sort of dropped off a bit because there was nothing to fight for anymore, it was just a normal day in the office kind of thing was nothing you need to play around with. And so therefore, nothing exciting. And when that sort of thing happens, it just becomes laborious, and you just quite happy to move on to something new and exciting again. So I worked there for a while. And then I needed to get out of the private sector, I needed to get into the public sector. And so I secured a role at University of Sydney, I think it was around 97, to deploy the new intranet system. Internet was a big word back in those days, and it just started to evolve where you’re developing internet services within an organisation. So students could access timetables online and exam results and, and all those sorts of things. So so I was a big thing. And I worked on that and successfully delivered the end result of that over a two year period. And after that, it was my time, it was time to go out hunting, to try and get into the private sector. And it didn’t take me long to actually secure a role. And so I secured a role as technical director with a company called the internet reach group, there was about 25-30 staff in that organisation, and they were pretty much in the forefront of developing websites for organisations, which these days doesn’t sound very sophisticated. They’ve back in those days, it was it was the new thing. And people were paying huge amounts of money to build their web presence and everything online. So there was some big, big results to be achieved there. So I took up that role, what I didn’t realise is that they were just setting up the company to sell to a company called Liberty one. Right. So this was my foray into working for publicly listed entities, which you could probably regarding small caps Liberty one had, I think they raised that it was either 100 million or 200 million to go out and acquire internet companies and everything. So that acquired quite a few other companies, a lot of loss leaders, because they were just trying to grab internet, real estate, I guess you could say. So they even bought a company called ubid, which was a competitor to eBay looks like eBay one up, they ended up being wound down. But they also acquired another company called Zuko, which was probably one of the largest and most reputable web dev companies in Australia, up there with spike networks. So they acquired that regional owners exited quite quickly from both of those organisations, which was quite surprising. But back in those days, I guess they didn’t put those handcuffs on original owners when they sold businesses. So it was
Michael: part of the tech bubble in leading up to 2000. Is it?
Rob: Yeah, absolutely. When they acquired internet reach group, I was then put in as General Manager. So I was basically running the business. And then they acquired Zivo. And eventually, they wanted to merge the two entities together. So I ended up being put in as GM of the group, the Sydney branch of Zivo. from memory we had about 110 120 staff is a combined organisation
Michael: Was that your first management role where you weren’t being required to do technical stuff.
Rob: Yeah, you could say so yeah,
Michael: yeah. And how did you transition to that being in charge of people and, you know, all that kind of troubleshooting stuff?
Rob: Yeah, I always said I wanted to fast track my way into the corporate sector. But that was pretty fast. I’d never managed 120 people before, I’d never managed the sales team of 12 salespeople, so it was a lot of learning very quickly. And, look, I thoroughly enjoyed it. But sometimes I felt like I was over my head. But I think that’s where you’ve just got to be a strong troubleshooter. And you just got to take on the challenges and try and identify where you feel you’re falling short so that you can then address those issues and try and improve where you can so worked very well and Zivo was a very, very profitable branch of the organisation. The Australian organisation was bringing in about 35 million I think, a lot in revenues and quite profitable. Sadly, though, I think Liberty one’s acquisition spree went a little bit too fast and too lopsided on the acquisition of loss making businesses in the hope that they will turn a profit because they were going to be extremely valuable assets. And so I think, in some respects, Liberty one was probably a little bit before it’s time. That also I think, probably you could argue that there was a little bit of mismanagement going on there as well.
Michael: They went broke. Rob, right, ultimately, yeah.
Rob: So sadly, they went into administration just after 2000 I could see what was going on there because all of a sudden, they started telling all businesses to downsize, shed staff and all of that. So there was obviously issues and it was quite sad that when you’re running a profitable part of a large business, you have to downsize as well. It’s quite a sad position to be in. And it ended up that myself and all of my line managers all resigned on the same day. And in doing so we had to forego millions of dollars in shares, which are options, right? That would come to maturity 12 months later, but what ended up happening after that? About six months later, the company went into administration.
Michael: Okay, so the shares would have been worth anything anyway. So you jumped ship, you can see the writing on the wall. You guys jumped ship, right?
Rob: Yeah, yeah. And, look, I think management, we’re making all of the wrong calls, and so did they as well. So, you know, we’ll nicked off. And
Michael: yeah, well, I mean, look, it’s a free market, isn’t it? I mean, you know, you can vote with your feet, I suppose. Oh, yeah,
Rob: that’s right. Yeah, yeah. And so at that time, lots of other turmoil in my life. So I broke up with my partner up there. So without her, and without a current role in the business and everything I decided I’d get out of Sydney and move down to Melbourne. Okay, got down here, rented a house and coffin south, big house, messy, big office in it, and then got to work on setting up a business really. And at that point, I didn’t really have a good grip on what it was I was going to do. But there were lots of ideas pinned up around the wall everywhere of all of my thinking and everything. And then I slowly sort of honed into something which I thought was going to go really well. And that was in the days where mobile devices were really starting to come to the forefront of the corporate world, I decided that there’d be a good opportunity to, to start an IT company that focused not only on reselling, and distribution of mobile devices and solutions, but also writing mobile software, and all those sorts of things as well. This is back in 2000, or thereabout? Probably 2001.
Michael: So Rob, this is your business, right? This is your move into your business the first time really you run your own show?
Rob: Yep. Yeah. And look, the funny thing was, I didn’t really have much of a network of customers or much of a network at all, obviously, because I’d been an employee of an organisation. So you’re not typically in that networking frame of mind when you’re just working for one organisation compared to where you’re an organisation selling to many, many customers. So had to all be built from scratch. And obviously, I never lived in Melbourne before either. So people I knew was very limited. I started from a very blank slate, I guess you could say, you know, it was proven quite difficult to even find gigs to write mobile application software at the time and even sell devices because the telcos had it all wrapped up in their providing the phones with the contracts, and all those sorts of things. So it turned out the idea didn’t really turn out that well.
Michael: It was too early Rob, was it you think for that way too early,
Rob: give it another five years, and you will probably be positioned very well, these days as an organisation who would be probably a thought leader in your space. Yeah, way too early.
Michael: That’s an interesting theme, isn’t it? That timing, right. So you know, if you get your timing right, for whatever reason, research dumb luck. If you get your timing off, whether you’re too late, and you’ve missed the boat, or you’re too early, you know, it can be devastating, really. And I mean, you can’t fund losses for five years. Well, let’s rock it and catch up with your idea.
Rob: Yeah, yeah, I think the smartest way to move into something quite cutting edge is to have some sort of foundation revenue stream coming in to support your business whilst you’re actually venturing into something that’s probably a little bit more unknown. And that way, you can at least step back and fall back on to where you can make traditional revenue. This is what we did. I had a staff member at the time who I bought into the business to assist them, we started getting into a little bit of web development and industry I knew reasonably well and started writing some applications for companies like power core, and those sorts of things managed to sort of develop a revenue stream.
Michael: you adapted really you had to pivot. That’s not working. What can we do?
Rob: Yeah, yeah. And look, the safest thing for me to do was to move back into what I was doing while I was in Sydney. Yeah, and that is developing web applications and all those sorts of things. And that helps bring in the revenue. But then I wasn’t really satisfied with that. So I decided to start branching out into a whole vendor land, basically, because I’d never been there before. And I always found it quite interesting reading about all these infrastructure vendors, whether it be networking companies, or whether it be server companies or whatever, like some Microsystems and that kind of thing. And so I started getting into hardware sales, nothing new or nothing exciting about that. Rob, just to help anyone listening to this, who’s not techy.
Michael: Are we talking about hardware sales, this is hardware technology.
Rob: Yeah, data centre, equipment, networking, devices, those
Michael: so you’re buying off some vendors, and you’re distributing.
Rob: Yeah, pretty much. Yeah. Yeah. And we kicked some really big goals, right. Like one year we won a, an award with Lenovo where we were one of the highest resellers of Lenovo desktops in Australia and they sent us over to Beijing to go and pay go to More of the automated warehouse and distribution centres and manufacturing centres, they head over there, which was all quite interesting. So continue to just explore all of that. And so the business then started to get a bit of a fracture in it, I guess you could say, because we were still doing the web development, the first staff member that came on board are issued some shares to the first staff member as a as a method of retention, although that sort of retention is probably really good with what you’re about to hear, but it seemed like a good thing at the time to retain staff, but the business started to get a bit of a fracture about it, because continued to focus on web development, but also branching off into managing vendor relationships and selling hardware based products, to customers and also software. Right. So with that fracture, the focus was really not sufficient in either side of the business for each to succeed, right, because you only do so much when it comes to selling, selling hardware is not a resource intensive game, you don’t need hundreds of people to do that. Whereas with software development, headcount is very expensive. Yeah, if you’re not getting the working, then you start to lose money. And that can happen very, very quickly.
Michael: So Rob, are you saying that those two streams didn’t really sit together? You know, that they were extensively different businesses that were together by necessity, really, rather than by design?
Rob: They were kind of Yeah, by necessity. But also, when you go into business with another person.
Michael: This point, you had a business partner, and you were beginning to see the world differently? I think, is that fair?
Rob: Yeah, yeah, absolutely. The two business partners wanted to go in two different directions. Yeah, yeah. And couldn’t really reach an agreement that one direction was a better idea than the other. So it was almost like a style mate situation that just continued on and on and on. Yeah.
Michael: How long did this go for, this particular venture?
Rob: Look I think, 10 years.
Michael: It’s not like you were there for two or three years. And, you know, after six months, this is something you gave a decade of your life to? Absolutely, yeah. And weren’t getting a lot of success? No, no. And any real. When did you and I bump into each other? Was it eight years in or something? Was it to that situation.
Rob: I mean, yeah, that’s seven years, I’d say seven or eight year.
because you got me into and I had a look at the business and sat with you and your colleague and your partner. And for me, it looked like a sort of highly stressful, poorly paid job at that point, you know, you you’d been at it a long time. It wasn’t delivering the consistent results and the margins that you needed. Hardware, in particular, at that point was extremely flat, and not very profitable. margins were coming down all over the place in hardware. I remember at that time, Rob, I was representing on the sell side mandate $120 million revenue hardware business that was projecting to make about million and a half dollars, we took about one and a half 1% profit, and one of the big listed plays at the time was only making 1%. They just happened to be turning over a billion. That did not look like a positive place to be really.
Rob: No, no, yeah. And that’s the hard part. And thats what happened with the hardware market, I guess, as well, which made things even more complicated. What you saw is the up and coming Infrastructure as a Service really start to cannibalise the traditional hardware business. So Amazon Web Services in particular, they were some of the big players. And look, there were even some other small local players who were offering infrastructure as a service or managed services and everything that either way, if that’s what you found was there was still the same number of hardware resellers out there. The number of deals had diminished. And so there were, there was so much more competition, and it was a vicious competition.
Michael: So Rob, when we’re talking about hardware, really, at this point, we’re talking about large servers on site. So it was the beginning of that move away from those large on site servers, correct. companies, they started looking at cloud as a, as a genuine option here.
Rob: Yeah, absolutely. And they were big deals. I mean, they serve as they’re just not, they’re not just computers. Now, like they’re three and $400,000 each, I mean, some of them are 800. And so you score a good deal here and there and make some decent margin out of it if the situation was right, and the transaction was right over time, that became harder to find that type of profitable transaction.
Michael: Yeah look, I saw it with you. I witnessed over 12 months and erosion. In those deals. Every time we did a forecast, we fell off it one way or another taught us a bit about the process and the thinking around needing to call time on that thing, you know, which is a painful process
Rob: It was communicated very clearly in the press for a good 18 months or so that a lot of the thought leaders in the in the IT resale industry, we’re basically saying that if those don’t adapt and change to more of a managed services style, business, or software as a service style of business then then they will eventually fail. It’s only a matter of time. And look, I’ve seen that over and over again with other companies. Look, I put a lot of thought into it. And we also had some software vendors on board as well. And when you look at the whole market, and where capabilities still required a week and position yourself as a needed provider, there still needs to be software skills for sophisticated enterprise products. And so they will always be seeking that when they buy them, whether they put them on an infrastructure as a service environment, or whether they put it on their own infrastructure. So the decision was made, what I want to do was moving that direction. And so it was at that point, I think that as business partners a decision had to be made to, to separate and go our own ways. Sometimes things don’t work out easily in those situations, and it’s difficult to split something up and take your part your way and your other business partner take their part their way. So it ended up having to be a situation of winding down that business.
Michael: Yeah, Robert, I think it’s fair to say because I you know, that the business that I witnessed at that point was insolvent. I mean, so my only input I remember at the time was go and seek professional input from a liquidator to do it properly. And you I think you did that. And I think you did that. Well, you got good professional input on how do you conduct yourself in those circumstances.
Rob: Yeah, and look, for a business owner, it’s a very, very stressful situation. And it’s not something that you would intend to happen. And so you feel you feel very bad about everybody involved, the staff, as a supplier are impacted by the situation. There’s all of that. And then there’s also what you take on board yourself as an individual, feeling a little bit like a failure, and all of that. And so because things couldn’t be resolved adequately between the two business partners and everything, that’s the direction I went, it was just one of those situations where you had to just see the writing on the wall and make those decisions. Yes, you can’t continue to trade in a situation like that. And say, Yes, get the right advice and, and deal with the situation in the correct fashion. And I think when you do that, you walk away from it feeling as though you’ve done the best you can. And after that happened, I kept Matina and I executed the strategies that I really wanted to execute, and started up a new business called Rivium. The key focus was that was to be a pure specialist in machine data analytics was thoroughly cybersecurity To start with, because it was all about machine data analytics. But what evolved in that is we I picked up a technology called Splunk, great technology that’s gone, leaps and bounds in the market as the leader in so many different areas of machine data analytics, and whether applied to different use cases.
Michael : So Rob, for the benefit of listeners, right? When we’re talking about Splunk. This is this is sophisticated data, analytic software. So really the big end of town largely, you know, sort of mid to large organisations. I mean, I always wondered why they called it Splunk. I mean, you certainly got to be careful how you say that you wouldn’t want to be saved in a less budget. So you basically, because I was around this time, and I remember it, well, you basically double down and narrow and became really good in a niche. And you wrote a business plan, you sent it to me Rob, because that’s the first thing I said is you had some ideas, I said, do a plan. And you wrote a fantastic business plan. I remember reading again, that is a winner, because you were clear. And I really think that Rivium, um, got born out of the 14 years or 12 years, wherever it was an agony in the previous business. You’ve lived every day with what wasn’t working. And now all of a sudden, you kind of go on Okay, this is this is where to go. And this is what to do. That was impressive to me, not just for the fact that you show resilience, but it’s actually getting back on the right horse. Right is that was the clever bit for me.
Rob: Yeah, yeah. And it ended up being that way. And Splunk was a and still is an amazing vendor, with an amazing portfolio of technologies which are sought after by many organisations, what was good about it was the skill shortage out there in the marketplace. And that’s what helped Rivium become quite successful because we put the blinkers on, I created a great team of consultants who even to this day continue to work for me under Tesserent, which I guess provides a little bit of Tesserent for them enjoying the style of management that I throw out to them that it was that that made it a success. And a lot of people said I was stupid, putting all of my eggs in one basket. And that happened about first year in so I went and explored other technologies and things like that to see what else I should be adding to our portfolio to help us grow quicker. But after researching at all, and looking at the risks of these technologies, would they be successful? Will they not? What does the competition look like? How do they work with partners, I came back to the original business plan and just continue to execute that and didn’t bother adding any additional vendors because it would dilute focus. So yeah, just stuck to the guns and continued working. And what happened was something that I could never believe would happen. And that was lodging a tax return for $550,000. Yeah, in one year. And that was just an amazing feeling. Because going through the hardship of those many years, you don’t really know whether it is possible to achieve that kind of thing. And so it was quite a victory to actually achieve that
Michael: just given us some context in terms of what was different. I mean, you were clearer from a leadership point of view, no doubt, you’ve written a great plan, you hired me, we started having board meetings right off the bat straightaway, there was some good governance, your numbers were great. So you’ve taken a lot of lessons on not knowing your numbers, and you put them together in a pretty, a pretty good way to the point where we really was sold, you know, telling the story about the numbers.
Rob: Yeah. And that’s one thing that you taught me, and it’s a really important lesson. Number one is to have the tidiest books you can ever have, and then the tidiest and in most informative reporting, that you can have, so that you understand your business and you know what’s going on. And so executing on that where we did have regular monthly board packs, I had an amazing bookkeeper, she was exceptional. She’s now started up her own business and offering accounting services similar to what she provides us. And she continues to provide them to me today. So great financial reporting, and very, very tidy. And so when we went through due diligence, pre-acquisition, they basically waived the need for an order because the information was so clear, concise, the package delivered to them had absolutely everything they needed in terms of contracts with customers evidence of transactions with customers had even detailed employment contracts with signatures from staff. And surprisingly, they said a lot of organisations are unable to provide a lot of that information.
Michael: yes, tell me about it. It was better than that. Because BDO the accounting firm that Tesserent used. They are the ones rang up Tesserent, Look, we don’t need to do an audit on this. And we were gonna have to pay $15,000 as part of the bloody audit fee, if you remember.
Rob: we were to pay 15,000. But I think the quote came in at 50.
Michael: But that was great that they didn’t need that. But just going back to that mindset, you were doing a lot of things as a very small business in the first year or two that a lot of people would say was over the top. But in fact, you executed on that plan. And that business grew and its growth was really only limited by your ability to get the right people, wasn’t it that started the debate at the board meeting about the strategy. What is the strategy? What are our constraints? And is there another way than just this organic growth?
Rob: Absolutely, then, look, another thing that came out that I really think is important for anyone to focus on. And a lot of my colleagues are also running businesses out there in the IT industry, they all seem to focus on revenue growth as being a key factor that they need to pursue. And the year before acquisition, I decided that optimization was better than growth. And so spending the last two years in the business of not focusing on growing revenue, because revenue was pretty stable, that only grew slightly from the second last year to the last year. But what happened was through that optimization, profits nearly tripled. So less effort, same amount of customers, same amount of interaction with customers, but more profit, sometimes revenue growth is not what you should be hunting for this actually optimization. And that was a big lesson that I learned because I always focused on revenue. And obviously, in doing that it’s EBITDA, Is where valuations come from, not your revenue. So that actually proved to reach an acquisition valuation. That was what I was seeking to achieve as well, I guess.
Michael: just talking about, I remember this, because I was there is that, you know, but a year before, you eventually sold Tesserent, and the debate that we were having as a board, and we were wrestling with was we’ve got some decent revenues, we’ve got some great earnings. And we’ve got a couple of constraints. One of the constraints was the trained and technical capabilities to help introduce and deliver Splunk to customers. And the other was the ability to develop sales expertise outside of you Rob, right. So you were effectively the battering ram on sales and, and we’ve had a couple of abortive attempts to bring people on and that hadn’t worked. The need to bring on staff at that point was proven quite expensive. utilisation was always a challenge. You needed to train them for maybe four or five or six months or even longer. And so we began to have the debate, okay, if we’re going to continue to grow organically, we’re going to have to wipe our profits and probably go into debt while we continue to try and expand the business organically or is there another way are other people out there with those assets that we could leverage and utilise. And it was a very useful debate, we were thinking about selling. And that work, the sale came out of the constraints and the challenges that we were having. And we began to examine the option of selecting people that might have won a consulting pool that we could coach and train and maybe improve the utilisation for that was one of their sort of drivers or that was on the wish list. And the other was who’s got an existing sales capability 40, 50, 20, 30 sales people, that could also help. Now, that was the debate that was going on Rob, and then I think it was you that said, okay, might go and see who ticks those boxes. And we run that as a plan B, if you remember for a while.
Rob: yeah, so the business had been optimised. And now it was time to look at how to grow it because there was running at an optimum level. And then there were different options that we looked at, one was trying to get some capital to grow, which is really still organic growth, you just got money to go and get some new stuff. And then the other is to go to market and see if there are some strategic acquisition partners that can offer some key criteria that are going to accelerate that growth, but also low risk. So a company that’s got an existing customer base that could potentially be leveraged a company that’s got a good consulting team that could potentially be cross skilled, and a company that’s got a good solid sales team that’s well networked with existing relationships that could potentially accelerate sales as well. So there were the key criteria. And during that journey, lots of interesting discussions with lots of interested parties, some not so interesting this year, there are some very unfavourable offers put on the table that having considered them, they, they just didn’t seem to work in the works so aligned to the strategy.
Michael: So why Tesserent Rob.
Rob: So Tesserent had a lot of those characteristics that we were seeking. A lot of them, they didn’t actually have pre existing, but their roadmap had those capabilities in the roadmap, because not only did they acquire us, they had other acquisition targets and aspirations and everything. And it was it was those future aspirations that would be eventually providing those additional capabilities. And so that’s where we are today. From a personal point of view, there was a de risk element to this as well wasn’t that there was a Is it time to take some money off the table, you’d been going at this a long time, if you added up not use your time at Rivium. But your previous time, and was it the time to you know, take some money off the table after such a long and lengthy and sometimes gruesome battle, you need to take a break from it a bit as well, look, I could have kept on going the way we were and earning very good incomes, but there was a good opportunity in front of me to take a bit of a step back and work for the man so to speak. And, and also cash in and get my life back on track financially, whilst I didn’t really have any debts or anything. Personally, I also didn’t have a house. So being able to cash in owning a house with cash is a great outcome. Because a lot of people, it took me 13 years to get there. Yeah, you know, people don’t own a house for 25,30 years. So yeah, I took a bit of a tough way of getting there. I think I’m now ahead a bit as well.
Michael: one of the reasons why I fully endorse that transaction was that you were able to take some money off the table, but you’re also able to trade some unlisted stock in Rivium, with some listed stock in Tesserent, right, which gave you an opportunity if we bought the story. And you know, the story of expansion and growth, and all the rest of it could, you know, allow you to do quite well, and that seems to be coming to pass. Right? So you almost have the penny and the bun at that point, at least on a 50-50 basis. And it’s given you a lot more to play for them, I think.
Rob: Yeah, absolutely. Yeah. It’s worked out very well, just in the recent weeks, the share price has improved considerably, really, because of the excellent strategic execution of the of the directors and the board. They’re doing an amazing job. And I guess I’m getting rewarded for being a part of that.
Michael: Yeah, yeah. So that’s the answer, really, to the question, really, there’s a question I get asked a lot, which is why, you know, why Sell a Business if it’s going so well, well, you’ve just explained why. And, you know, in a way, you’re, you’re now invested in a liquid stock that you can sell at any point, Rob, thanks for sharing that story. And, you know, thanks for sharing the year resilience, really the fact that you know, you had quite a big failure before you had a success. So, so Rob, before we let you go, we’re going to end every podcast with this little segment where we’re going to ask you a few questions. So if you got any, any mentors or major influences that you can share with us? Look, I probably can’t really name an individual A lot of people ask me if I’ve got a favourite actor and I can’t answer that question. look, I encounter a lot of quite wise people throughout your life, and they all have an influence in contribution. There are some senior executives that I’ve seen perform extremely well. And they would be the CEOs of Splunk. And how they operate as people. Very, very impressive to turn to watch their execution and how they operate. I couldn’t call out one individual. Okay. There’s lots of people that influence how you think and just absorb the qualities that you feel are going to be beneficial, I guess.
Michael: What about your best book?
Rob: That’s a tough one. But one that I’ve always sort of liked is Crossing the Chasm. And it’s an interesting, I don’t know if you’ve heard of the book, but it’s, it’s an interesting book on how technology stacks offers a cutting edge kind of piece of technology and then slowly crosses that chasm into mainstream adoption. It’s all about understanding when to jump in. Yeah, interesting.
Michael: Yeah, yeah. And what about your best film?
Rob: The Bourne Ultimatum series, they’re all they’re quite good. Always. I like a bit of action and a bit of fun. Yeah.
Michael: Yes. Good. Okay. I know just lastly, your favourite place in the world. The beach. The beach. Now you’ve got a holiday home. So you like it down there, don’t you.
Rob: I love it down there. If I were to pick out one of my favourite places to be on the beach, it will be a place called innocent point in Tasmania. It’s an amazing tranquil place.
Michael: Do you still think of Tasmania as home?
Rob: No, I don’t these days. I think Melbourne’s home.
Michael: Okay. Well, look, Rob congratulations on your success so far. Particularly with yourself a Tesserent but much more to come from you. I have no doubt. Remember me, won’t you when you’re rich and famous? Well, in fact, after the last few days, you probably already rich but certainly remember when you famous and thanks. A million for turning up to date. Probably. Thanks for having me, Michael . Well, have you enjoyed that conversation with Rob silver as much as I did? Certainly, you can see that Rob didn’t have it all his own way. That’s for sure. If you did enjoy today’s podcast, be sure to subscribe and tell your friends and colleagues. Finally, a big shout out to our sponsors Oasis partners, corporate advisors, with a practical bias. If you want some good input from our Oasis partners, you can go to Oasis partners.com.au. If you want to know any more about Tesserent or Rivium, the Tesserent ticker is TNT that’s not a recommendation to buy some shares. Remember, shares go down as well as up so until next time, take care.