#38 Building Australia’s first unicorn – David Shein, Partner OIF Ventures (s02ep14)

DISCUSSED IN THIS EPISODE

• How taking a risk at the age of 26 and starting his own company shaped his future.
• Making sure that the things that he hated from his first job in Australia were not going to be repeated in his own company.
• The lessons learnt from having a not-so-good boss in first job shaped the way he manages his staff in his business.
• His 3 rules for happiness in life. You need something to do, someone to love and something to look forward to.

RESOURCES

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Transcript from the interview

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SPEAKERS

Graeme Cowan, David Shein

Graeme Cowan 0:22 

It’s a great pleasure to welcome David Shein to The Caring CEO. Welcome, David.

David Shein 1:10 

Hi, how are you? Graeme, thanks so much for having me today.

Graeme Cowan 1:14 

My pleasure. What does care in the workplace mean to you?

David Shein 1:20 

So, I think, Graeme, I think it’s– Yeah, I was saying, you only know how good your supplier is when the shit hits the fan. And I think it would be the same in the workplace. It’s– it’s when things aren’t going well. What are the processes in place in an organization to really support people, when the shit hits the fan for that person, either when it’s work related, or when it may be outside of that and work environment, and it’s, it’s making sure that that you genuinely are there for the people in your organization to support them?

Graeme Cowan 1:59 

What was it like coming to Australia as a new immigrant?

David Shein 2:05 

I am especially having returned from overseas recently. More so now than ever, I always– there’s two things that always come to mind when I, when I land in Australia. The first thing is the song they still call Australia home. And the second, which may show my age I can’t remember what year it was blown. Never forget when Pakistan won the World Cup in– at the Melbourne Cricket Ground and they got on, got on the ground, literally on their knees, hands and knees, face and neck and kissed the ground. I always feel, I always want to kiss the ground when I landed, returned to Australia because I really do believe this is the most unbelievable country and I’m very fortunate to live in this country, as I think we all are.

Graeme Cowan 2:54 

I previously interviewed Pat Grier, who was the CEO of Ramsey Healthcare, I don’t know if you’ve met Pat. But he arrived in Australia with, you know, his wife and three children and, and five suitcases. And, you know, he then built his life, and you built your life in a remarkable way. Would you mind just letting our listeners know about what happened in the first couple of years you’re in Australia?

David Shein 3:25 

So, I just came from South Africa. I’m a chartered accountant by profession, I work for Price Waterhouse in South Africa. It was Price Waterhouse, PWC in those days, they hadn’t merged yet. And I was actually originally coming on a transfer with Price Waterhouse to Australia and then got a job. Before I arrived as the national Sales Manager of a, of a computer software company and I thought how lucky I am as an article clock in South Africa, and landing in this new country and going to be national Sales Manager and I didn’t realize that titles are actually meaningless if what you have to sell is not going to give you an opportunity to achieve your potential. And it probably turned out to be the luckiest break in my life. Because I think I learned most of the things about management from that first job, I was paid poorly. I had absolutely no job satisfaction. And I had no input, it was almost like my boss was, ‘leave your brain at the front door and you can pick it up on the way home.’ And I was lucky enough to be earning $2,000 a month because the opportunity cost was that low that when I thought about starting my own company, I thought how much do I have to sell just to be back to where I was in the company where I had the job? And it wasn’t that much and yeah, if I was on a market-related salary, I probably would never, ever have taken the risk. I was a new migrant; I had a wife with a young child. And as I was telling the story, my mother, mother-in-law pointed at me and said, you gotta get yourself a job like any normal South African? Two years later, she did say, why don’t you give me any shares? But I think that was my first couple of years was one is having a job where I was extremely unhappy. And it wasn’t because it was not my own company, because when I worked at Price Waterhouse, I love my job. I love, I love getting out of bed in the morning and going to work. I was, I was engaged, I had a huge amount of respect for my boss. And when I took that job in Australia, I felt completely the opposite. And it was, it was a good lesson for me in terms of my own management staff was I’d never hired a person in my life, but I knew, I knew what I didn’t like. And if I were ever to hire someone, in my own business, I would make sure that they loved coming to work every day, that I– that I paid them market-related salaries, and I listened to their valuable ideas.

Graeme Cowan 6:12 

Yeah, and starting off, you know, is always a risk and your mother-in-law saw that risk. But what do you think were the critical ingredients in those first couple of years to really setting up platform for the future?

David Shein 6:27 

Yeah, I know, it sounds crazy. But I was 26 when I started my company. And I think being young and not even stupid as lots and lots of benefits. I think, yeah, I mean, venture capital today. And if somebody came with my business plan, and pitched the idea to me, I would have, I would have probably told them, giving them the same advice that my mother-in-law gave me. I think, I think being as I say, young and naive, I was fearless. And I was willing to take a risk. But I do believe as I say, and I was lucky enough, I did it with my endorsement, we first arrived as new migrants. So, I knew that, that my wife and my son always had a roof over their head, and that there was going to be food on the table. And that, yes, if I take that out the risk that I was willing to take, I thought was a pretty low risk at the time, I was offered a job by one of my customers Gary Betsworth, he offered me a job for $4,000 a month, which was double what I was earning. And I said to Gary, the only reason I’m not taking the job is I’ve always wanted to try something on my own. And if it doesn’t work out, I won’t be too proud to come back and see you. And I hope you won’t be too proud to give me the job. And fortunately, I never had to go and see Gary. But that also, I think, reduce my risk knowing that I had a bit of a safety blanket name that if it didn’t work out, I would go back to Gary and say I’d love to come and join logic institutions.

Graeme Cowan 8:02 

When did you decide to hire a first employee? How long after the start?

David Shein 8:07 

It was started in June ’87. Stock market crash in October ’87. And by the way, it was a very good time to start a company. And I think it’s advice that I’d give any– anyone looking to start a company, today’s market where, you know, the stock markets have pretty much crashed, similar to .com or 1987. That I think my– the advantage that I had was that unbelievably low overheads with our competitors had pretty high overheads and never made the change that they needed to, to change their business to meet the changes in financial circumstances of the economy. And so the first person I hired was a technical guy, I’m not a, as I said, I’m an accountant by profession. I think in any organization, you need three kinds of people, you need sales people, you need admin people, and you need technical people. That’s not just in a technical company, which I was in. If you’re running a restaurant, you need– you need someone in the kitchen is the technical person or she’s a technical person, the chef, and then you have the front of the house people who are serving and managing customer expectations. The same if you’re working in for a newspaper, the technical people, your journalist, so in my business, it was a very technical industry. It was networking and communications. The right at the outset of, of, of that era. And I needed somebody to complement myself and admin skills. I could do the books if I had to. And I thought I was a pretty decent salesperson. So, the first person I ever hired was a technical person that govern the NAV of making sure which was six months after I started. 

Graeme Cowan 9:59 

Right. Right. And you had enough cash flow then to hire him, or do you have to borrow money to–? 

David Shein 10:06 

I– luckily enough, being a distributor, I, I didn’t create my own IP, I was selling someone else’s IP, or we’ll say, and money might embarrass the sellers are riding the coattails of successful companies. And so as long as I could sell a product that I was buying and collecting the money faster than I needed to pay for it, I was cashflow positive. But I did say to Nathan, as a startup, there’s risks involved, and he was willing to take the risk and I think fortunate worked out really, really well for both of us. 

Graeme Cowan 10:49 

And Comtech, which you found it to be incredibly successful, you know grew from just a personal one, up until around about 1400 people is that, is that right?

David Shein 11:00 

That’s correct. It was good. Why bigger after I left, but at the time I left, and there were 1400 people. We had offices of all the states of Australia as well as in New Zealand as well. So–

Graeme Cowan 11:14 

And how did you go about creating the right culture in the organization? What were the real fundamentals you tried to embed right from the start? 

David Shein 11:24 

So, the culture, the culture was, I think the most important thing about cultures within to city. As it’s actually doing what you say, yeah, there’s nothing worse than, you know, I’ve never ever heard a CEO say, our number one asset is our furniture and fittings and number twos, computer equipment. Number three is motor vehicles. And number four of our people. Yeah, it’s– I think from the day I started, I really wanted to build a culture where, where we were absolutely renowned for customer success and customer satisfaction. And, and, and when I did hire people, I always wanted to make sure that the things I hated about that first job I had in Australia, were not going to be repeated in my own company. And if you say you’re going to genuinely take care of your customers and your staff, you really have to because I think there’s, there’s– the fastest way for any CEO to news credibility is by not walking the talk that yeah, I know, lots of startups today, lots of companies today, I think often think that culture may be, yeah, that you do yoga twice a week at work, or that bring them assuring or you have beer on tap, those are all value adds. Those are all nasty heads. The key thing that counts is how you– is do your, do your words, your actions match your words.

Graeme Cowan 12:54 

Yeah, well, you know, walking, the talk just counts for everything, doesn’t it? You know, people gonna have policies and procedures, but it’s what people actually do that makes a difference. And, you know, I was formerly involved in recruitment and the headhunter and so often you go into an organization that had the values up on the wall, but then you have someone from that same organization coming in next week, and just saying it’s rubbish, you know, we don’t really walk the talk. So, setting an example, as a CEO is a really important element. How do you– what do you enter that to keep it growing as the business grows? 

David Shein 13:30 

Well, I think you got it, you know, as a business grows to the size that we had, is you have to make sure that one person– Yeah, I think that culture starts at the top, but, and then filters through every level of an organization. So it could be through a different department, or it could be through a different, through a different branch. And I always say, you know, we had different branch managers, you know, right across the country. And I never ever would have expected Steve Nola, who ran our Melbourne office. He then went on to run the company after I left probably far more successfully. And Ellen Bradshaw, who ran our Perth offices and example, never ever lost health Stevie has to be like Eleanor, he has to be like Steve, everyone. Everyone needs to be an individual. But there was some unbreakable four values in our organization. That was what do our customers in Perth think about us? What our staff in Perth think about us? What our staff think about us in Melbourne and what our staff think about us in Melbourne? And as long as those core values were maintained. Yeah, it’s almost like if you went and took the sun in the moon, the sun is unbelievably rigid. It never ever moves. Those are an organization or a family’s poor values. You know, much of you have kids. Graeme, I have three kids, they’re honestly completely different. I call them low maintenance, high maintenance and very high maintenance, ever. They all have core values that are absolutely unbreakable in our family, and then that they’re their own unique individuals, I think that’s the same in organization, that you have the absolute to be absolutely rigid on those core values, and then understand that people, people are individuals, and you need to give them that flexibility, like the moon, sun is rigid, but the moon revolves around the sun. And, and I think it’s the same in an organization.

Graeme Cowan 15:34 

How do you handle a situation, either in the past or now where someone that works for you disappoints you, you know, don’t, doesn’t live up to your expectations? How do you manage that discussion?

David Shein 15:47 

So, it’s, yeah, there’s lots of ways to disappoint. There’s, there’s those that are fixable, and those that are yet are non-fixable. Sexual harassment, for example, is something that should never ever be tolerated as an example. And that’s yet where somebody who may miss the sales target or who didn’t respond to a customer quickly, is disappointing. But potentially can be fixed. So, I really always think that people fit in, in four, in four categories. And, and so if you take, if you take a square divided four quadrants, on the one axis, you put values on the, on the y axis put objectives. Yeah, the bottom left axis doesn’t share the values of that company, and nor do they meet objectives. The top right shares the objectives– meets objectives and shares the values in the organization. Those are the two easiest groups of people to deal with, you know, the bottom left, get rid of that person as quick as possible. The top right is made sure that that person never ever leaves the organization. The second hardest person to deal with is someone who’s absolute team player, unbelievable person, everybody loves that person, but then miss, they miss the sales targets. They’re not getting back to customers; they don’t have the technical expertise. You know, we spoke about BlackBerry earlier, at somebody who was the best BlackBerry engineer, we didn’t re engineer the skills to become iPhone, iPhone engineers, or Android engineers, as is going to become obsolete. And usually that person you give a second chance. You want to give that person how do we, how do we educate this team plan to become a star performer. And the worst, or the toughest person to deal with, is someone who meets the objectives but doesn’t share the values of an organization. And in my experience, is you have to get rid of those people that it’s somebody who may be your top sales performer. But who pisses everyone else in the company or a technical person who thinks knowledge is power, so I’m not going to share that knowledge that you have across the organization? So, you know, the best term I’ve heard for that person, I think, was coined by Ariana Huffington and she, she called it a call that person a brilliant jerk. And, and, and I think yet, she was on the board of Uber when Uber was renowned for having an absolute toxic culture, and we have to get rid of our brilliant jerks. And they did. And so, I think the biggest challenge that a manager has is that when you are disappointed to understand in which quadrant does that person fit, and then to make changes as quickly as possible? And yet, especially being a caring leader and leading with care, which I say, I was that– Or I likely I still am the CEO who walks by those. Those words, I think my problem was, I was said ‘be fit first and tough second’, and I think if I have a failure, I have been too free for too long. And I often advise young managers to make the changes when you know something’s not right. Make the change as quickly as possible.

Graeme Cowan 19:35 

Yeah, I read two things that speak to that one was your belief is it’s so important to embrace reality, what it really is or what it should be and then to change before you need to change. How do you make that happen week to week as a as a CEO?

David Shein 19:57 

Yeah, I think that’s critical. And I think probably the best way to I mean venture capital today. And? And yes, if you were the Founder of a Startup six months ago, and you were a half decent founder with a half decent idea, raising capital was unbelievably easy. Yeah, six months later. Yeah. So, if you asked me six months ago, David, what is the biggest challenge a founder has today? I would say in my career, I’ve never ever seen it more challenging to attract and retain good people. Six months later, I will never walk away from saying that’s not important for any founder. Even in, in– even if unemployment rates with 12%. Being a carry leader, you should always take care of your staff. But the biggest challenge that the founder has today, is trying to raise funding today is unbelievably challenging. So, if you were a founder, six months ago, and you said all is what I need to do to get to my next round of funding, you just make sure that I keep growing the business that my revenues growing and opening new marketplaces and unallocated funding. Today, it’s how do you preserve your cash? What steps do you need to take to make sure that you preserve your runway as long as possible, to give your organization that the best chance of surviving, and I had a young family, come see me the other day, and he has faced reality, he’s got a really nice business, but why don’t extend his runway. And the only way you can extend your runway is either by generating more sales, you either raise more capital, or you reduce your costs, which often is unfortunately, getting rid of people. Yeah. And any said David, I don’t know what I’m going to do, I’ve already gone present to the rest of my team. We’ve laid off eight people, and I’m not sure– I’m not sure what message to give. And I say to you, what you’ve got to do is you got to let the 55 people that are still in the company know that the toughest decision that you made in your life, which is asking people to leave your company is because of the care you have for 55 people that are still in the company, you want to make sure you give them the best chance of working for a company that’s going to be around in the future. And some ends, and I think the leaders that can adapt to changes really quickly. And I think we’ve seen in the last couple of years, whether it’s going from a COVID pandemic, where everybody thought, yeah, unemployment aren’t yet. I remember on March the 23rd, when you saw 2020, where you saw queues of people standing outside simply, honestly, in my mind, I honestly had the 1929 depression in my mind. And only a few months later, it was absolute brutal times for some of the companies that people thought were going to be going out of business. You have companies like off to play that, you have from a share price point of view went from $8 up to its peak $160 yet, and your founders had to say what am I going to do never dealt with a pandemic? And the next minute, what am I going to do to keep this business going? The next was oh my god, I never realized that be a need to be hiring and hiring etcetera. So, you have to be unbelievably nimble and quick on your feet and make the changes as quickly as possible. And that’s, and that’s going to be– yeah, that’s going to be the difference between good companies are great companies are ones that disappeared.

Graeme Cowan 23:49 

Yeah, yeah. So, you built Comtech up to this 1400 people very, very successful. Why did you decide to sell it then order to reduce your equity?

David Shein 24:03 

So, I– So, as we know, from our book in chapel, who is in my opinion, when the greatest– if not the greatest Australian cricket captain. I was lucky enough to meet Ian in 1966. When he played cricket, I was six years old. I think Ian was 23 when he played, you play cricket against South Africa. And he’s trying to, he’s trying to forget that series. I remember absolutely so clearly. Only because I think I only took one weekend in my whole life. And that was bowling in chapel and in my backyard. But so, but I’ll never forget one of our managers. We had a meeting and one of our managers said, asked him the question you said, yeah, and how do you know when you’ve reached you use by date? And I’ll never forget what Ian said. Ian said, in 1975, Australia, were going to tour the West Indies. And he said, I personally did not feel mentally tough enough to lead a team on a really grueling and challenging trip to the West Indies. And I thought it was time for me to sit down. And I think I felt the same. We’ve been going for 14 years. Yeah, especially the last four years have taken a massive toll. We’ve added a new line of business and they’ve grown from generally 40 people and growing from one person to 240 people over nine years was really manageable growth. And grew from about 240 people to 1400. It was probably 240 to 1000 people in one year. And then we added another 400 people over the next couple of years. I found it extremely challenging. And I think I felt at the top not mentally tough enough to take the business to the next level. And but with hindsight, yeah, I probably could have taken a sabbatical and maybe taken three months off and come back and kept going. But I just at the time, maybe because I was a first time CEO, and I’d never run a company before. I always felt that if I left, if I left OSF a toothache on Monday, I’m going to the dentist instead of that. I always had this thing that if I left the office early people would think I’d lost– I lost interest in the company, I was completely wrong. No one would have given a damn. So, I think at the time, I just thought it was really opportune. It was also at the peak of the .com boom. And, and yes, the opportunity was really, really compelling. From a financial perspective, as well as from a just from a mentally prepared to take a company through the next 10 years, I just didn’t feel I was tough enough to do it.

Graeme Cowan 27:12 

And how did it feel when you did that deal? Obviously, you’re gonna take out a lot of money. How did it feel for you?

David Shein 27:20 

You know, Graeme, I don’t want to sound arrogant was more money than I ever dreamed can make in my entire life. But it was almost like an anti– it’s hard to explain like an anti-climax. It’s almost like you’ve, you’ve got to the top of Mount Everest. And, and, you know, Sarani say the year after I left the company, having money in the bank, having financial security was probably the worst year of my entire life. It was debilitating going from being the CEO of a company that was, you know, that have been trying unbelievably well for 14 years. Having yeah, having something to do every day to wake up– waking up in the morning and absolutely having no purpose. And I would really say that if everybody had been the closest to being depressed that I’ve ever become by just not having that sense of purpose. So, I think financial security is really, really important. Yeah. Anybody who says, yeah, that it’s yeah, as you know, I’ve been away and it’s, it’s fantastic to be able to say, if we go overseas, what are we going to have to cut back on? And but it doesn’t, it’s not everything. It’s not everything and yeah knowing that you’ve got funding to send your kids to private schools, and you can still take an annual holiday, you can still pay the mortgage. That is, it’s a– it’s why you start your own company and what you know what I would, what I suggest often to any founder, if you can take some chips off the table to give your family financial security, just do it, you know, because it’s, it’s one less thing you have to worry one less pressure that you have to worry about. But it doesn’t mean that they’re for the rest of your days your life is, is fantastic, because you’ve got money in the bank. 

Graeme Cowan 29:20 

It’s really interesting. Two interviews– interviewed Derek Bari and he built up a very, very successful human resource rehabilitation organization build up from one up to it’s now up, I think, to 700 people. And when he sold a large part of his equity, he said exactly the same thing that you said that, you know, it was like this you for the thing that had driven him for, you know, five years to getting this over the line, but it was a very, very tough. I think he said six months he was still involved in the business, but it’s interesting that isn’t it, you know, it just goes to show how important the sense of purpose is where our lives it really is. And, you know, I’ve read research that says that the younger you retire, the younger you die. It’s actually been shown from an actuarial point of view to be true. And I’m sure that really relates to having a purpose getting up out of bed each day.

David Shein 30:18 

Yeah, well, I do mention in my book, and it was words from my it’s actually my wife’s, was one of the nicest human beings I’ve ever met. And sometimes claiming was my uncle. And, and probably not his words, but he once said to me, David, if you want to be happy in life, you need three things, you need something to do, someone to love, and something to look forward to. And I really believe that that’s what happiness is really, really about. So, it’s as simple things. Yeah, it’s holidays are, are fun. Because if you work for a year, and then overnight for 11 months, and you take three or four weeks off and a holiday, that’s why, that’s what’s a holiday if you didn’t, if you didn’t have a purpose, the holiday wouldn’t be as meaningful as it is, it actually is or should be.

Graeme Cowan 31:11 

Yeah. And you were credited with building Australia’s first unicorn, you know, a very, very, very successful company. And you brought out your book called the ‘Dumbest guy at the table.’ Why did you choose that, that title?

David Shein 31:34 

We never sit at a table, any table, even a virtual one grabs, I’ll say, our one as well. I always, always think, just I’ve got the lowest IQ at this table. And so, when it came to finding a name for my book, I’ve said that 70 times I’ve used the lowest IQ at the table, I thought, I thought it’d be a good name for the book. And, and they show your audience, this is the, this is the new, the second release which should be available in August or September. And which has two additional chapters to the original ground. And but I just thought it was a name that I really personally have resonates with me personally, even though I do save time and cheat because there’s obviously some areas that I’m pretty good at. And, but most areas I’m not good at. And I can probably the smartest thing I ever did was, you know, as a very young CEO or Founder, you know, I forgot back to say yet. There’s three key parts to company sales, admin, and tech. And I realized that no matter how many technical training courses that ever went on, I’d never ever be able to install and support a network. I knew if I had to do the books as an accountant that could, but I didn’t want to do it. And what I really wanted to do was I wanted to be involved in sales and marketing. And I decided I was going to surround myself with people in those years that I will never ever be able to do myself. And those years that I may be able to do that I want to do so that I could focus on what I was good at. And, and, and I think yeah, in our company, we had unbelievably smart and talented people. I think you know, Gerald Florian really well, Gerald would have been one of them. And one of many of them. And if you look at what Gerald’s achieved today as the Chief Technical Officer of ANZ Bank, that’s something that makes me unbelievably proud as the Founder to see people achieve things that yeah, that yet, we never believed were possible achieving but as a team together, we were able to achieve it.

Graeme Cowan 34:05 

What are the really important elements of running a weekly meeting as a CEO or as a team manager? What do you think are the essential components of them?

David Shein 34:16 

Well, I think the key thing is you know, they say God gave you one mouth and two ears for a good purpose, you can do twice as much listening as you do talking. And I think it’s really making sure that you give the management team the opportunity to express you have both good things and bad things and then your job as the CEO is to evaluate all the ideas, all the concerns, and act on them. An act on them might not necessarily be just by yourself but making sure that the allocated to people who will solve those problems and then so yeah, it’s making sure that people around the table, genuinely feel that they have a, have a voice and that they’re an integral part of the decision-making process of the company that has not just left to a CEO. I mean, I hate it when people say, you know, the board– this or the board that, yeah, to me, by the way, that one chapters in my book is, do you have a Board of Directors? Or are you Board of Directors? In my opinion, that the, the absolute fundamental requirement of a Board and this is really my perspective, is to find the right CEO. If a Boards got to set the strategy, and hand it out to CEO, you’ve got the wrong CEO. The Board should be there to review a strategy set by the CEO and the management team to do, to question that to then potentially tweak it, but then sub what support does the management team need from the Board to help? Yeah, to help achieve what they set out to do. So yeah, I think as a starting from a CEOs perspective, it’s obviously having a vision for where the whole company wants to go. But then understanding that you have a management team that you want to have a better vision for. We had a plugin that were very big distribution company. Yeah, we and, yes, I had an overall vision of saying, I just want to know that if somebody places an order with us at 6pm, on a Monday evening, they don’t choose their morning with 99.9% certainty, they get the right to the right was delivered to their warehouse, no matter whether they’re Sydney, Melbourne, Brisbane, Perth, Adelaide, that was my vision, how we execute on that was why I hired a distribution manager. If I had to tell that manager, you have to use TNT for you know, for our courier service. So, you have to use these systems, I’ve hired the wrong person. As I said, if you want someone who’s not going to leave their brain on the front door and pick it up at the way home, you want some said the reason I’m using this courier companies because of the following reasons, the reason I’m using RFID and not Bluetooth is because of these reasons. And that’s, as I said, yeah, the CEO should always have those core values, how you treat your customers, how you treat your staff and your business partners. And then rely on experts to run a part of the company.

Graeme Cowan 38:03 

And I also saw, you know, as part of your review of, you know, prospects to invest in. You’re looking for a leader, not a manager running the business. How do you tell whether someone is a leader or manager because people can talk the talk, but won’t necessarily walk the walk? How do you– how do you? How do you find out? How do you have that reality check?

David Shein 38:26 

So yeah, one of the few things I’m good at is I’m a bit of a– I’m a gut feel person. So yeah, you have to in our industry, you have to make some, you can never ever be in any businesses. You can never ever be a 100% certain. Yeah, it’s, I remember reading. I think it was Lee Iacocca’s book. Lee Iacocca was a renowned car manufacturer and CEO and to cover Christ and when they were going broke, he said never hired an MPX that was trying to be 100% certain of the facts. And by the time they’ve got all their, their, their information and the data and whatever. By the time they want to make a decision, the opportunity’s gone. So yeah, it’s the same in Venture Capital, we have to assess a Founder. And really what we’re looking for someone who can roll the sleeves up, and not yet and know that they’ve got to get into the weeds if they yeah, the best advice I always give to specially sales orientated Founders is that they should be out there winning those first few anchor customers. If they can’t sell it, nobody’s going to be able to sell it. And once they’ve got those first 5 or 10 customers or reference sites, they will find it much easier to attract other good salespeople to an organization. You know, when you hire and it’s a technical founder, you want to make sure that the technical founder is on the tools and doing you’re writing code themselves and as the company grows, and obviously your roles, roles change in that– our worst in salesperson has Comtech. And I think it took me– I think I’d hired six technical people before I hired my next salesperson. That– but by that stage, we had lots and lots of customers and it was much, much easier for that salesperson to come on board. And yeah, that’s yeah, as I said, it’s a bit of a gut feel decision that you make, but it’s also sustaining those expectations out at the beginning saying yeah, until the company grows especially in today’s environment where as I said, cash is king that founders are rolling my sleeves up and keeping the cost down by not saying we’re gonna have five salespeople and obvious sales manager as I’m actually going to go and win those first few anchor tenants. 

Graeme Cowan 41:02 

You mentioned previously about good advice for me in Chapel your, your [41:06] and you mentioned Lee Iacocca. What are the influences? What are the people or books have really influenced the way that you operate? 

David Shein 41:15 

So, my dad always used to tell me, I haven’t done badly for a bloke who read two books in his life. But probably in my day, the most, the most influential leader for me would have been, would have been Jack Welch, who was the CEO of GE for probably about 20 years. So when you spoke about face reality, as it is not as advisable you wish it to be, and change before you have to do, I would love to take credit for those incredible, an incredible bit of advice, but it’s, it came from Jack Welch, I read a book many, many years ago, it was called control your own destiny, or someone else will. And he had six rules for success in which those were two of them. And you actually alluded to another one, in those six rules facially added? Yes, it is not as advice as you wish it to be. Yes, you think about it today. You know, the, the, the more current way of saying is, is that you, you better watch what’s happening in the marketplace, or you might get disrupted. So, two is change before you have today startups or founders talk about, I had to pivot my business and that yeah three, in much exactly in the audience lead don’t manage. And four is you don’t have a competitive advantage, don’t compete. And five was be honest with everyone. So, you spoke about you know, what is important about leadership? And in my opinion. Yeah, be honest, be open and honest. And even if it’s, even if it’s, if it’s a tough, a tough decision, that yeah, it’s, for example, someone who, you know, may get retrenched in the next– yeah, it’s now you’re saying to that person, yeah, Grandma, I’m really happy, you’ve got nothing to worry about. Everything’s great. And you get a call from HR department the next day saying, Graeme, this new election unfortunately, you’re being laid off, or you’ve been made redundant, rather, you know, know that Jack Welch, as an example, used to say, by the way, rule number six, was control your own destiny or someone else will. And he said, you control your own destiny, when you have a highly energized team of people, anything is possible. And honestly, I absolutely believe that with Comtech, we control their own destiny, because we had a highly energized team of people. And, and I think as I say, I’m not saying this as, as the Founder. I think you spoke to our customers. If you spoke to our staff, I think people will say Dave’s not believing his own bullshit. We could do absolutely anything, when they did do absolutely anything. And yeah, I think with good leadership, I think you would have seen what Microsoft did, which was such an Adela came in literally with the same, with the same people, with the same products that Steve Ballmer had, you literally turn that massive organization on a dime. So, it doesn’t have just been a small company, it can be in a massive company, like a Microsoft. And so, you know, so I think, I think that’s important, but just saying, So Jack Welch had– you always say, you have to be number one or number two in every market that we operate in, or I’m going to close you down, sell you off, or do something that’s going to make yourself number one and number two. So, if a manager who was in an industry or company in the GE portfolio was number six in the market, and a manager kind of said, Jack, how do you think I’m going? You wouldn’t say you’re going great and said, Graeme, I think you better get your CV up to date because you know that I’m going to close you down or sell you off. So, and I think it’s better to be open and honest. And that’s, that is a culture. To me, that’s a caring culture, we actually open and honest with whether it’s with good news or bad news. And as opposed to saying one thing and doing another.

Graeme Cowan 45:37 

It’s been an absolute pleasure catching up today, David, just a couple of other questions I’d like to finish on, and I guess the first thing is, what– is there a message that you had the chance you can share with the world, what would it be?

David Shein 45:53 

So, my message would be I think fairly simple. If you, if you want to be a caring leader, a caring leader is someone who has a say, who genuinely cares about their customers and their suppliers and this, and their– and the staff, which would be unbelievably easy. If you didn’t have this juggling ball, on the other hand for cash flow and profitability, that if as an example, if standard leaving in a, in Australia’s four weeks, but you said your team’s actually pretty stressful industry done take four weeks, we’ll give you eight weeks, and their market related salaries are $60,000, we can pay $90,000, you’d been amazing company to work for, for a very short period of time. Okay, so good leadership is going to say, how do we deliver EPS imaginary customer service? How do we ensure unbelievably high levels of staff satisfaction, and at the same time, make it back at the same time? So, think, yeah, like, I know, a lot of the things that we did for our staff, we were only able to do because we were a successful company, we’re able to invest in our people, we are able to invest in our infrastructure, we are able to provide the care and wellbeing programs that you’re able to provide. Because we were a profitable and successful companies. I really believe that that being a caring company and a high-performance company are absolutely interrelated, that interrelated are not mutually exclusive. That you know, we spoke about because you went on exchange to Canada for a year and you spoke about BlackBerry and Waterloo, it will be very tough for Blackberry, when they were– when they were dying, to be able to invest in their people, and invest in infrastructure and provide the resources are needed for a caring organization. How you deal how you deal with a successful company? How you share the success of a company is what a caring CEO is about. So, there are lots of in our generation, you’ve seen some unbelievably successful leaders, whether it’s Mark Zuckerberg, Jeff Bezos, Elon Musk, Steve Jobs. The two leaders that are absolutely would aspire to be like, in my opinion, Bob Iger from Disney, and I can absolutely highly recommend a book called the ride of a lifetime. And, and such a Vela and I really believe that that built in Disney and in Microsoft to absolute iconic organizations that you know, that both built the platform. And I think today I’ll say at least for the next five years of unbelievably successful companies, highly profitable, highly successful, but unbelievably empathetic leaders. And those are the kinds of leaders that I aspire to, and I would like to emulate. 

Graeme Cowan 49:16 

It is quite extraordinary about Microsoft, isn’t it? And I’ve seen, you know, the, when he was awarded, that role set in Adela, the speech he gave to the Microsoft team, and it was all about, all about purpose using, you know, our, our technology to solve world problems. And he had his own personal example with children that had learning difficulties. But I’ve also interviewed– I’ve also interviewed on this program two people that worked at Microsoft, and that were there before and then afterwards, and they basically said that the organization completely changed in six months, even out here in Australia. I think that is just extraordinary isn’t that, you know, if you can tap into a compelling vision and a real purpose, it excites people. 

David Shein 50:08 

Yeah. And it’s interesting when you talk about such an Adela, I was lucky enough to hear him in Australia, and I was invited by Microsoft to a small lunch that and was hosted by the final review. And I would have said, if I hadn’t heard that speech, or would have used these words, I will say, with the same crappy products and the same lousy people, he turned that company on it’s– yeah. And then I heard such an Adela talk and he said, ‘How lucky was I? That Steve Ballmer left me with this amazing organization, these amazing people and products?’ If he– and I just thought his humility, and just being humble, saying, look, look what I was given by the previous CEO. And yet to build on and create and, yeah, as I say, and I think, I think the proofs in the pudding. He’s probably been on the job for probably four or five years. And yet today a company that in my opinion, it was on its way to relevance. You know, there’s lots of companies that are irrelevant. Pick on BlackBerry, I think BlackBerry still exists today. But is irrelevant. Yeah. BlackBerry literally died. Nobody on this webinar with, oh, my God, what am I going to do? Your company that’s irrelevant. If Apple went down with oh, my god, how am I going to catch an Uber? How am I going to pay a bill? How am I going to do whatever? So yeah, I think Microsoft would have existed for many years. But I don’t know how relevant that would have been, I think, in the five years, we are not only has it turned the company on it’s, yeah, but it’s going to be absolutely, unbelievably relevant for the next five and probably more years.

Graeme Cowan 52:00 

Fantastic. And final question, David. If not what you know now, what advice would you give to your 20-year-old self just after you come out of a chartered accounting at uni? What advice would you give that person knowing what you know now?

David Shein 52:18 

Well, I think I’d definitely say, have a go, back yourself. And anything’s possible with the right, you know, with the right attitude, and obviously, having some ability and I think there’s a great quote that said, it’s your actual attitude, not your aptitude that will determine your altitude. And I really believe lots of people don’t, don’t back themselves because they fear failure. And I think, yeah, never fear failure. And if you think you’ve got a shot, ever go, you don’t want to die wondering.

Graeme Cowan 53:01 

Fantastic advice has been an absolute pleasure catching up, David, and just for our listeners. So, David, an updated version of David’s book, ‘The dumbest guy at the table’, ‘How he built Australia’s first unicorn’ and more really recommend that and it’s coming out as end of August? 

David Shein 53:20 

I think the end of August. And yeah, it will be available. Unlike the first version, which was only available on Amazon will be available. And by the way, I should say Amazon were unbelievably supportive. They didn’t charge 100% of the proceeds of the book were donated to the Black Dog Institute. And Amazon did all the distribution for free. In the second, this is actually I have a publisher today. And 100% of my royalties will continue to go to Black Dog. But it will then be generally available for not in addition to Amazon for other bookstores as well. 

Graeme Cowan 53:56 

You maybe want to ask one more question. I know that it went there because you had a very good friend who really struggled with mental illness. What was it like being a friend of someone like that? 

David Shein 54:10 

You know, Graeme, it’s actually crazy, because I never knew that he struggled. I’d heard that he struggled, and he worked in our company for about 10 years. Everybody loved him. The quality of his work was absolutely incredible. And he was yeah, he was definitely someone who fit in that top quadrant, met his objectives and shared the values of the organization. And from time to time, people might have said to me, does Dan’s depression ever impact and I said, Man, I don’t even know, I didn’t even know he suffered from depression. And he was also really good athlete. He did Ironman Triathlon, and, and, unfortunately then left, he had American wife and they left to go and live in Chicago with his wife is from when they have kids, I think the deal was soon as we have kids will go back to the US. And I think that part of Dan’s medication was his training that I really believe we often hear people saying they want to lose weight, they’re going to exercise. My thing is you want to leave, you want to lose weight, stop eating so much. I really sincerely believe that that exercise is better for your head and your body. And I believe that dance training was part of his medication was all the training that he did. And unfortunately, what I didn’t know, right until the last day prior to Dan, unfortunately, passing away was he had been on lithium, and Dan used to stick with a jug of water on his desk every day. And I just assumed it was just because I get to keep hydrated because of all the training I was doing for his Ironman. And I think the lithium was affecting his kidneys. And he was taken off the medication in the US and believe it or not, not put onto an alternative medication. And I think unfortunately, that’s what led to his untimely death in that. And so, to go right back to the beginning, that you asked me, what did it feel like living in Australia? I really sincerely believed, as much as people complain, I was thinking I’ve had age parents, I’ve got my own kids. I’ve been in the hospital system, I really will say, if you’re going to be trouble, there’s only one country in the world where you really want it, where you’re going to be in trouble. That’s Australia, I think, often think the I really do believe that if Dan had still been in Australia, I think, I think he’s still going to be with us today. 

Graeme Cowan 56:59 

Thanks for sharing that really personal story. And it’s another great reason to, for everyone to go out and get the ‘Dumbest guy at the table’. Wonderful speaking to you, David, thanks for your generosity in your advice and your reflections. It’s been wonderful talking to you. 

David Shein 57:17 

Thank you so much for having me. I really enjoyed it. Thank you.

Graeme Cowan 57:20 

Thanks, Les. That’s great. David. I, you know, we, as you said, we just covered lots and lots of different areas. And I just really liked how the conversation flowed. And, you know, you’re able to raise some really, really great points and ideas, and I’m sure it will help a lot of people and I; you know, we really are trying to champion this concept of The Caring CEO that does strive for both those things. I think it’s, as you found and as part of your success has been able to juggle those two things and not see them as mutually exclusive.

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