From “starving musician” to the head of a $30b tech firm

Though Wisetech Global (ASX: WTC) only burst into public view with its 2016 ASX listing, the firm’s history stretches back some 40 years, into the late 1980s. That's when founder and CEO Richard White finally landed on the idea that would lead to the creation of his wildly successful business.

The importance of learning and education is a theme that runs throughout the wide-ranging interview White gave in the latest episode of Success and More Interesting Stuff, hosted by Matthew Kidman. 

Education

How WiseTech's Richard White built a 26-bagger growth darling

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White explained his somewhat unlikely career trajectory from musician and music producer in the early 1970s – working alongside names such as ACDC and The Angels – to heading up a $30 billion company employing 3500 people and serving users in 181 countries.

Though music remains a passion for White, a jazz-trained guitarist who also plays rock and blues, he quickly abandoned the idea of embracing the life of a “starving musician.”

His next career venture in guitar repair and modification, Rock Repairs morphed into music production. White designed and manufactured lighting equipment and control systems in his first business, Rock Industries. This operated between 1980 and 1981 before it was folded into audio, lighting and staging company Jands, when White recognised the inherent capital constraints of the industry.

“I moved four times to get bigger factories – so you get higher rent, more equipment, more staff and more raw materials to build the product,” White said.

“Then you had to pay your creditors, run your debtor book and collect money…those businesses have cash flow challenges.”

No fear of failure

It was here that White developed the technical skills that would later underpin Wisetech. As an R&D director at Jands, he created sophisticated but early-stage lighting hardware. White also began working with microchips that were used in controlling these systems.

“It took me probably a year of work to build the circuit boards, to design all the circuits, to learn the programming languages and then program it. And I didn't think it was hard at the time. I just thought it was a job that you had to keep going at until you got it done,” White said.

“I never had any fear of failure, which is just a step toward success. If you make a mistake, you just have to fix it.”

Ultimately, White drifted towards software because of the low-margin nature of hardware development and distribution. Again, White’s capacity for self-education shone through, having taught himself “the basics” of circuitry engineering by reading a series of textbooks.

“I read the CMOS cookbook, the TTL cookbook, the Op Amp cookbook and the 555-Timer Cookbooks, which are all famous books,” White said.

“The basic circuitry of all of computing, they seemed really logical to me and they stuck.”

White’s first software venture came after he co-founded Sydney-based distributor Clear Group. Affiliated with US-based technology services company Unisys, it operated between 1986 and 1989.

He then launched and operated a computer and systems integration consultancy, Real Tech Systems between 1994 and 1998.

“Cash is king”

One thing that united these disparate businesses was an emphasis on cash flow.

“Right through to a few years before we IPO'd, I used to run every business on a cash flow statement, not on a P&L. It doesn't matter if you're making a profit if you can't pay the wages. So, cash is king.”

Each of these companies were successful but as White explained, his younger self didn’t fully appreciate the value of persistence.

“When I founded WiseTech, I remember making myself a very, very distinct promise. This is it, I've got something that I want to run here, and I'm going to do it, this is the last one, I'm not going to change again,” White said.

“Persistence and consistency pay an enormous dividend because you can then build your product, you can build your client base, you can build your skill set. Your fluency in that business becomes manifestly better than it could be in any business that you've owned for a short time.”

White’s consultancy work brought him in contact with the freight forwarding industry, where he noticed efficiency gaps. This led him to establish EDI, shorthand for Electronic Data Interchange or Eagle Datamation International.

Global aspirations

After launching in 1994, EDI initially focused on Australia and New Zealand until in 1998, White realised he was going to run out of addressable market. His first acquisitions outside this region were in China, which coincided with the Asian nation’s admission to the World Trade Organisation in 1997.

As global trade became more fundamental, the company started to grow by acquiring and integrating local Chinese subsidiaries.

“Our product perfectly matched that change in economies. We took out a lot of the costs, agency models became more irrelevant and the whole of the system became much more productive than anything you could do on those local bases,” White said.

Realising global expansion was the only way forward, White also noted external investment was required.

EDI’s first capital raise saw two individuals, Charles and Mike, tip in $4.5 million when the company shares were worth 5 cents. (They’re still shareholders today, the return on their 5% holding is staggering when you consider the stock last closed at $91).

This investment underpinned the company’s push into the critical US market, where the acquisition of Chicago-based firm CargoWise led White to rebrand the firm as CargoWise EDI.

Fast forward to 2015 and more acquisitions followed, including from China and South Africa, alongside institutional investment. It was at this point that White realised a share market listing was the next logical step if he wanted to continue expanding.

Why did Wisetech list?

Emphasising he wasn’t under pressure from his investors, White said it was the need for liquidity.

“A listed company is a liquid investment with a valuation mechanism, it's much more valuable than a private company that doesn't have those mechanisms.”

As White explained, these are the three key things listing provided:

• Liquidity and valuation
• The trust of the public market
• The trust and brand awareness of your customers.

The JCap attack: “Completely fabricated ideas”

White was also quizzed on some of the challenges of being listed, including the inevitable share price volatility. But he says he doesn’t sweat on share price movements.

“I don’t feel that stress particularly, though I do understand the volatility and I am respectful of the fact we need to do our best to properly inform the market,” he says.

One such challenging period for Wisetech came in 2019, when it faced what White described as a “short and distort” attack by short-seller research firm J Capital.

The JCap report contained “completely fabricated ideas about the firm having no software, no money, no customers and no product.”

“Which is nonsense, but it gets aired in public. People notice it. They’re not entitled to do it in Australia but they leak it in through social media,” White said.

“I wasn’t worried about the company but…about the impact on small shareholders. They get frightened and sell their shares…which is where the hedge funds and short sellers make their money.”

Another of the biggest challenges White faced was the COVID pandemic, the risks of which his team saw before many others, given their large presence in China. In the build-up to Wisetch’s half-year results in 2020, they noted a 90% drop in the volume of containers out of China.

“We were the first public company in Australia to make any substantial negative comment about COVID. And that was frightening stuff because none of us knew how that would end up,” White said.

What’s next for Wisetech?

Despite the impressive growth curve the company has undergone since it listed, White sees plenty of further expansion opportunity ahead. Having built out its international business, he estimates there is an opportunity to grow its domestic business by more than 10 times.

“There are other layers to logistics itself and then you get into supply chains…There's 20, to 30 years of growth here that we could continue to build.”

More from Success and More Interesting Stuff

Listen to the full recording of the Richard White interview and others by clicking the link at the top.

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