Steve Baxter reveals how he saved his first start-up, SE Net, $700k networking interstate


In my first business, SE Net, I balked at going to industry conferences interstate. They were expensive, there was no airline competition – Adelaide-Sydney on special was $700 return and you HAD to stay a Saturday night due to local tourist board subsidies! And in general, whilst I had a hand in helping the local Internet association scene get up and going , travelling interstate was a whole new thing. 

One year, my business partner Chris and I finally bit the bullet. We flew from Adelaide to a tech conference on the Gold Coast. I think I regretted the expense the entire time, right up until the last night at the lobby bar(!) where I got to chatting with a vendor rep about a problem we were having.

With SE Net, we could only scale by buying more hardware, and lots of hardware. It was worth it, but a bitter pill to swallow because it constrained growth. Like most hardware, our’s used software to do most of the work and our equipment was faring poorly, constantly running a 99% CPU and customers were feeling it. Our vendor had a solution : upgrade to the newest hardware – for over $700k! The new stuff was good, but other than fixing a problem our existing hardware should have already fixed, it was only a “nice to have”.

Getting insider info

As it turns out, if you get people socially compliant and chatty enough, they’ll let you in on some insider info. In our case, this was the secret cheat codes to make equipment work better — this is what happened to me at the lobby bar on that final night. I was told the non-obvious programming steps required just two lines of text that could be typed in to make the load issues go away.

So I ran up to the hotel room, unplugged the hotel phone, plugged my modem in, and dialled STD back to Adelaide to try the fix it live. It’s  not a great idea to modify live the bit of gear you’ve dialled into ,  but hey, it worked! In a sign of zero testing it deployed to our dozen other chassis immediately. No $700k to the big bad vendor — a networking win!

The value of networking

This was my biggest direct and immediate networking win that I can attribute direct dollars to. Over the years, I have been privy to numerous tidbits and insights and benefitted from introductions that have saved money and made money. This includes being given advanced warning of competitive moves and meeting people who asked me why I was doing that “thing” in such a dumb way (and their question was right — sometimes it was the dumb way). I got to ask them similar stuff and everybody gives a little.

That’s why I believe networking opportunities and events are so important. Consider these three tips:

1. Attend events: Go to all events that look remotely useful to you, and at least some that look unrelated but could be a wild card. You never know who you will meet there.

2. Communicate: Be open to conversation even with people who don’t seem directly relevant to your business. You never know who they may know, or where they’ll be in a year’s time.

3. Give back: Information exchange shouldn’t be one-sided. Share insight and knowledge from your own business and industry in return for similar intelligence.

Networking is essential to help you and your business grow. It is not a process whereby you give up or try to get somebody else to give up their crown jewels but an incremental process. Take it slow, be genuine and you will be surprised what can happen.


About the author

Steve Baxter is an entrepreneur, investor, founder of technology start-up hub River City Labs and founding director of StartupAUS. He tweets at @sbxr. Steve is also a ‘shark’ on Shark Tank Australia, with Series 3 airing on Channel Ten on Tuesdays at 8.30pm AEST. See also: When pitching your start-up to Steve Baxter, don’t use the word ‘give’ or you’ll p*** him off