Meet the entrepreneur who saved his first startup $700k by networking
Steve Baxter is an entrepreneur, investor, founder of technology start-up hub River City Labs and founding director of StartupAUS. He is now founder and CEO of Transition Level Investments, who invest in early stage startups.
Fri 9 August 2019 - 10:18 amEntrepreneur | Featured | Leadership
Dynamic Business revisits the startup success insights of Steve Baxter, one of Australia’s most successful tech entrepreneurs, an active investor and mentor to startups. You may recognise him as a ‘Shark’ on Channel 10’s Shark Tank Australia.
In 1994, at the age of 23, Steve put his life savings of $11,000 on the line to launch his first start-up, the pioneering internet service provider SE Net, from the spare room of his Adelaide home. Servicing more than 35,000 customers, SE Net was eventually acquired by Ozemail/UUNet.
What’s most interesting is the behind-the-scenes story, which Steve explains in his byline below. Simple networking saved his first business, despite his reluctance and reservations towards it.
By: Steve Baxter
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!
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 existing 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.
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 requiring 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 – but hey, it worked! No $700k to our 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. He is now founder and CEO of Transition Level Investments, who invest in early stage startups.