Excellence in Action


Tidemark Founder Dave Yuan interviews Richard White, Co-Founder and CEO of CargoWise.

This is the story of Richard White’s circuitous journey to start one of the best software companies in the world. He went from working in manufacturing, to fixing AC/DC’s guitars, to writing programs for lighting systems, to running one of the largest freight software companies globally. Rather than stick to the advice of established peers, White is relentlessly driven by an engineering mindset. You’ll see in this interview how he approaches every problem from first principles.

His company, CargoWise, epitomizes our theory on why Bootstrapped companies are incredible—they have license to do things differently. The company breaks a variety of so-called software rules and has done so with enormous success (800M AUD in revenue, growing 30%, and 50% EBITDA margin).

We cover some of the many ways CargoWise broke the mold:

  • Their sales staff are not allowed to do demos of the software
  • Customers cannot email or call when they have a problem with the software
  • No secret discounts are allowed, ever.  All prices are public and updated every month.
  • A strong point of view on how work gets done—so much so that the company fields a Wisetech Academy and builds almost all operating systems and software inhouse, including a task management system that manages every employee’s work product systems

We hope you enjoy this expansive interview with CargoWise co-founder, and Tidemark Bootstrapped Legend, Richard White. 

If you’re interested in staying in the loop when new episodes of Bootstrapped Legends launch, you can subscribe here. If you're a Bootstrapped Legend who wants to tell your story or learn more about working with us, please reach out to us at knowledge@tidemarkcap.com.

Dave: I’m really excited to have here Richard White, founder and CEO of CargoWise, which trades under WiseTech on the ASX. This is an amazing story for our Bootstrap Legends series, for a wide range of reasons. For those of you who don’t know about WiseTech, it is a publicly traded company on the ASX. I believe you reported your half-year numbers most recently, Richard. Their business is roughly 800 million AUD revenue and still growing 30%, which is remarkable growth at that scale—and probably even more rare is the 50% EBITDA margin. You don’t see that combination of growth and profitability very often, and for good reason. 

The other thing that we really appreciate, Richard, as a business, is how you’ve built out this amazing vertical SaaS platform. You really transformed the freight forwarding industry in a whole variety of different ways, some of which we’ll get into in a second.

Finally, on a personal level, I remember when I started going to Australia about 15 years ago, you were one of the first entrepreneurs that I met. I always felt like I needed to visit you early in my trip before the jetlag, because you had these really transformative and wide-ranging ideas. I needed the neurons to click fast enough to keep up with you, Richard! I loved our session every time. I love the friendship we’ve been able to form over the years, even though I never got to invest in you guys, unfortunately.

Richard: I want to respond to that, David, because you touched on a number of things. One of the most important things was, I actually really valued the meetings that we had. I might have been giving you ideas and talking about concepts and things, but I have also listened very carefully to what you said, what you cared about, and how you measured things. I remember specifically refining my thoughts on recurring revenue and attrition. Really, after those meetings, I started collecting attrition rates. We had very low attrition rates, but we made them much, much lower after properly identifying what the attrition was from. For the last 10 years, we’ve had attrition rates of less than 1%, significantly less than 1%. Your sales cycles are much easier when you’re not losing customers off the back end. [Laughs]

I remember thinking how sophisticated your understandings of things were. I had a strong sophistication of the product space, and of development, R&D—I did my master’s in agile development, and I’ve developed a lot of techniques since then. I’ve also studied behavioral science and other things. But what you gave me was a rich set of business perspectives that I, as a tech nerd, probably didn’t have. I then incorporated many of the things that you talked about. They were just breadcrumbs, but I grabbed them, and I went and thought more about them. If I gave you some ideas, that’s very good, because it’s a wonderful exchange of values when you think about that. 

I think that’s the curiosity that drives me. I’m a very deeply curious person, and I like to learn. And whenever I’m talking to someone, I’m listening quite carefully to what they say. I’m trying to give information back as well, but I’m often learning from other people. That’s a really important thing.

Dave: I’m not surprised at all that we’ve become friends. I do find that I tend to gravitate towards people who are obviously incredible at what they do, but also really energized by ideas. We actually, in some ways, have built our firm around that too.

Richard, if it’s okay, I’d love for you to start by telling us about what you were doing before [CargoWise]. Place us in that context. I think you might have been a musician before? Is that right?

Richard: Yeah. We can go way back. I won't go from birth [Laughs] but my early childhood was very powerfully influenced by my parents and grandparents. My father was an engineer, and my mother was a very good communicator and very sales-y. My grandfather was an entrepreneur. 

I lived in the same block of land as my grandfather, and he ran a function center, wedding receptions, basically. My grandmother was an operations manager that ran the whole function center. She had probably 50 people under her command, and ran multiple events every week. 

I had the opportunity to work in the function center. My first job was washing dishes in a huge dishwashing machine. I remember receiving my reward every week, that brown paper envelope with money inside it. I don’t remember how much I was paid, and I don’t remember what I did with the money at all, but I remember every week being paid. That was reward and effort. It was a huge thing. I washed dishes for a while. I worked in the kitchen. I then worked behind the bar, probably serving drinks illegally at the age of 14. I worked as a waiter at the age of 16, and then I sold receptions just before I graduated high school.

At the same time as that was going on, I would say my academics were pretty average. I was a bright student, but bored. The only subjects that really interested me were maths and science. The rest of it was just, I don’t know why I’m there. But my father’s factory was probably about 500 yards from the front door of the high school. I would walk, in the afternoons after school, to my father’s factory. He would teach me about electrical things, about Ohm’s Law, about welding, about metalwork, about how physics worked in compressors, and all these other things. And he was good with his hands. He was very good with cars, with motors, and with electrical components. I just absorbed that. I’d go home with him at 6 o’clock in the afternoon, after working for a few hours in the factory, and I became quite efficient at a lot of different things. That was a huge benefit as well. I had this interesting input. 

Now, at about the age of 16 I started becoming very interested in music—I was originally in the school band and then graduated to guitar, because I felt it would be easier to meet girls if I was playing that rather than the trumpet. [Laughter] It didn’t actually work, because I spent more of my time on the guitar rather than meeting girls, but I became quite proficient. I ended up playing in bands, but very quickly recognized that it’s not a very economically powerful thing. I’ve often described myself as an economic refugee from the music industry. I had to find a way of using my musical talents to pay myself, so I could actually live.

I was hanging out with the guys from AC/DC, and many other big Australian bands. I won't mention all the names because they’re probably not so familiar with Americans, but AC/DC’s Angus and Malcolm used to come over to my house all the time. I used to fix their guitars. That was a really good business. It was a very profitable business, and I had really elite customers, but I realized quite quickly that I couldn’t scale it because it was just my two hands. Whilst it was great to have and very profitable—it certainly paid wages and more—I decided to quit that business.

Alongside that business, I had built another business. A friend of mine needed lighting equipment, basically copied from other systems, which I then built and redesigned. This was a lot of metalwork and a lot of electrical work. It had the problem that it had a physical cost, and it was a competitive industry so your margins are always reasonably compressed, but that got to scale.

I then merged that business with a company called Jans and became the manager of a lighting division, and effectively the R&D manager for the whole company. I started building computerized lighting control systems. There was nobody that knew how to write the software, so I had to basically teach myself how to write software. It was [there] that I really dug into software. I ended up doing Assembler, C++, and various other things. Most of the system that we built there was very successful, and it was written in Assembler because I didn’t have the process, power, or memory to do it any other way. Many iterations later, that product was still being sold in 2016 when they sold that part of the business. That was a successful thing. It was the first computer-controlled lighting system that I’m aware of in the world.

I sold the shares in that business because, as part of what I was doing there, I started doing computer networking, and linking all the PCs together. I actually became quite interested in systems integration. I started up a computer wholesaler, which became extremely large. It distributed Unisys computers, Philips monitors, and many other peripherals. But that also was a business—again, I was observing what was going on—that had margin pressure.

Then I started consulting. I almost accidentally fell in with a couple of very big freight forwarders, one called Expeditors International, and another local one in Sydney. I became very good friends with the local guy in Sydney, and he taught me about how the industry worked. He taught me all the technical details of the industry. I got a job in Huntington Beach in California, and spent about three months there writing a fulfillment system which connected a reseller to UPS and various other people.

I came back [to Australia] with all this knowledge about freight forwarding and the supply chain. In ’92, I started writing a system, because I figured that the big problem with the industry was it lacked anything that looked like a completely integrated front and back office. We did the accounting, the HR, the CRM, the document storage and management. And from the front office, we did all the operational things: the freight forwarding, the warehousing, all the other components. It’s a single platform that does all of that. You don’t get an accounting system and bolt it together—it literally comes fully formed. Most companies that use our system don’t have any other software of any import. They have little things, maybe, but they don’t have any fundamental platform other than ours.

Dave: Most vertical SaaS companies aspire to only either front office or back office; you own both. And one customer might be the customer of another customer, right? Freight forwarders tend to work together.

Richard: They do. It’s a network industry—but it’s also a very fragmented industry. Even today, we recently made some very big acquisitions into the US, and when we look at what’s going on, it’s incredibly fragmented. The participants really want to have all the information so they can manage their transactions and their processes well, but they hate collaborating with each other. They’re like scorpions circling each other. Everybody is trying to get the other guy.

Dave: Information is great, but transparency isn’t always great for arbitrage. So, you go from guitars to lighting to freight forwarding. It sounds like it was initially a consulting [business]?

Richard: It was systems integration consulting. I was writing small programs for freight forwarders, and I was learning about the industry, and I was meeting other people in that space.

Dave: When did you think that you had a product that you could sell?

Richard: This is an interesting point. A lot of people talk about minimum viable product—I have never been able to get a minimum viable product to work. I talked inside the company and said no, don’t ever do that. We’ve got to go maximum, not minimum. We’re in a mature industry that has high expectations, and unless you’re in greenfield space, an MVP doesn’t really function. You’re up against legacy competitors. You can’t come in with a minimum viable product; you have to have the full scope. 

In fact, there’s a very strong connection between what we call product and development in the company. One of the things that we hold to is for quality to be the highest we can achieve. We’re a test first, TDD (test-driven development) company. A lot of companies don’t build that way, and then, after five years of building, they go, “Oh, this platform has got too much technical debt. We’ll have to start again.” Every five years you’re refactoring yourself back to zero. Whereas, as long as we keep the language and the technology the same with C#, we’re just moving to .NET Core and getting rid of some old legacy. We’re still using a lot of capabilities that we built 15 years ago because of the test framework, because of the constant refresh.

I think the underlying comment about this is, we hold the product capability – the scope, if you will – to be maximal. We hold quality to be very high, and non-negotiable. We spend a certain amount of money every year on a rising slope. We’re growing the R&D spender about 30% per year. That’s a fixed question, but you can move people around, and you can apply labor to different projects. Last year, we introduced about 1,200 major modules and capabilities in the system. 

The thing that we work to compress is time. Ultimately, what you’re spending is time and resources to build a great product.

Dave: You have a very different philosophy of how to build a company, which I think is a huge part of your success. You have a very high bar for your product; you have very high standards. When did you think you could build this product and company? When was the moment that you knew you had something?

Richard: First of all, you’re doing it from Australia. You got a reaction of, “Oh, that doesn’t work. That’s not where you build software. You build software in Menlo Park or San Francisco.” I don’t think that’s the case anymore. I think talented people, great ideas, persistence, and grit are the things that really drive capability.

You do have to have underlying skill sets that are really deep. I think what I brought to the company was that very interesting blend of technical skills, industry skills, and commercial skills. I did a master’s degree in 2000, which was an odd time to do a degree because I was already the CEO of the company. From an Australian perspective, we were the dominant player; we were very successful. But I also realized that I needed to do something different, because we’d run out of market share, and we didn’t know how to get out of Australia. The master’s degree was a good way of rethinking everything—of writing a business plan and calling it assignments.

The really interesting part of this is that I’ve blended those business skills, technical skills, and commercial skills—some of which I have borrowed from you—along with behavioral psych. I’ve got a really strong area of behavioral psychology and cognitive bias, which actually works amazingly. When you think of it as an engineer, you suddenly see all these tool kits, capabilities, and opportunities to use those.

Dave: What was the hardest thing, getting the business going? 

Richard: There are a lot of hard things, really. [That’s] the hard thing about hard things. I think what I learned early on was that a lot of software companies become trapped in business models that are punishing. For instance, big up-front fees: they’re very attractive, but they tend to distort what you sell and what you have to deliver.

Then, the other part of it is, customizing for a particular customer is fatal. Before starting the freight forwarding software business, I bought a business in the print estimating industry—for printers. This would be a dead business today, because of digital, but at that time, I bought it because it was struggling and I thought I could fix it. I was being a bit of a corporate doctor. This was from ’89 to  ’92. I realized their biggest problem was they had 50 customers and 50 different systems. They had customized for everybody. Their sale was to go to the customer and say, “I’ve got a great system.” The customer would say, “But I want this, and I want that,” and they would add those things. Then that piece of software would be different to the next customer. 

We did a little bit of that early on but realized how painful it was. We haven’t customized or provided any customer-specific features since 2008, but we have a very powerful workflow engine and a highly configurable system. Everything that customers ever ask for, we think about how can we make it usable for a wider audience. We’ll do it for the customer, and sometimes they’ll actually pay for that, but we’ll also make it a capability of the system that gets published for everybody. That’s been a very successful strategy.

Dave: This generalizable workflow aspect is super interesting. What else do you think you did differently than other entrepreneurs?

Richard: There are a number of things that we specifically did. We’ve acquired quite a lot of businesses. Across the entire landscape of the company, we’ve acquired about 60 businesses, most of them quite small. A couple we bought recently were much larger, but most of them quite small. We have a recipe of how to refactor those businesses into successful, growing, profitable businesses.

One of the first things is, the model can’t be a perpetual license model. It has to be some sort of a transactional or seat-based license model. It’s better to not control the licensing for the software, but to let the customer choose to use more without having to come back and ask for it. You turn the license into, effectively, a permissive system, so that the customer can use whatever they want to use. Then, at the end of the month you bill for the usage. You bill in arrears, rather than in front. I don’t like models where you have to bill 12 months out, or you lock a customer in for three years. I think those make the sales cycles very difficult. When you say “I’ll give you the software. It’s free. When you use it, and you extract value from it, we’ll charge you for the value you extracted” – that’s a much, much easier sale. The pricing of that model is about twice the price of a typical one-time plus maintenance model.

The next thing is, we don’t provide any training or implementation services. We used to—in fact, when we were talking back in the day, we actually had a fairly big team. I think I had 27 staff flying around the world and implementing things. They were away from home a lot of the time, and because of pressure on the costs, the customers were pushing them into three-star hotels and cattle class on the planes. It wasn’t a very pleasant arrangement. You also couldn’t get a consistent approach to how you implemented customers, because every person had a slightly different perspective. 

We changed from a traditional license model to this on-demand model—no up-front fee, no implementation cost. We only charge you when you use the software. There’s a whole bunch of structure around how that works. I’ll maybe come back to that later. We did that right at the beginning of a global financial crisis where, by the end of 2008, all capital budgets were slashed. We weren’t a capital solve; we’re an OpEx, not a CapEx. We were growing about 3% a month from 2008 to 2011. By 2011, I had a serious problem: we were growing so fast that I couldn’t implement quick enough. I had 27 staff, and it would take me six months to onboard a new staff member.

My solution was to not do implementation at all. Now, that’s a challenging idea, but what we actually did was build a partner network, all local to their environments. We changed all of our training content into very high-value, streamable content with formative and summative assessments, so that the customer did not need a consultant—they could on-board themselves if they wished. The consultants who were partners didn’t work for us at all. We took no money from them, paid them no commissions, got no money from them. They worked directly for the customer, so they have a trusted relationship. That worked brilliantly.

Dave: We’ve seen this in other situations, where you sell 100% direct but fulfill 100% through channel. It gives you the scale that you described, but then also your channel is really grateful. Because you’re a source of leads… [Crosstalk]

Richard: Absolutely. But actually, the channel is a source of leads for us. The interesting thing is, if you buy a software, you pay a license fee every month forever. You get a consultant, they implement, and, then, largely, you don’t need consultants except for some very specific things in the long term. The consultants have to find new customers—and most new customers buy our software. Our biggest source of leads is free, and from trusted consultants who are in the industry pitching your software to everybody. We don’t pay them, we don’t ask them to pitch. They just do it. They don’t get a commission for that, so it’s a very independent and trustworthy sort of consultant that does that.

Dave: You create this reciprocity.

Richard: Correct. The other thing is, many of the acquisitions wanted to keep their consulting businesses but have partners as well. You can’t do that. Your partners will always suspect that you’re taking the good stuff and giving them the crap. You’ve got to get completely out and give everything to the partners.

Dave: It forces a very good pressure, both on your product and your documentation.

Richard: Yeah. There’s another positive feedback loop that arises after you do this, which we picked up almost at the same time. We looked at how support was being run. With support for most companies, there are emails and there are phone calls. A support ticket comes in: “I had a problem, some message flashed up on my screen, I can't remember what it said, but I want you to fix it.” Then you go through first-level support, and spend a lot of time trying to figure out what actually happened and how it happened.

We did a number of things. Inside the software, we have very specific processes so that, whenever there’s an error, we trap those errors. We actually capture the cause step for the software, the last 10 SQL queries, the last 10 keystrokes, and the last 10 menu clicks. We know where they were, what happened, and when it happened. Most of the time, we know exactly the line of code where it went “boom.” Now, that pops up on the screen for the customer. They can then put in a descriptive text and send it to us directly. There’s no first-level support because that’s a full analysis of the software. It goes directly to second level, and we now have a fairly detailed analysis. 

Shortly after we built all of this, we also built a support system so that those incidents can be reported. As part of that, we decided that we were no longer going to allow customers to report by email or by phone unless the whole system was down and there was no ability to use the in-built software. For any normal incident, other than a complete system failure, you must report [through the system]. If you call us, we’ll teach you how to use the incident management system. If you send an email, we’ll call you back and teach you how to use the incident management system. But the only way you can report an incident is to report an incident. That’s actually very powerful.

Dave: I love it. You built your own instrumentation, and you also built your own ticketing system.

Richard: Well, at the time, there wasn’t another ticketing system. This was before Atlassian and the other companies had any ticketing systems. We just built it because we needed it, but it’s been incredibly successful. For every one of the acquisitions, we convert their support structure into those software-based ticketing systems. The remarkable thing is, you get much better action on defects. You fix the defects quicker. There’s much less back and forth with the customer because there’s a clear process. It’s not human-to-human anymore. They’ve got to write something definitive, and you’ve got a log. That’s a fantastic thing.

Dave: I’ve seen this from you. Every time there’s a problem, you come up with a software and engineering solution. And in many ways, there’s a lot more scale and it’s actually more effective. 

Tell us about your internal workflow and task management system. That, to me, was way ahead of its time.

Richard: Well, to be fair, the ticketing system we just talked about is actually part of the workflow system. The workflow system came from studies that I did in terms of the Theory of Constraints. I realized that you can’t define a bottleneck unless you have a clear workflow. If you have a workflow, you can identify where the bottleneck is, and you can actually manage it. The interesting thing about this was, at first, it was just a task-management flow of work. Then it became a work-item system, and then the work-item system became a project management system. You have this whole structure. Then, the ticketing system is part of the workflow system. An incident from a customer is a kind of workflow. A work item in software or product development is kind of a workflow. A project is a set of work items that builds something even bigger.

That translated into the software itself. This same idea became fundamental in how our customers use our software. Now all the jobs that they do inside the system are workflows. A freight forwarding job, or a customs job—even, in accounting, paying an invoice—is a workflow. Everything is structured in data, it’s very clear and defined, and nobody’s making shit up themselves by writing it on a wall or using a spreadsheet. It’s all built in the system. All those things are the same.

Dave: If I recall correctly, every single employee at CargoWise actually uses this workflow system to do their jobs. Is that right?

Richard: Yes. Well, not on Day One when you acquire a new company. But certainly for any employee that joins the main business, one of the first things that happens is they get taught test-driven development. It’s quite a mind-twisting event, when you think about it, because most coders don’t know how to write unit tests and don’t know how to do them first, not last. 

The second thing that happens is, they get put into the workflow engine. We call it PAVE: Productivity Acceleration and Visualization Engine. It’s a big buffer board of all the work for a team. Each person can see their work next to each other person. That’s also a very important psychology. If your work is running late, and everybody else’s is on time, it creates an important psychological positive pressure to adjust what you’re doing. There are also some other things we do inside those workflows that have to do with what we call chunking of size of the work down to small pieces, estimating those correctly, and then monitoring and managing to make sure that those chunks don’t run over. We get very close to accurate in terms of software estimation, which is kind of like the Holy Grail, right? Nobody can estimate software correctly.

Dave: You not only have engineers, but you have marketers, sales people—everybody is in this. People talk about culture; CargoWise has a culture, but it also has a system and you prioritize that system.

Richard: We actually run the whole company on a product we sell to our customers. We’ve got some specialized modules in that system that we don’t give to customers, like our licensing control and billing engine and so forth, but it’s largely the same as the product we ship to our customer base. That’s an important thing, because you own the problem. You know if quality is slipping, because you’re using the software every day.

Dave: Yeah. What I’ve noticed from the outside is that most private companies don’t actually grow through M&A. You’ve been prolific on M&A. (Actually, the track record of M&A in software has been getting better recently, but over a long stretch of time, it was quite weak, as an industry.) At CargoWise, it’s been quite successful. Is PAVE the secret to that success, or are there other elements to your M&A strategy?

Richard: We have the workflow engine and the model, which we call STLC, plus transaction licensing, plus the content-led thing… Our mantra says lead with content. There are a number of other things that we have as these fundamentals, and all of those bundled together is called the “WiseTech Way.” We are not at all afraid, when we acquire a business, of implementing those things straight on top of the business.

We don’t necessarily do it on the first day, although we do some in our onboarding, and some engagement and education. But the quicker you get it done, the quicker the business is stable and more growth-oriented, and you remove many of the constraints. We’re now all over the world, with customers in 165 countries and 30 locations around the world. It’s very hard to manage if you don’t have a data-driven system, but it’s very easy to manage once you’ve got that system in place.

Now, I’ve got to tell you—and I’m sure this will resonate with everybody—when you do this, it’s quite challenging. You’re challenging people’s fundamental assumptions about the way things are. The good thing is, we are all software companies. We can predict, to a high degree of precision, the pain points that they have, because we lived those ourselves and solved them. There are a series of things we can say: “Well, is this happening?” Yes. “Is that happening?” Yes. “Is this happening?” This happens sometimes. We know those answers are going to be yes 99% of the time. Then we can say, “Here’s how you solve it.” 

It becomes a problem because some of this stuff is counterintuitive. Saying the way to support customers is to make it so that they can't call you or email you—they have to log an incident, and any call or email is a training session to show them how to log incidents—doesn’t feel like customer service when you do it. But ultimately your responses are much better.

Dave: You’re totally redefining this problem around M&A. A lot of people talk about systems integration and migration; you’re talking about essentially a change in management, almost an evangelism around the WiseTech Way. It’s a very different way of thinking about the problem.

Richard: The good thing about the WiseTech Way is that it’s accompanied by a business model that is high organic growth, incredibly profitable, and cash-generative. It’s very hard to say, “Oh no, that won’t work around here. High growth and profitability? No, that’s not us.” [Laughs] It’s almost impossible to avoid the conclusion that there’s something going on here that’s different and better than what you’ve been doing.

Dave: Maybe it’s a little less evangelism than I characterized, because the results speak for themselves.

Richard: It sort of doesn’t matter. You can do it forcefully, but it doesn’t need to be done forcefully. I would say, over the 50+ companies that we’ve acquired, there were [only] two or three founders that were just so entrenched in their belief that the way they were doing it was right, despite all the evidence to the contrary, that you had to make those hard choices and say, “Unfortunately, it’s not working. You’ll need to take early retirement.” I’ve already made them pretty wealthy by buying them, so it’s not that much of a problem. 

Frankly, most everybody realizes that there’s something going on. We’ve got a lot of evidence, and we’ve got a lot of training and knowledge in that space. In fact, we have an academy, called the WiseTech Academy, which teaches all this stuff. We don’t just do corporate speak; we actually do lead with content. We have deep content capabilities in this space, and that makes a company very scalable.


On that lead with content, I’m going to give you one more positive feedback loop. I actually stopped salespeople from demonstrating software. I’ll leave that hanging a minute, just because that sounds pretty shocking when you think about it.

My problem was that when we had big customers. The sales reps would say various things, and the customer would ask, Does the software do this? [The rep would] say, “Of course it does.” They don’t actually know; they’re just trying to get us a deal. We actually built a team of business development analysts who are technically skilled people, and they built content that demonstrates all the salient features of the software.

We have about 300 or 400 very sophisticated videos that talk about all the major features of the software. If someone says, “I’m in Hong Kong, and I need to deal with dual house bills for this particular thing. How do you do that?” There’s a video for that. Instead of the salesperson speaking to that, they build the relationship, and they develop the commercial pitch, though even the commercial pitch is quite tightly constrained.

What happened is, I rang one of the senior sales guys and asked, “How’s it going with this new lead with content sales model?” Richard, it’s chaos in the streets. [Laughs] I said, “Okay, wait for a couple of weeks. Let’s keep going, let’s keep pushing through.” In a month’s time: I can’t believe how successful this is, and how easy it is to figure out what the customer needs and then give them what they want! The combination of training resources, which are all content-led, and sales resources, which are all content-led, really brings customers into a very high level of trust. You never have to misrepresent the software. 

You do have occasions where the customer asks for something you don’t have, and then we turn that into a paid feature request and give it to everybody. That’s easy to scale.

Now, pricing. Another positive feedback loop. We never discount. We have a standard price list, which we publish monthly. It’s quite comprehensive; it’s a big product. We have a standard set of what I call behavioral discounts, because each discount requires a behavior. It’s not a negotiation, but a behavior, to get the discount. For instance, volume is a behavior. You get a discount for volume. You get a discount for prepayment. You get a discount for having a large number of highly trained staff certified by us.

In the early days, when you’re rolling the platform out—because sometimes it takes a few years to roll the platform out globally, with big companies like DHL—there is an all-you-can-eat period, where there’s no direct connection to the price list. Other than that, every customer falls under the standard price list and the standard discounts. 

If they commit to five years, they get another discount, but we also won't let customers commit on day one. If you put a commitment contract in place, then the moment you sign the commitment agreement, you’ve got this huge financial risk. You don’t know how the software works, and you say, “I want the discount, but I don’t like the fact that I’ve now obligated myself to a five-year or ten-year commitment.” That particular discount can only be done after six months, then we’ll give you the discount back to the first day. 

The sales cycle means you can go live, have six months on the platform, and then choose to commit. We also say to customers, we will never give anybody a better price than you for exactly the same set of behaviors. Any other customer is going to get the same price list as you, and we will never give anybody a better deal. Any better deal we do will be available to anybody. Everybody.

Dave: You’ve gone from discretionary discounting to rules-based discounting, essentially.

Richard: Correct.

Dave: And so, therefore, you have some precision and consistency in how you price.

Richard: Actually, several customers have said, “We don’t like the price. We’d like to get a bigger discount, but we know that you’re not going to do that. We know from the industry that you never do that, so we’re okay with it.” In fact, we had a large Israeli company that was negotiating with us. They said, “We have to have this extra discount.” I said, “If I give you that discount, I am going to give it to every single customer. 18,000 customers. That’ll make your business completely unprofitable. I can’t give you the discount.”

Dave: Yeah.

Richard: “Can’t you just give it to us and not tell anybody?” No. We don’t do that. We’re ethical.

Dave: It’s explicitly rules-based, and you’ve developed reputation capital.

Richard: Once you get the reputation, people don’t like the fact that you don’t discount, but they also respect it. I won't mention the company—but it’s a very big US-based international parcel company and you can probably think of which one. They spent six months trying to crunch us on price. We just went back to them and said, “This is all we can do.” I had three or four calls, jumping over the procurement manager, who just was completely dogged. I would call the MV and say, “Listen, this is where we are. This is what we can do and what we can’t. I can give you some consideration during the all-you-can-eat period, because we’ve got discretion during that time, but other than that, you’re going to be on the price list. You’re going to have the same incentives, the same discounts. You can get bigger discounts, but you’ve got to make bigger commitments. That’s all.”

Dave: This has been amazing, Richard, hearing about the story and also the WiseTech Way. I’d love to close out with a couple questions. 

The first is, you decided not to take venture capital. I’d love to hear how you thought about that, why you think your company is better for not taking venture capital, and maybe some areas that you might have suboptimized by not taking venture capital.

Richard: Well, to be fair, David, if there was anybody I was going to take venture capital from, it was you.

Dave: [Laughs] Well, thank you.

Richard: We had a great relationship. I did trust you, and that’s a very important part of this. But I think the fundamental thing was, back when I started the company, I didn’t have the faintest idea about raising capital. I didn’t even think about it. I just figured, from day one, I had to be profitable. 

The only times that I ever really had any real need for venture capital was at those extreme moments when you’re growing very rapidly, trying to spend money expanding overseas, and trying to do ten different things. I always went back and thought, hang on a minute. If I just make the appropriate engineering adjustments to the business model—if I think about pricing power and the depth and capability of product, go a little bit slower over here, spend a bit more time over there, and collect a bit harder here, then I’m going to be okay. 

During the entire time of the company, we’ve never had a mass layoff. Not ever. We’ve never had to cut heads. Obviously, we’ve removed people if they’re not functional, and we’ve had to take out duplication when we do M&A, but we’ve never had a mass layoff, ever.

I think there’s a very important role for venture capital. If I hadn’t started as early as I did, and grown as willfully as I did in Australia… We were hugely penetrated in the Australian marketplace, and I was able to use that penetration to fund the development of the global system. Without that, I wouldn’t have been able to do anything. I would have been unable to build the system. I spent almost all the money building the second generation system, but I didn’t run out of money. I got to the point where I got the system out the door, and then that one amplified as well.

Dave: It is a really interesting confluence of factors, being in Australia. This is as an outside observer, but what you did on the multi-tenancy side—the subscription, the consumption pricing, the big investment in workflow—the systems that you built, some of which are now third-party software companies, were always ahead of the time. In many ways, you weren’t at a loss for being in Australia. Certainly, you were on trend, if not ahead of trend, but you were in a small enough market where you could actually get to profitability and get to market share, to scale, much more quickly.

Richard: Yeah.

Dave: In many ways, we’re not surprised at all that we’re seeing such strong self-financed or lightly financed software companies coming out of Australia.

Richard: This is a characteristic of being a challenger economy. Australia has never thought we’re the best in the world. We’ve always felt that we’re under pressure to perform. We’ve had to really knock them down and push in, and realize that we have no choice but to work hard and do things.

Dave: One hundred percent. The other thing I’ve always admired about the Aussie entrepreneurs is that they’re fluid in Asia, fluid in the West, and well-traveled.

Richard: I mean, Australia is a long way from everywhere, to be fair. The shortest journey is about 14 hours. It’s actually quite painful to be flying around the world, but on the other hand, it’s a great place to be situated in. This is a great country. It’s got a wonderful system of laws, we don’t have too much social upheaval. It’s very calm. It’s very sunny here.

Dave: [Laughs] I’m in. I know there’s going to be a point in time where I’m going to be setting up a residence there, if the country will let me. 

Let me just end with, Richard. You’ve accomplished a lot. Not only in WiseTech and CargoWise, but before that. If you look at this business and your run here, what is this going to mean to you in ten years? What’s your legacy? How are you going to remember your time and your accomplishments?

Richard: Well, there are a couple of legacies. One of them I will give to you. I have a book list that I have read, which I think has been foundational in allowing me to do different and much better things in WiseTech. I’m happy to provide that book list at the end here, if I haven’t already given it to you, David. You can give to all of your investees. Reading books is not for everybody, but I’ve read and applied these books very directly. I’ve seen enormous benefits by having a different and better way of looking at things.

In our Academy, there’s a course which can be done that's available to your people too. It’s called “A Black Belt in Thinking.” It’s a rendition of the Eli Goldratt thinking processes, but it also encompasses some of the behavioral cycle that we use.

Dave: Clearly, this mode of thinking is part of your legacy.

Richard: The other thing I’m trying to do is to redefine K-12. Not WiseTech, but another company is building a big platform in that space in order to try to lift the education in technology, particularly engineering and maths, to really create pathways for people to have a better life. And to lift a lot of the pressure away from teachers, who really do have it pretty tough, and don’t have the necessary computerized tools to actually make this work.

There’s a lot in that. I put 50 million of my funds directly into that at the start, and I’ll probably continue to invest in that as a long-term legacy. If we can make the education system better on a global basis—Australia first, because that’s where we’re planning to experiment—it’ll be better for everybody. That’s a huge thing for society.

Dave: That’s incredible. Well, Richard, thank you so much for spending the time today and sharing the WiseTech story—and also everything you’ve done. Really appreciate it. So great to reconnect here.

Richard: Thank you very much. Lovely to talk to you again, David.

Richard's Book List


Dave Yuan

Founder and Partner, Tidemark

June 2023

The information presented in this post is for illustrative purposes only and is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by Tidemark or any of the securities of any company discussed. Tidemark portfolio companies identified above are not necessarily representative of all Tidemark investments, and no assumption should be made that the investments identified were or will be profitable. For additional important disclaimers regarding this post, please see “ Purpose of the Site; Not Investment Advice; No Recommendations” and “Regulatory Disclosures” in the Terms of Use for Tidemark’s website, available at Terms of Use (tidemarkcap.com).

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