Tech startup SafetyCulture hit the big time last month with the second-largest venture capital raise in Australia this year.
Some 12 years after founder Luke Anear, a former workplace accident detective, launched his venture in the family garage in Townsville in far north Queensland, SafetyCulture raised $30 million ($US23m) in series B funding to expand its global footprint.
Index Ventures, a key investor in Slack, led the round, with Blackbird Ventures and Atlassian co-founder Scott Farquhar, who led last year’s $6.1 million series A raise, tipping in again.
The latest raise values the business at $160 million and it now has offices in Townsville, Sydney, the US and UK, with a prestige client list that includes Qantas, Hilton, Coles, BHP Billiton, and Coca-Cola.
What’s grabbed with attention is SafetyCulture’s smartphone app iAuditor. It lets people create smart workplace checklists, conduct on-site inspections, analyse data and share insights, whatever industry they’re in.
Its impact has been profound, with Siemens Health estimating they’ve saved 30 minutes per maintenance inspection by using the app instead of paper forms, and also saving $170,000 in 10 months as a result.
Business Insider sat down with Anear to discuss what’s next for his business, which has the potential to be Australia’s next Atlassian, and why his team won’t be rushing out to buy Maseratis.
Business Insider: Congrats on the funding round. This really takes things up a notch for Safety Culture, doesn’t it?
Luke Anear: It’s the next stage for us. We didn’t really set out to try and raise money, though. We were just focused on trying to build a profitable business. Once word got out in Silicon Valley about what we’re doing and our metrics and the size of the market that we were solving this problem for, VCs [venture capitalists] ended up coming out to us here in Sydney.
It forced us to decide whether or not it made sense to do a round. We thought about it and felt that we had a great foundation to build on. We took our time, though. We spent about eight months just talking and listening to VCs, and building relationships with them, talking to their portfolio companies. In Index’s case they were one of the backers of Slack, so to get people from there and different companies that are going a bit further beyond the journey than us was quite helpful.
We spent a lot of time just getting to know VCs. We found the best ones tended to help you whether they could invest or not, long before you make a decision. They were just there to show that they really could add value, and they wanted to help. That was really good to see.
BI: What advice would you give to a company in the startup phase, when it’s looking at a capital raise, to keep in mind?
LA: I’d say the fundamentals haven’t changed. No matter what, stay focused on building something that changes the world and investors will then want to be involved. Stay true to your mission, and focused on solving the problem that you’ve set out to solve. I think if you do a good job of that, then good things come.
Just gravitate towards working with people that you respect and admire. That’s worked really well for us and then those people have introduced us to other people that share their values. Blackbird were very good at that. They originally walked down my driveway up in Townsville into my garage, and we put on a Subway spread for them! Even then I didn’t even know what venture capital was. Seriously.
I just thought we’re going to build a profitable business. They [Blackbird] introduced me to [Atlassian’s] Mike [Cannon-Brookes] and Scott [Farquhar] way back then, and that’s when I realised that there’s actually much smarter ways of doing this than just a few blokes in the garage.
We took that funding, and Scott then introduced us to other people as well, and one thing led to another… Just stay focused on that core product that you need to build, and make that the best it can be, and go from there.
I think the other thing I’ve said to people is don’t always try to lead with a pitch deck. We literally didn’t have a pitch deck for this round until right at the end because it was all just based on a very organic type of relationship, where the investors could see value in our product, they loved our product, and the metrics and the transactional element is sort of secondary.
You’ve got to have strong metrics, especially for a [funding] round this size, but we knew that investors would get excited when they saw our metrics and our gross numbers.
It was more important that we really led it with just a great relationship, and built trust and credibility with each other. We did that with a number of VCs before we made a decision, and that helped us. It wasn’t until I literally had to fly from Townsville to London for a one-hour pitch to Index’s investment committee, after they’d been to Australia, and after they’d done all this due diligence, that Jan [Hammer, from Index] said you should you probably should put a pitch deck together, and they can present to these guys before they make their decision.
That was when we put a PowerPoint presentation together and showed them, and 20 minutes later he came back out, they’d voted unanimously, and the investment was approved.
I think too many startups think, “Oh, I need to put my pitch together.” I think what you really need to do is have your mission and your product so ingrained in your DNA that it oozes out of your skin.
I think if you’re that passionate about what you’re doing, people who share your passion will want to get involved, and they’ll become engaged. That’s a much more organic way to build a relationship than leading with metrics.
There are very transactional investors out there, and all the investors are nice up front, but you want an investor that’s going to be with you through thick and thin, and if they’re just purely focused on the metrics and the transactional elements, then they’ll perhaps going to influence your decisions along your journey that may not be in the best interest of your mission or the customer problem you’re solving.
BI: How important has it been for you having good mentors? What advice do you have in that regard?
LA: Build a great product first of all, because mentors, great mentors, will tend to want to invest their time in people who are going to act on their advice. I think it’s important that, number 1, you show that you can actually do something. That means focus on the problem you’re solving.
Finding good mentors comes from being clear about what your values are and what’s important to you, and then you’re attracted to other people who share those values. Scott and I have got along well because we shared similar values, and we care about the people around us probably more than just about anything else.
Then you need to reward your mentors by delivering results and showing them what you do. If you just take their time and advice, but then you don’t show them the results, then they’re not incentivised, because they’re usually not doing it for the money, especially at this stage.
Scott doesn’t help me because of the money, he helps me because he gets rewarded by seeing us grow and make the world a better place.
I think self awareness is another big thing to bring to the table. If you’re aware of your limitations and your strengths then you’re in a good position to be able to understand what you can and can’t do. Those distinctions then shape decisions in finding great people and people who can complement your skills and people who have strengths where you have weaknesses.
You can’t surround yourself with people the same as you. It’s really easy to get attracted to other people who reinforce your beliefs and what you think, but I think it’s more important that you surround yourself with people who challenge your beliefs, and challenge what you think, but then it’s also nice to have them support you at times, as well. It’s a balance.
BI: This is a $150 billion dollar industry. Is it one borne out of an excess of government regulation, or are these issues every bit as important as we’re told, even if we don’t quite believe it in the work meetings?
LA:That’s a good question. When I started looking at how to solve this, because I was a private investigator originally, right? I saw 2,500 cases where people had been injured at work, so we went and investigated. Then I thought, we are part of the problem here. We need someone to get injured before we go and investigate what happens.
I stepped back, looked at the whole industry, and across the whole world it was reactive. It essentially was wait for someone to die, and then legislation would get creative, and then policies and procedures in companies, and then the poor guy out in the field would be given a new administrative task that he now has to do on top of his day job.
I think that’s been the source of the problem. When we step back we went, if we’re going to solve this globally, how do we simplify it, and how do we find a way, or how do I find a tool that everybody agrees on across all industries?
Safety and quality management changes from aviation to construction. It changes from Australia to the US. It’s all different. But when I broke it down, the checklist was the tool that everyone was already using.
In the 1930s, the aviation industry mandated that if a plane had a pre-flight check done by the pilot before it took off, it had a greater chance of landing at the other end.
That made its way into medicine, where before surgeons would go into theatre they would go through a checklist: Did everyone wash their hands? Etc. That reduced infection rates.
Today it’s all the way into the McDonald’s bathroom, with a checklist of who it was cleaned by and when. Once I had that light bulb moment, then I thought, okay, now I think we can look at solving this, not to try and comply with legislation, but to go beyond that and actually just help people go home at the end of the day as simply as we possibly can. That’s how this whole mobile Safety Culture iAuditor app started.
BI: Looking at the figures, you said for one company it saves them 30 minutes per inspection, and delivered $170,000 in savings in 10 months. Does that mean you’ve changed the state of mind in terms of compliance?
LA:It’s changing the behavior. What’s been interesting is when we started we thought we were creating a magic clipboard that replaced pens and paper.
But what actually happened is we’ve tapped into this innovation layer that’s been dormant inside organisations. If you take a company like Coles, they’ve rolled out Safety Culture iAuditor across every store in Australia. What they started off doing was replacing their quarterly store inspections, done with pen and paper, and because the end user can create a checklist themselves, it empowered all of the store managers to create their own digital workflows.
We now see this across all these companies where people who were never responsible for IT – never had any budget behind them – just the guy out in the field or store manager at Starbucks, they can now build a digital workflow, and then share that across those teams.
I think technology actually hadn’t caught up with the opportunity, and it’s only in the last 3/4 years, that now because everyone’s got a smartphone in their pocket, we can build a user experience that allows these frontline people to drive change.
That’s really the secret for most of this. It’s not that we’re replacing pens and paper. That’s part of it, but the real synergy for our customers, the real value for our customers, comes when everybody now is able to report what’s working well and what needs to be improved, in real time, and that’s powerful.
We were just on a 54th story building in San Francisco being built, and they’re using Safety Culture iAuditor across the whole site. Their concreters are doing their QA checks with it, and, in real time, the construction managers are able to see what’s happening. They even tell us that at night when they get into bed, the last thing they do is they look at Safety Culture iAuditor and they check to see if there’s any big issues, and if there’s not, they can go to sleep.
It gives companies that peace of mind and real-time visibility across the entire organisation. They deploy it so quickly, it requires very little training. We’ve got construction guys with big fat fingers and sweaty hands and gloves, and they’re able to use this stuff. That’s why a mobile-first experience really has to be great in order to work well.
BI: Was the scale and diversity of the app a surprise and apparent from the beginning? Or did it slowly emerge?
LA:When I sat down with Alan Stephenson, the engineer that started this with me, we sat down we built a risk assessment app called IJSA, and nobody really used it. We went back to the drawing board, made it more flexible, and came out and came out with iAuditor about three months later.
We had 1,200 people download the app in the first week, and about three months in, we had multinational companies starting to tell us how they were using it. It was probably about the three-month mark that we first went, “Wow, people are actually using this.” And then over time we’ve just continued to improve it and iterate, and provide much more of a scalable system that can now handle millions of people using it every day.
BI: When plan A didn’t work, and you decided to go to iAuditor. What was that moment like for you?
LA: I think you’re so deep in just trying to do something to succeed, that you’re willing to try anything at that point. I can remember the first app, IJSA, guys on a site contacted us and we jumped on a plane and went straight down there, and asked them how they were going to use it, and what that was doing. They showed us they had 360 folders behind their desk for each of the contractors on this site. They said we need you two guys to get rid of all these 360 folders of documents on every contractor, and that’ll make our lives easier.
We were trying to tackle that and it was like, this is overwhelming. We don’t know where to start. We had to go through a number of iterations before it got as clear as it is today.
BI: You said Safety Culture is at 5% of your long-term vision. Tell us about where that 5% is, and about the other 95%.
LA: I use a checklist to do an inspection. You do an inspection to find an issue before something breaks, or before someone gets injured. That’s the role of the checklist.
I think we’re doing a good job of solving that, but we’re also building an incident reporting app called Spotlight, and that gives people the ability to report incidents in real time when something has gone wrong. We’re addressing that in a completely different user experience, in a separate way.
On top of that, you’ve then got the big data opportunity that’s starting to happen. Because we’ve got 1.3 million inspections a month now coming through, there’s an enormous amounts of insights and data that we can serve back to our customers, and start benchmarking, helping them get insights to what’s working well and what could be improved inside their businesses.
We’ve got a long way to go with that. I think we’ll look at making that a product next year.
BI: Speaking of next year, where are you now and where to next?
LA: Revenue’s grown 500% in the last year. We’re at 75 staff today, and that will probably get to about 150 over the next year.
I think we’ve done well at building a great product. Now we need to look at the other half of building a great tech company, which is how you then take that product to the rest of the world that don’t know about it.
As for goals, it keeps on resetting. When we started we thought if we could get to $1 million in revenue that would be amazing. Then it was $10 million, and then it was 100. I think we could realistically become a $1 billion a year business in terms of revenue. That’s about as far as we’re looking at the moment, but I think if we get to that point then we’ve probably got to figure out how to go further.
BI: Is that a two-, three- or five-year goal?
LA:I think that’s a five-year time frame. One thing I’ve learned is that everything tends to take longer than we think, and cost more than we expected. I think we’ve always taken on more than we could realistically do in the short-term, but then in the long-term we achieve more than we ever imagined. I think that’ll continue.
Only two-and-a-half years go, we’re in the garage and the valuation was $6 million. Now it’s $160 million. Crazy. I think we’ve got to stay disciplined and focused, but it’s been a pretty startling ride. It’s still got that young company excitement about it.
It’s like what maybe Google might have felt like 10 or 15 years ago, where it’s still got people coming in and engineers that are going to become millionaires from their equity, and have got that real excitement that we’re solving a big problem that will make the world better.
BI: So how do you keep the discipline and focus in the team when everyone has the potential to start backslapping and buying Maseratis?
LA: There’s none of us doing that! It’s funny. Your culture’s got a lot to do with it. We’ve got core values where we try to just focus on the customer. Be honest, open always. Leave your ego at the door. Bring a fair dose of humility, and I think understanding the “why” behind what we do – we’re not here to make a heap of money, we started this to solve a problem.
I noticed that’s different to some of the tech companies in the Valley. Some founders are talking about their exit strategy and doing an IPO and all this kind of stuff. We’ve never really thought about those things. What we’ve focused on is why we’re here, and how we solve these problems each day.
I think when that’s the DNA and the culture and the company, then the success milestones along the way are kind of secondary. They’re kind of the scoreboard, if you like, as to how well you’re doing, and how well you’re solving that problem, but they’re not the function of the company, even to do an IPO or build a massive company.
Our core focus is to solve a global problem, and that’s what guides us in doing it, and sets the tone for the culture, which is something that I’ve personally worked really hard to maintain across the team.
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- Why Paul Bassat believes Australia’s size is no obstacle to global tech competitiveness
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