A brief history of Aconex
Although I have a current day ‘corporate’ bio, these blog posts relate very much to the Aconex story, so I thought I would share it here for context. It starts with me as a very green 26-year-old founder, and continues through often rapid growth to IPO and, ultimately, acquisition.
Prior to co-founding Aconex, I had worked as a business analyst at McKinsey and Company, after taking Mechanical Engineering, French and Mathematics at Melbourne University. It was a great time to be at McKinsey – the business world was just starting to recognise the potential of the internet and, as a graduate engineer, I knew enough about the internet to be dangerous. I had the good fortune to work on internet strategy, advising McKinsey’s corporate clients in Australia on its likely impact on their business.
SaaS before SaaS
During this time, I started discussing internet opportunities with Rob Phillpot, a long-time friend from boarding school who worked at Multiplex, the large Australian construction company. We thought that there was potential to use the internet to improve construction projects by building a B2B industry exchange (a much-hyped internet business model at the time). We believed that we could streamline three collaborative, information-rich processes that are critical to all construction projects – tendering, procurement and document management.
With an idea and rough business plan, I left McKinsey to start the company with Rob, just as the 2000 dot-com crash was kicking in. Somehow, we raised $1.6m with only a plain black and white pitch deck and a business plan.
While we believed in the power of the internet to change how project teams worked together, it soon became apparent that it was not going to be so easy in practice. Twenty years ago, most potential customers did not have the internet (or even computers) on their construction sites. For those that did, this was still the age of dial-up modems or ADSL connections. We spent as much time selling the benefits of the internet as selling our new product.
We quickly learned from our first hard-won clients that we would need to change our approach. While our first purchase order (for $100,000!) was for our procurement catalogue, we were 20 years too early and the industry just wasn’t ready to buy that way. We learned from these customers that their major problem at that time was actually managing drawings (document control) and related communication processes like requests for information (RFIs) and site instructions.
So, we settled on solving that problem through internet-based project collaboration, which became the core of the Aconex product. It was software delivered as a service (before the term SaaS was coined in 2005) and it ran from our own servers located in a hosting centre (there was no Amazon Web Service at the time).
I have written about the importance of making difficult decisions and moving forward. Fundamentally changing our product vision so early in the game was one of those decisions, but ultimately the right one. But the idea of a B2B exchange lived on in the name Aconex – contracted from Australian Construction Exchange.
As I’ve written about previously, the business turmoil after September 11, 2001 almost killed the company (discussed here) but we got through and raised our second round. From there, our growth really took off.
In 2003, relatively early in the life of a start-up, we began our international expansion. We knew that to be a large company we would have to move beyond Australia and enter larger international markets and, as an internet business, there was almost no limit to where we could serve customers. Fortunately, we were also able to follow some of our early customers onto their overseas construction projects, piggy backing into new cities. Our first port of call was London, where we worked with supportive early customers such as Multiplex. Rob moved over to start the business there and began to build the team.
On a trip to London in 2004, I stopped off in Dubai. Stepping out of the terminal, I could count more cranes than I had ever seen in my life, and that was just around the airport. Dubai was a sea of construction sites - at the time people said that one third of all cranes in the world were to be found in the UAE’s largest city. I resolved that day to set up in Dubai, which we did the following year.
The Middle East became a great market for Aconex as we rode the construction boom through the mid-2000s, working on some of the world’s largest and most iconic projects.
In parallel, we set our expansion sights on Hong Kong, led by our Australian sales team. After a few months of fly-in, fly-out sales effort, we won our first mega-project – the multi-billion-dollar Venetian hotel and casino in Macau.
Over the next few years, we continued our overseas push, opening dozens of offices across the Middle East and Asia, generating 100% year-over-year revenue growth. The expansion was funded through regular capital raisings totalling $28m from Australian high net worth individuals and family offices. We capped off our capital raisings in this period when we completed a $57.5m raise from Francisco Partners in the US – fortunately for us, just two weeks before the start of the Global Financial Crisis (see previous post about this here).
About a year after the investment from Francisco Partners, I moved to Menlo Park in the heart of Silicon Valley. We had started to win some projects in the US, which had not been a priority market in the early years for a number of reasons, and we were building a team in the market. It was a great time to be in Silicon Valley, buzzing with the potential of both Software-as-a-Service and mobile applications to digitise industries. Aconex was right at the heart of this technology shift. While there, we started working towards our IPO and I returned to Australia prior to listing on the ASX in late 2014.
An Aussie IPO – the largest loss-making company to list!
The IPO was a rollercoaster (see previous blog post) but we ended up getting it away at a share price of $1.90, raising $140m at a market cap of around $400 million. As one of our investment bankers said at the time, and as only a banker would – “Aconex was the largest listing of a loss-making company in Australian history”. Looking back, our loss-making position was quite modest relative to most private SaaS businesses today, who burn through loads of cash. We had operated on a cash-neutral basis while growing rapidly for six years pre-IPO. I thought that wasn’t too bad.
Of course, life as a public company brought a whole new set of challenges and plenty of learning (all for another post). But helping to pave the way for other technology companies (and even some high-growth unprofitable ones!) to list on the ASX was one of the most rewarding aspects of that period.
Consolidating our global leadership
After the IPO we continued to extend our global leadership position, both through organic growth and by completing two major acquisitions. The first was a ‘bolt-on’ cost control solution called Worksite from San Francisco, which complemented our existing product suite. The second was the $120m acquisition of Conject GmbH, headquartered in Munich, the market leader in project collaboration in Europe with a strong presence in Germany, the UK and France.
Our management team spent a lot of time in Europe leading a successful integration program, both from a business and cultural perspective - getting German, French, Austrian, Polish and English teams aligned with an Australian business. Almost all staff stayed on post-integration and, with careful planning and a lot of work, we evolved into a single company with one global culture.
Oracle comes a-knocking
I was enjoying leading the company of, by now, around 900 people, and we had no intention of selling. In fact, we had turned down several unsolicited offers. But in late 2018 Oracle put a price on the table that we could not say no to, considering our fiduciary responsibility to shareholders. It had become clear that the best time to sell a company (or anything) to optimise price, is exactly when you don’t want to. Aconex was acquired for A$1.6 billion, at the time the largest ever technology acquisition in Australia.
The sale was bitter-sweet for me personally. It was a great result for our shareholders, many of whom had been with us since the early years. And our product was going to a good home at Oracle, who were assembling a construction tech business of which Aconex would be a significant part. But it was sad to see the end of a standalone Aconex. The day of the shareholder meeting to approve the sale was an emotional one for Rob and me, as well as for many staff and shareholders (you can read the AFR article here).
By the time of our acquisition in 2018, we were the world’s most widely-used cloud collaboration platform for managing construction projects. We had built the company to nearly A$200 million in revenue, employing around 900 staff across 50 cities in Australia, Asia, the Middle East, Europe and North and America.
After the integration of the companies and a year working in the Aconex-Oracle offices in Paris, I left Aconex, my professional life’s work of nearly 20 years, in mid-2019.
What I loved most
I loved everything about the Aconex journey. Of course, there were ups and downs, but the opportunity to build a company that changed an industry was hugely rewarding. It was a wonderful learning experience - working with a great people, driving the technology-led transformation of construction and engaging widely in the world.
As a leadership group, I think we developed a passionate and talented team that worked together to deliver our purpose of “connecting teams to build the world”. It is an enormous privilege to choose who you work with (founders should never forget that) and Rob and I were able to bring together the team and develop the culture that we wanted to work in.
Aconex was used on over one trillion dollars of projects, across hundreds of cities and dozens of countries on every continent (yes, including Antarctica!). I had the pleasure of meeting many of our customers around the world and doing business in very different cultures – Australian, British, North American (not at all the same as Australian), as well as many cultures in Europe, the Middle East, Latin America and Asia.
One of the joys of working at Aconex was the global reach of our platform and the places I was able to work in and visit. While being away from home a lot came at a cost to our family, I absolutely loved the opportunity to see the world and build a global business. As a family, we lived in Melbourne (our main home), four years in Menlo Park near San Francisco, a year in Paris and a few shorter stints in Hong Kong, Singapore and Dubai.
Perhaps above all, I loved being at the forefront of the digitisation of construction, bringing a traditional industry into the information age. I often say to founders (and my kids) that the technology sector is the best place for a young person to build a career. As a 20-something, you know more about new technology than most experienced executives. With it you really can change the world and this impact is only accelerating.
That’s my brief history of Aconex – a rewarding 20-year journey that came with all the scrapes and scars of scaling an Australian technology start-up, but with a huge amount of learning, and no shortage of fun, along the way.
Thanks to everyone that was a part of that journey. You made it awesome!