Following a career that’s seen him grow and sell multiple businesses, taken him to Silicon Valley and onto our TV screens, Steve Baxter is now focused on investing in early-stage start-ups. And the proud Queenslander is doing it from his beloved sunshine state.
Tech pioneer Steve Baxter is a straight shooter. He doesn’t mince his words. He isn’t scared to take a side or a stance. (Anyone who follows his social media, has viewed him on telly or read his comments regarding Adani, NBN and unions will know this.) No doubt, this trait has helped the businessman get to where he is today. And certainly, it has been valuable to the many tech companies Steve is invested in growing. (No blowing smoke here!)
Since establishing his company Transition Level Investments in his hometown Brisbane back in 2010, Steve has championed and invested in numerous early-stage startups. It seems to be his sweet spot – the balance of finding a purpose, keeping his business acumen sharp, helping Australia innovate and of course, financial reward.
Long before he was a tech investor though, Steve was a boy from regional Queensland, born in Cloncurry, some 770km west of Townsville, and raised in Central Queensland’s Emerald and Rockhampton. “It might sound a bit cliched, but life was simpler back then,” says Steve, of growing up in Emerald and Rocky. “You got to ride your bikes around and do a whole bunch of stuff before the world got serious, you know?”
Steve was the third of four kids. Dad was a clerk in Queensland Rail and Mum was a housewife, later obtaining a social work degree and working for Commonwealth Rehabilitation Services; and neither was particularly interested in technology. The family was more likely to spend weekends playing sport, socialising, barbecuing, and fundraising for the Lions Club or the local old people’s home, which Steve says are some of his fondest memories.
By his early teens, Steve had developed some interest in electronics. Like many kids in the ‘80s, Steve owned an Atari 2600 console a Commodore 64 computer. “I remember buying a Dick Smith catalogue back in the day,” recalls Steve. “The Dick Smith catalogue was like an encyclopedia; it wasn’t just a sales catalogue, it had actual real information about how electronics worked. It was fantastic.”
“Actually, the year before last I was at an aviation conference and Dick Smith was there,” tells Steve. “I managed to have a chat with him afterwards and thank him for just making the catalogue. That catalogue was what probably set me off on this path, to be honest.”
‘Tech entrepreneur’ wasn’t Steve’s first career though. At 15 years old, finding himself getting in a lot of trouble, often, he left school to join the Australian Army’s apprenticeship program. There, he became a technician working electronics, telecoms and guided weapon systems.
“other than being a good dad, to be known as an ex-soldier is the highest privilege for me.”
“I think I would have done just about anything to get out of school; so, when I had the opportunity, I applied to the army, navy, air force. The air force and navy rejected me and then the army took me… But my preference had been the army, I wanted to be a soldier,” shares Steve, who describes himself as “extremely patriotic and a proud ex-soldier”. “Other than being a good dad, to be known as an ex-soldier is the highest privilege for me.”
During his nine-year enlistment contract with the Army (three years in Victoria, three in Brisbane and almost three in Adelaide), all of which was a peacetime army, Steve continued to educate himself. “When we deployed for five/six months in a 12-month period, we used to take a lot of books, but would run out of those pretty fast. So I enrolled in some part-time external university courses and one of those was Computing. I came across this operating system that allowed you to essentially plug modems and various bits and pieces into it and turn it into an ISP [internet service provider]. I thought ‘that sounds easy, let’s do that’.”
In 1994, fresh out of the army and with a minor knee injury and $11,000 life savings, Steve started his ISP business, SE Net, from a room in his Adelaide home. That’s a lot of cash and a big risk for a young bloke going into a new business in a new industry. To put some context around just how ‘new’ the industry was, the modern Telecommunications Act wasn’t formed until 1997 – three years after Steve launched SE Net.
“The first 300 customers, I actually drove out to their place and installed the software. Seriously, you had to! Back in those days, it was very hard to do. It only got easy probably around the 2000s,” recalls Steve, who grew SE Net’s customers to 35,000 before selling to Ozemail/UUNet in 2000.
For a tech company in the early days of dial-up, long before online transactions existed or any software was available, Steve really had to pioneer his own way. “It was a different world back then… I had to teach myself to code, I had to write the billing systems and business operational systems.” Add to that, SE Net’s only supplier, Telstra, was also its biggest competitor. “It was a very hard business to operate in. We were there at the sufferance of Telstra,” says Steve.
“On some days, our problems were making money fast enough. Other days it was not banking money fast enough,” recalls Steve. “Back then, there were no online transactions, because they just didn’t exist. People would mail in cheques, or they’d phone up with their credit card and we would write out one of those little carbon-copy slip things and whack it through the machine, you remember that shit? We also had people visit us and pay in person.
“I have exceptionally fond memories of that business; we built an amazing team, we were a very young culture, we had a lot of fun, and did a lot of cool things,” reflects Steve. “When we sold it, it was because we saw the threat from Telstra. In fact, they’d done
some things accidentally that massively impacted our business and scared the hell out of us. We saw selling as a way to get cash at the table.”
In 2001, Steve founded PIPE Networks with a Rockhampton schoolmate, Bevan Slattery, which they listed on the ASX in 2005. In late 2009, they sold PIPE to TGP Group for $373 million. In 2008, Steve spent a year in Silicon Valley working with Google, leading a project to deliver high speed telecommunications systems across the US.
In 2010, he founded Transition Level Investments, and in 2012 he launched startup accelerator and coworking space River City Labs in Brisbane (which he sold last year). “I didn’t want to build another business, I didn’t want to run it,” says Steve, of his decision to move into investments. “I’d left the army a reasonably fit individual and put on 50 kilos. It was not a healthy thing to do, but it was a lot of fun – you eat some good food and drink some good beer, let me tell you! Ultimately, I’ve reversed that.”
In October 2017, Steve was announced as Queensland’s second ever Chief Entrepreneur – a volunteer position appointed by Advance Queensland with a 12-month tenure. During his term, Steve toured Emerald, Rockhampton, Mackay, Yeppoon, Longreach, Toowoomba, Dalby, Roma, St George, Airlie Beach, Bowen, Hervey Bay, Bundaberg, Gympie, Gladstone, Cairns Atherton, Townsville, Ipswich, Gold Coast and Sunshine Coast.
“My year as Chief Entrepreneur was a lot of fun,” says Steve. “I got out and visited a lot of people. I also I dragged a lot of people out of Brisbane to go and network. When you’re networking in Barcaldine, it’s the same butcher, baker, and candlestick maker. There’s nothing wrong with those people, but, you know, it’s the same crowd every time. You can get so much out of networking events, you can have one conversation with someone that’ll change your entire approach to your business.”
What is the state of entrepreneurship in Queensland? “It’s good,” says Steve. “People are out there trying. The opportunity’s there, it’s just whether you want to seize it?”
“Anyone can get into business, so right now, people all round the world from favelas in South America through to people in Ukraine, Russia, China, Vietnam, Indonesia, the US, are all working on the new greatest, latest tech startup, some online app or service that we all need in the coming years. We [Queensland] have no special attributes that rank us against the rest of the world,” says Steve, before adding, “Given our parlous state of telecommunications though, I’d say we’re behind the eight ball.”
He is, of course, referring to the NBN. “I think that NBN is the largest piece of sovereign interference in the world. It was a grotesque idea when it was first proposed, and there was about 12 of us in the country who actually told the government at the time how it was going to end,” tells Steve, who drew from his experience building terrestrial and submarine networks in Australia, and networks across the US. “We predicted this future we’re in right now. We were called Luddites at the time, we were called ‘fibre-haters, we were called all sorts of things.
“The problem right now with the NBN is it costs too much to use. And because it costs too much to use, the people who sell it to end-users ration it out, they actually control their costs by constraining band-width,” explains Steve.
“We’re the only country in the world where the price of access for broadband is going up; every other place in the world, the price of access for broadband is going down.
“Tell me how clever that is, after spending $50 billion.”
Steve’s argument is that to allow enterprise to flourish, we need inexpensive, reliable, future-proof digital freeways throughout Queensland. One possible solution Steve has worked on with Queensland Government,
is to use spare fibre-optic capacity from state-owned power utilities and other utilities. “This would deliver metro comparable pricing – bandwidth from, for example, Townsville to Brisbane to be the same price as bandwidth from Fortitude Valley to Spring Hill. So, we can actually remove one of those barriers to doing business in the regions.”
Steve says it’s an easy program and once initiated would only take three to six months to engineer. “There’s no rocket science involved, it’s only what I would call ‘light engineering’.” But so far, there is no start date. In December 2018, the Queensland Government announced it will establish FibreCo Qld, to work with ISPs. “I hate delay, because it actually robs opportunity and time, there’s nothing worse than lost opportunity.”
Despite the hurdles, Steve’s advice for Queenslanders considering starting a business is to just do it. “The hardest thing can be starting.” Other gems are, “Only take an investor if you need one. The easiest money you’ll ever come across in business is from your customer, so sell first.” And: “Get out there and network like crazy, understand how other things work, talk to people.”
When he’s not networking, strategising with or analysing Australia’s next best tech startups, Steve is fishing (“There’s a fantastic island where we go fishing once a year, up in the Gulf of Carpentaria”), flying (an avid flier, he has his pilot’s license and is in the process of getting a helicopter license), or with his wife Emily and their three daughters, five-year-old Olivia and two-year-old twins Nina and Kara.
Looking back at his Year 11 track record to see what Steve has achieved, and is helping other tech startups achieve, that Dick Smith catalogue was worth every cent.