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It takes a hacker to catch a hacker

Last Updated: Monday, 6 August 2007

By Mike Preston

Pure Hacking founder Robert McAdam has just moved his information security business into new premises on Pitt Street in the heart of the Sydney CBD.

It is a huge leap from the spare bedroom in which he started the business five years ago with his personal savings and no clients.

Pure Hacking is a boutique provider of a premium niche information security service to blue-chip corporate clients. It does penetration testing: in other words, he and his staff hack into corporate computer systems of banks and telcos to identify and fix vulnerabilities before they are discovered by genuine digital predators.

McAdam was a police officer before he became a computer cop. He worked for nine years in the NSW Police Service. He says the force gave him more than just a forensic advantage: “In policing, I really learned the value of building relationships. I’ve always been personable, and as long as I’m able to deal with people directly I’m usually able to make a connection, even in difficult situations.

“That has been a huge advantage for me. Especially in a service business, it is crucial to be able to communicate with and understand people,” McAdam says. Breaking the computer nerd stereotype, McAdam says the foundations of the Pure Hacking business are built on good communication.

He built the business the hard way: cold calling. “There was no marketing budget, so to get work I just got on the phone and started cold calling potential clients. It took three months of calling and talking to people till we got our first gig.” McAdam calculates he had to leave about seven messages before getting one call back, let alone a sale.

It was a struggle to earn the trust of corporate officers more accustomed to dealing with big name service providers such as Deloitte and Ernst & Young. He won them over by promising to provide the elite services these top-end corporates expect – but with the responsiveness and flexibility that only a small, specialised service provider could offer.

“We promised them the service they wanted, when they wanted it, and we delivered,” McAdam says. “It was something no-one else could do – for example, I got a call 15 minutes ago for a substantial engagement tomorrow night and I was able to re-arrange what we are doing and do it.”

To get and keep good staff, McAdam hasn’t scrimped on staff salaries to compensate them for the long hours required to meet the requirements of a demanding clientele. To pay for them, he has deliberately targeted clients who will pay premium fees to pay for premium staff, saying no to small clients.

“The big corporate end of town want premium services and information on demand, and they will pay $20,000 for a service for that without blinking, whereas it would usually be too much for an SME.”

The strategy is working. Revenue growth has grown 50% a year over the past three years. This year revenue will tip the million-dollar mark, and profits will be $500,000.

The fast growth has not been without its problems. A few years ago, encouraged by a business mentor, McAdam tried to accelerate the flow of new work into the business by spending $120,000 on a marketing campaign and opening a Melbourne branch office.

“We splashed out on big-ticket items to try and make the business look bigger than it really was, but it was without any real need or justification, and it didn’t work. We accepted this advice from mentors because we didn’t know any better, but in hindsight we were trying to run before we could crawl,” he says.

McAdam says Pure Hacking didn’t have the cash flow to support another office at that time, and when the person hired to run the office didn’t perform as well as expected the office had to close.

Four years later, Pure Hacking now has an established office in Melbourne and two new offices, in Singapore and Israel. The business now draws 20% of its revenue from offshore clients last year, with that figure likely to grow to 50% in coming months.

To this point, Pure Hacking has built export income by building on good relationships with the local offices of multinational clients to obtain work with regional branches. The next step, McAdam says, is to use established IT businesses in target markets to on-sell Pure Hacking services.

To make this work, McAdam works on relationships with complementary businesses overseas. “I feel happy with where the business is now, but it’s a big world out there and we need to be playing more globally than we are at the moment,” he says. “The one thing we can’t do is stand still, and if I need to hit the phones again to make sure that doesn’t happen, I will.”