Monday, July 9, 2007/
A unique radar system for monitoring rock wall stability in open cut mines has taken GroundProbe from start-up to the global stage at breakneck speed. Founder David Noon shares his story with AMANDA GOME.
David Noon’s company, GroundProbe, was practically born global. In 2003 it had just signed its first lease with an Australian miner, to monitor the stability of an open-cut mine, when it was asked to provide its system in South Africa. Deals with the US and Chile followed.
Now GroundProbe has systems in eight countries and is expanding fast. Noon (right) intends to double the company’s size within the next few years, through organic growth and the acquisition of bolt-on businesses.
He tells Amanda Gome about the company’s birth, during the tech wreck, and how the “stars were aligned” to enable GroundProbe to negotiate a difficult fortnight just before it went commercial. David is happy to answer your questions. Email [email protected].
- Company: GroundProbe Pty Ltd
- Entrepreneur: David Noon, 36
- Started: Formation in 2001. Commercial operation in 2003.
- Revenue: 2005-06: $18,798,000
Amanda Gome: Your Brisbane-based company Ground Probe has come up with a revolutionary new product. What is it?
David Noon: In a nutshell we developed technology that can tell in advance whether an open-cut mine might collapse. GroundProbe was the first company to successfully commercialise a real-time monitoring system that provides broad area coverage of slope movements in open-cut mines.
The product, Slope Stability Radar (SSR), enables mines to improve safety and optimise productivity against the risk of slope instability. Our product has already gained worldwide acceptance, with installations in many of the large open-pit mine operations in Australasia, Africa, and North and South America. Our staff numbers have grown from four founders to 105 employees in four years.
Your company has achieved the impossible: successfully taking intellectual property from a Cooperative Research Centre and turning it into a huge company. You launched in the middle of the tech wreck of 2001 with a very small grant. How did it happen and what barriers did you have to overcome?
In July 2001, GroundProbe was formed as a spin-off from the Cooperative Research Centre for Sensor Signal and Information Processing (CSSIP) and the University of Queensland. The intellectual properties for GroundProbe’s technologies were transferred to the company in return for shares. At that time, the company got an AusIndustry R&D Start Concessional Loan, which funded the development of the prototype SSR system to reach a production standard.
In 2003, the first significant lease contract was secured from a major mining company in Australia. Around the same time a Queensland Government Industry Start-Up Scheme (ISUS) Grant was provided to further develop GroundProbe’s business plan. These were crucial during the post-research commercialisation stage of the technology development.
Positive cash flow was generated from the production prototype and this gave confidence to potential investors when the company needed to raise additional capital to speed up production to meet the growing demand for SSR systems. Capital-raising in May 2003 allowed for the employment of the inventors of the technology from the University of Queensland and new staff (including the CEO), and the setup of an assembly workshop and offices in Brisbane.
In mid-2003 things were looking tricky. Then in the space of two weeks, you had the trifecta. What was that? How did you get venture capitalists still hurting form the tech wreck to invest?
In mid 2003, we were able to secure our first long-term contract with a major Australian mining company, raise seed capital from several sources, and entice a well-qualified CEO to join the company. All three happened within the space of two weeks. If any one of these events had fallen through, the other events would not have happened: they were all dependent on each other. The stars were aligned for us during that fortnight.
What did you do once you had the money?
It was a simple plan. We used the money to build two SSR units, which were then leased to mines in Australia, and then we built another two units, and so on. The cash flow from the leases was sufficient to boot strap and build the business. We haven’t needed to take on any debt. Our growth has been derived organically from day one.
You are now in eight countries with offices in four continents. How did you begin your export push?
After three months of commercial operation, we were requested to immediately provide our system into South Africa following a serious mining incident.
A similar urgent request was made by an Indonesian mine just a few months later. Largely through word of mouth, mines in the US and Chile followed. As soon as these international markets became sustainable, we decided to establish local offices in Johannesburg, Tucson and Santiago to provide dedicated support and to enhance our international presence.
What has been the hardest part of exporting and how did you overcome it?
We recognised right from the beginning that we needed to work globally with the world’s major mining companies. To help with the transition from local supplier to exporter, we established strategic alliances with several international mining companies.
This helped accelerate entry into international markets and provided us with the confidence and security to commit to establishing local offices.
You are an electrical engineer. What has been the most difficult part of being an entrepreneur?
We have been able to take a great idea and make it into a commercial success in seven years. This sounds entrepreneurial, but I believe it is also what engineers are trained to achieve: to create and deliver value for the benefit of society. We were surrounded with other like-minded individuals and mentors who also had a passion for entrepreneurship and value-creation.
Many science start-ups have trouble managing the expectations of scientists who find it difficult to think in business terms. It has been described as herding cats. How did you overcome that problem?
None of the founding scientists and engineers from the University desired to become CEO (including myself). We understood that a well-qualified CEO who was also an experienced manager was required to ‘herd the cats’ (so to speak), and to apply business skills that we didn’t possess.
Lyle Bruce joined our company as CEO in May 2003, which was about the same time that GroundProbe commenced commercial operations. Lyle has been a wonderful mentor for the team, and has taken a long-term view in building a competent team and creating commercial value from our ideas. It has worked very well.
When did you become profitable and how have you managed cash flow?
We have been cash flow positive since the first day of commercial operations. At the beginning, our business model was to lease the SSR systems to mines.
This approach provided a strong and reliable cash flow to GroundProbe, which we invested back into building the business. More recently, we adopted a capital purchase model with long-term support plans in addition to leasing model. This has enabled our business to grow even more rapidly.
Just when things were on track your chief executive had an accident. What happened and how did that affect the company?
Our CEO, Lyle Bruce, was involved in a serious bicycle accident in 2005 that resulted in him being away from work for four months. While this had a sudden impact, our staff rallied and carried the company successfully to still meet our goals for the year. We were fortunate that Lyle was able to recover quickly and return as full-time CEO with fresh views and an energetic team to work with.
What new technology are you using in your office to increase productivity and/or reduce costs?
We are creating a customer web portal to enhance our position in the marketplace as a renowned provider of slope monitoring data and resources to the global mining industry.
This technology framework will also reduce communication costs, allowing GroundProbe’s customer communication channels to be enhanced in a similar way to which an ‘internet banking’ system works at a business-to-consumer level. In addition, this medium is expected to provide a powerful communication medium with the capability to reach a global audience.
What is your strategy and plan going forward?
Doubling the size of the business over the next few years. To do this, we will need to continue to organically grow our current business, and we are seeking to bolt on other profitable businesses so that we can diversify into other products or markets and obtain a step-change in our size and value.
What is the biggest risk you face?
Failing to grow in a sustainable manner. There is a delicate balance between growing too fast, and not growing fast enough. Sustainable growth over the long term is what we are planning for.
What has been the most rewarding?
The most rewarding part has been the building of a team of like-minded individuals who are energetic and dedicated with a strong culture of professionalism, mutual respect, and team support. Through our people, we have maintained a small-company culture and team-based structure that operates in a dynamic and innovative manner to rapidly grow and service our markets globally.
Without the dedication and efforts by our people, GroundProbe would not be as successful as it is today (despite the fact that we have a highly sought-after product in a buoyant mining industry).