From garage to ASX200 powered by the internet: iiNet CEO Michael Malone
Sunday, October 20, 2013/
Title: Chief executive officer
Studies: Bachelor of Science (Mathematics), AICD Directors Course
Motivation: A love of the internet and its life-changing potential.
Top tip for leadership: “People talk about going out there and starting a business. If you want it, just do it. Today, with children and relationships, I don’t think I’d do it again. So just get out and do it. Because it only gets harder.”
In 1993, Michael Malone had just graduated from university and was about to lose his internet access. He figured out it’d cost $25,000 to hook himself up to the information superhighway.
Using his own savings and a loan from his parents, he set up a connection through his parent’s garage.
He figured he could offset the cost of the connection by sharing it around with anyone else who wanted it.
So he started pitching a simple idea to anyone who’d listen.
He wanted 200 people to give him $25 a month to cover the costs of the connection, and for that, he would connect them to what was then a very slow, 14KB/second internet connection.
This was before the internet made crowd-funding simple. Hell, it was even before the rise of internet browsers turned ‘the internet’ into ‘the world wide web’ – a clickable array of hyperlinks and pictures. Back then, the internet was a connection to another computer achieved over a phone line by typing lines of computing code into a black screen – something used in universities to share data files.
Malone found enough early adopters to meet his funding goal and in October 1993, with the help of co-founder Michael O’Reilly, iiNet was born.
The following year, along came early web browser Netscape. Suddenly, you didn’t have to be a programmer to understand how to use the internet. Malone’s business boomed.
It’s been one of Malone’s greatest passions for the past 20 years. He’s still the CEO of the now ASX200 company.
“I was 23 when I took this business up,” he tells LeadingCompany. “Back then, my wife had a university scholarship to do in Tasmania. So I threw myself into the business while she was gone.
“There’s a fine line between focus and obsession. In my case, I was fortunate that the focus of my obsession meant I didn’t have to draw that line. For many business leaders, it is very easy to just throw yourself into the business and for it to become all obsessive, and it was for me.
“But I’m doing something I love anyway, so it’s not a problem.”
He says it’s a love of the internet, and a healthy enthusiasm for its potential to change people’s lives, that’s always driven him.
“I’ve talked to a lot of other people in business. If you try to make a business for the sake of making money, you will fail,” he says. “I think that’s a positive thing.”
Over the past two decades, iiNet has grown to become Australia’s second-largest DSL internet service provider. It’s expanded to three countries and employs 2000 staff. It posted $32 million in half-year profits this February, built on $474 million in revenue.
In recent years, the company has gained a measure of notoriety, or credibility, depending on who you ask, by fighting a four-year lawsuit with the Australian Federation Against Copyright Theft (AFACT), a group representing Hollywood’s biggest movie studios as well as local television networks such as Channel Seven.
AFACT took iiNet to court arguing that it infringed on copyright law by not preventing its users from downloading pirated material. The matter was eventually concluded in iiNet’s favour in the High Court last year. Malone was front and centre in the fight.
“Today’s High Court five-nil ruling confirms that iiNet is not liable for authorising the conduct of its customers who engaged in online copyright infringement,” he said at the time, adding that “increasing the availability of licensed digital content is the best, most practical approach to meet consumer demand and protect copyright.”
In taking this stand, he was unique among the CEOs of major Australian internet service providers.
But Malone does have a rather unique background, and an unusual path to leadership. His whole career has been spent at the helm of iiNet. He has a degree in mathematics – an unlikely pedigree for an ASX200 chief – and says he has never undergone any specific training in management, apart from a company directorship course with the Australian Institute of Company Directors taken long after he’d established his business.
In a way, this likely helped him, he says.
“I think the lack of management qualifications is one of those classic ‘you don’t know what you don’t know’ situations. And that was to my benefit.
“If I thought for a second that I couldn’t do it, I wouldn’t have done it.” He’s learnt about running a business in other ways – chiefly, from his board and those who report to him. “People talk about mentors. What I’ve found is that the people around me teach me far more than I ever taught them.”
The failures taught him as well: “When I’ve had enormous failures, they’re the times when I’ve tended to pick up things and use them.”
“The business went through a lot of problems in 2006. But ultimately, I learnt a lot from that and was able to build because of it.”
Asked what advice he would give to young people wanting to start their own business, he says they should “just do it”.
“I was just out of university when I started iiNet. Today, with my children and my relationships, I don’t think I’d do it again. So the thing I’d say is just get out and do it.
“Everyone says, ‘oh, I should study more’, or ‘I should set things up so it’s just right’.
But the reality is it never gets easier – only harder.”