John Owen

Melbourne-based software company QSR International has a relatively low profile outside the world of academia, but they are actually one of the real global success stories of the Australian software sector.

The company’s products allow users to manage and more importantly make sense of the never-ending mountain of unstructured data – such as video, audio, pictures, text, blog posts, tweets, comments – and are used by more than 400,000 people worldwide, with a license to use the company’s flagship NVivo product costing as much as $2,700 per user. While the company will not disclose revenue, sales grew at 28% last financial year and about 90% of revenue comes from overseas.

Today we talk to CEO John Owen about being born global, jumping from the academic world to the commercial one and why Australia must do more to support its high tech industries.

Can we start by getting an explanation of exactly what a QSR does?

So effectively what we do is develop a software platform for researchers to manage, analyse and gain better understanding from what we call unstructured data. So that comes in many different forms. It’s generally in audio, video, pictures and text, of course. And so this sort of messy information is the greater component of the data that you’re gathering around the world. We’ve been analysing numerical data through statistical packages for a very long time but understanding the contents of unstructured data is a lot harder. So we’ve created software platforms to enable researchers to achieve a much greater understanding of information and by that hopefully be in the position to make better informed decisions and better informed programs.

Academic uses are obvious for this – there would be millions of researchers in need of the product. But take us through some of the examples where it’s used in government and business.

It’s starting to expand outside the niche market of academia and so the important thing is that government and commercial companies are recognising that they also need to look at this data if they’re really going to understand their customers or their suppliers or their business. They are gathering this information and have been for some time but in most cases, up until recent times, it’s been very hard to get an understanding of.

So I’ll give you an example of a bank that might gather huge amounts of information either internally or externally. We had one bank that was looking at training courses, internal training courses, it was gaining comments from those trainees, 15,000 of them every month. But nobody is going to read through 15,000 comments and then say ‘oh they like this course’ or ‘they don’t like this course’. What they’re going to do is quickly understand what that information is telling them and if they want to they can drill down and examine it a little bit closer.

In the publishing space, a New York company called iD8 Publishing Services using our product NVivo to help extract patterns and themes in content to provide its clients, which includes publishing giant Pearson Education, with editorial guidance and market intelligence. The software is being used to analyse everything from peer reviews to competitive information and has formed the backbone of a new online service and revenue stream. The software is ideal for the publishing market – it helps make sense of large quantities of unstructured data with multiple themes.

In commercial we have a whole range of different clients, we have legal firms using it to get a better understanding of their customer base and their relationship between them and their customers. We have a lot of government departments; it’s used in police departments and in defence departments and tax departments. And so again you can really apply this now to any area of research that you are doing because most of them really have some component of this type of information. It’s just been very hard in the past so they’ve tended to focus on the numerical side because it’s easier to understand that.

Academia is a really good place to have started, because academics are people that go to conferences and discuss things and share concepts. Did that help build credibility for the business?

Yes, it was very important for that because a lot of these conferences I held overseas. There’s not a huge number in Australia so that gave the visibility for the product in the very early stages in the international markets and that was a critical factor for us because if we were going to get a firm foothold internationally, we needed to do it when the product was young, when the market was young. Much harder when you’ve got a mature market to try and get into the American market or the European market if it’s really fairly saturated or mature. Getting in very early, building a reputation and credibility, you can then grow there.

Around 90% of your revenue is coming from offshore customers. Is that a difficult thing to manage from a base in Melbourne suburbs?

In some ways yes, in other ways because now with modern communications and the nature of our software it’s not too difficult but we do have offices overseas, we have an office in the US and an office in the UK. They are predominantly sales and marketing and they are obviously an excellent conduit to get closer to the customers and two of our larger regions in terms of markets. So although the predominant communicating tool is electronic, phone calls and face-to-face still do come into play.

From what I’ve read this business seems to have almost been created by a happy accident.

Yes that’s true and the origins go back to a husband and wife team Lyn and Tom Richards at Latrobe University. One was a social scientist and the other was a mathematician. This is going back into the 1980s now, and there were no tools whatsoever to handle this type of information. And qualitative research was mainly used in the social sciences; it’s obviously changed significantly now.

So they looked at what’s the best way we can develop the tool and they build something that their colleagues and peers thought was fantastic. That network sort of spread the tool and it wasn’t until the late 1990s that QSR was actually formed as a commercial organisation with a mission and a vision of what it could achieve in this.

So like a lot of these things it’s incubated in an academic environment and reached a point where it needed to become commercial, it needed to look at producing commercial grade software and also of course take back or to build marketing and sales capabilities.

Are the Richards still involved?

They were of course founders of the company and left a few years ago and in fact sold their share back to the organisation. So they’re not involved in any way anymore.

So what’s your structure now? Owned by management and staff?

It’s owned by a tight group of shareholders. So that’s basically a very tightly held private company at this stage.

How has the company been funded?

It’s been funded organically and the company from its inception has been profitable and debt free. Which is a good place to be, usually innovative companies require considerable VC support or whatever in achieving those goals, we haven’t had to do that. However we are looking at rapid expansion, rapid growth, particularly with the new product that we’ve got coming online which would be more geared towards handling a broader range of different research environments such as the commercial and government worlds. And so that’s something that we will always continue to evaluate.