Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. We love a good entrepreneur success story on Fear and Greed, particularly when it ends in a deal worth hundreds of millions of dollars. Soprano Design is an Australian communications technology company that specialises in mobile messaging software. It was started by Dr Richard Favero 25 years ago and has grown into a business that handles 10 billion communications every year for thousands of customers around the world. This year, Soprano Design was acquired by a Norwegian company for around $560 million dollars. Dr Richard Favero, the founder and majority shareholder of Soprano Design, is my guest today. Richard, welcome to Fear and Greed.

Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. We love a good entrepreneur success story on Fear and Greed, particularly when it ends in a deal worth hundreds of millions of dollars. Soprano Design is an Australian communications technology company that specialises in mobile messaging software. It was started by Dr Richard Favero 25 years ago and has grown into a business that handles 10 billion communications every year for thousands of customers around the world. This year, Soprano Design was acquired by a Norwegian company for around $560 million dollars. Dr Richard Favero, the founder and majority shareholder of Soprano Design, is my guest today. Richard, welcome to Fear and Greed.

Thanks very much, Sean. A pleasure to be here.

Thanks very much, Sean. A pleasure to be here.

So when you started the company 25 years ago, did you ever think you'd be selling it for this much money?

So when you started the company 25 years ago, did you ever think you'd be selling it for this much money?

Oh look, not at all, Sean. I think in those times, it's really a hand-to-mouth experience. And I think the process in which you go through that actually grows a business to this size is much more organic than what the planning might otherwise indicate.

Oh look, not at all, Sean. I think in those times, it's really a hand-to-mouth experience. And I think the process in which you go through that actually grows a business to this size is much more organic than what the planning might otherwise indicate.

Yeah. So tell us what exactly Soprano Design, breakdown what does your technology allow?

Yeah. So tell us what exactly Soprano Design, breakdown what does your technology allow?

So first and foremost, we're a software company and what we do is our software is making the communications that are automated more valuable and meaningful for our enterprise and government customers. So essentially it's access via a web portal like all other SAS (Statistical Analysis System) applications. But the driver of the application is communications, typically known for its SMS (Short Messaging Service) and email and voice communications, but increasingly other secure channels or over the top communications to WhatsApp and Facebook and the like.

So first and foremost, we're a software company and what we do is our software is making the communications that are automated more valuable and meaningful for our enterprise and government customers. So essentially it's access via a web portal like all other SAS (Statistical Analysis System) applications. But the driver of the application is communications, typically known for its SMS (Short Messaging Service) and email and voice communications, but increasingly other secure channels or over the top communications to WhatsApp and Facebook and the like.

Okay. So can you give us an example? You don't have to name the customer, but can you give us an example so it can really bring it down to understanding exactly that comparative advantage you provide?

Okay. So can you give us an example? You don't have to name the customer, but can you give us an example so it can really bring it down to understanding exactly that comparative advantage you provide?

So the key examples most Australian users would know us well for the one time passwords that are arriving on through most of your financial institutions. They are typically powered by Soprano, but also a lot of government communications that you receive via text and also, you know, your parcel deliveries or the appointment reminders in other jurisdictions. So we do a lot of stuff in the US around logistics and in particular in Europe with their health services, and it's been quite prominent in the COVID-19 handling. So that's been a lot of what we do.

So the key examples most Australian users would know us well for the one time passwords that are arriving on through most of your financial institutions. They are typically powered by Soprano, but also a lot of government communications that you receive via text and also, you know, your parcel deliveries or the appointment reminders in other jurisdictions. So we do a lot of stuff in the US around logistics and in particular in Europe with their health services, and it's been quite prominent in the COVID-19 handling. So that's been a lot of what we do.

Okay, I get it exactly now. So you've been going for 25 years. Let's look at a couple of milestones. And one was 2001 when you powered the first mobile payment transaction in Australia. But then soon after that, and it's probably the one that people first took notice of you at least in terms of mass audience, you powered the SMS mass voting for Australian Idol.

Okay, I get it exactly now. So you've been going for 25 years. Let's look at a couple of milestones. And one was 2001 when you powered the first mobile payment transaction in Australia. But then soon after that, and it's probably the one that people first took notice of you at least in terms of mass audience, you powered the SMS mass voting for Australian Idol.

Yes. So we're often the technology behind the brands that are actually driving a lot of these initiatives. So we, quietly in the background, are handling a lot of the complexity of what's involved in these projects. So that was a key milestone where SMS really came to the fore when there was a large number of voting applications on TV that were really interesting, really high volume, really complicated, really tricky to do. But through that, we cut our teeth and we're now in a position where we're able to handle billions of transactions rather than thousands of.

Yes. So we're often the technology behind the brands that are actually driving a lot of these initiatives. So we, quietly in the background, are handling a lot of the complexity of what's involved in these projects. So that was a key milestone where SMS really came to the fore when there was a large number of voting applications on TV that were really interesting, really high volume, really complicated, really tricky to do. But through that, we cut our teeth and we're now in a position where we're able to handle billions of transactions rather than thousands of.

Okay and so I'm just really interested. Over 25 years, you've built this incredible expertise and I understand exactly what you do. Is it about software engineers and investing in research and coders to create something better than what you've got? Is that sort of how did the company unfold?

Okay and so I'm just really interested. Over 25 years, you've built this incredible expertise and I understand exactly what you do. Is it about software engineers and investing in research and coders to create something better than what you've got? Is that sort of how did the company unfold?

I think we've been really blessed with a small number of really long standing software engineers in our company. There's about five of us have had more than 20 years in the business. And that software architecture that we began with is still current today although we've done one or two rewrites over that time. But what's been fantastic with the kit that we've got is that we're really inspired by our customers. We don't tend to take big random gambles on software development or software creation. We're really engaged with our customers. We really believe that by listening to them, we're able to see the future better than it is for us to sit in our rooms and whiteboards and try to guess the future. And I think that's what has allowed us to really change the software over that time and to maintain its relevance over that period of time.

I think we've been really blessed with a small number of really long standing software engineers in our company. There's about five of us have had more than 20 years in the business. And that software architecture that we began with is still current today although we've done one or two rewrites over that time. But what's been fantastic with the kit that we've got is that we're really inspired by our customers. We don't tend to take big random gambles on software development or software creation. We're really engaged with our customers. We really believe that by listening to them, we're able to see the future better than it is for us to sit in our rooms and whiteboards and try to guess the future. And I think that's what has allowed us to really change the software over that time and to maintain its relevance over that period of time.

And when you talk about customers, you're talking about Telstra and AT&T in the US, StarHub in Asia, those sorts of organisations?

And when you talk about customers, you're talking about Telstra and AT&T in the US, StarHub in Asia, those sorts of organisations?

Them as well. So they're our partners, one of our many channels to market through our mobile network operator partners and they've been fantastic for us. But ultimately, it's the end client who uses it is the real driver. So if you sell through AT&T to one of their big fortune 50 clients, you get access to just wonderful complexity that then allows us to take that to all of our other clients around the world that so many other suppliers just don't get the benefit of. So I think it's a real benefit for us to have access to those complex solutions, complex problems that customers are seeking, that then every user gets the benefit of.

Them as well. So they're our partners, one of our many channels to market through our mobile network operator partners and they've been fantastic for us. But ultimately, it's the end client who uses it is the real driver. So if you sell through AT&T to one of their big fortune 50 clients, you get access to just wonderful complexity that then allows us to take that to all of our other clients around the world that so many other suppliers just don't get the benefit of. So I think it's a real benefit for us to have access to those complex solutions, complex problems that customers are seeking, that then every user gets the benefit of.

So how did you manage to expand so globally?

So how did you manage to expand so globally?

Well, look, you know, there's a very rough road to riches, Sean, and we've had a lot of misstarts. We've got a lot of very expensive lessons on the way. But I'm not going to shy away. There's a lot of luck involved. So sometimes you just get really lucky to meet the right people at the right time. I've had sales cycles in the offshore markets that have lasted six years and I've had sales cycles that last three months. And I couldn't tell you why there was a difference. So I'd be misleading you and all to say that it's all well planned and organised, but it's ultimately you just got to keep on chipping away and eventually there is some gold behind those what otherwise look like rock walls.

Well, look, you know, there's a very rough road to riches, Sean, and we've had a lot of misstarts. We've got a lot of very expensive lessons on the way. But I'm not going to shy away. There's a lot of luck involved. So sometimes you just get really lucky to meet the right people at the right time. I've had sales cycles in the offshore markets that have lasted six years and I've had sales cycles that last three months. And I couldn't tell you why there was a difference. So I'd be misleading you and all to say that it's all well planned and organised, but it's ultimately you just got to keep on chipping away and eventually there is some gold behind those what otherwise look like rock walls.

OK, so did you ever think about listing on the ASX? You've created a really big company.

OK, so did you ever think about listing on the ASX? You've created a really big company.

Yeah, we looked at it about it would be five years ago now. And the unfortunate timing sort of led to it being paused and we were quite blessed that our listing would have been a rather more a compliance than a requirement for investor capital. So we were able to sort of pause that while some others still needed to go out after that disruption that happened in November 2016 to the IPO (Initial Public Offering) market. But that's also allowed us through that process we learnt a lot about our business, about ourselves, what's required to actually operate really well. And I think out of that, we were able to redraft the business and become a little bit more precise in our administration delivery planning. And we really feel incredibly proud of the competence that our team have pulled together.

Yeah, we looked at it about it would be five years ago now. And the unfortunate timing sort of led to it being paused and we were quite blessed that our listing would have been a rather more a compliance than a requirement for investor capital. So we were able to sort of pause that while some others still needed to go out after that disruption that happened in November 2016 to the IPO (Initial Public Offering) market. But that's also allowed us through that process we learnt a lot about our business, about ourselves, what's required to actually operate really well. And I think out of that, we were able to redraft the business and become a little bit more precise in our administration delivery planning. And we really feel incredibly proud of the competence that our team have pulled together.

Richard, you sound like you've always learned from whatever you've done, good or bad.

Richard, you sound like you've always learned from whatever you've done, good or bad.

Look, it's a having the scars is what helps you avoid the pain later on. And that's part of the joy, I think, in the process. If it was all just straight planning and execution, then you wouldn't call it entrepreneurship. So I think cutting new paths is what opens up the opportunity. If you're just going to do what everybody else has done, then you may well have a successful business, but you're not going to find those new opportunities or those new goldfields.

Look, it's a having the scars is what helps you avoid the pain later on. And that's part of the joy, I think, in the process. If it was all just straight planning and execution, then you wouldn't call it entrepreneurship. So I think cutting new paths is what opens up the opportunity. If you're just going to do what everybody else has done, then you may well have a successful business, but you're not going to find those new opportunities or those new goldfields.

How important was resilience?

How important was resilience?

Oh, look, you know, there are many a time when you sit up curled in the corner in the foetal position and you're thinking, Jesus, is this really what I thought was a good idea all those years ago? But I think the opportunity that comes from just holding on is more important because there's so much more in the windscreen than there is in the rearview mirror particularly in our business. And if you just walk away when those times are tough, then you you miss out so much of that opportunity that's in front of you.

Oh, look, you know, there are many a time when you sit up curled in the corner in the foetal position and you're thinking, Jesus, is this really what I thought was a good idea all those years ago? But I think the opportunity that comes from just holding on is more important because there's so much more in the windscreen than there is in the rearview mirror particularly in our business. And if you just walk away when those times are tough, then you you miss out so much of that opportunity that's in front of you.

So eventually you did sell a 25 per cent stake to HT&E (Here, There & Everywhere), which is an ASX listed company. Was that because you needed the money or what was it, access to market? What was the reason for that?

So eventually you did sell a 25 per cent stake to HT&E (Here, There & Everywhere), which is an ASX listed company. Was that because you needed the money or what was it, access to market? What was the reason for that?

So at the time, you're looking at 2000 here. That's when everybody was doing it, it was the dotcom boom and its eventual crash that happened shortly thereafter. But what it provided us was an opportunity to have a little bit of stability in the organisation, access to some excellent executives. Over the time that HT&E's been involved in Soprano, we've had access to their nominated board members and that's allowed us to be a little bit more rooted in what is best practice and what would be the best way to do things. So it bought us a lot of expertise, a little bit of money, but more importantly, the expertise has been most valuable.

So at the time, you're looking at 2000 here. That's when everybody was doing it, it was the dotcom boom and its eventual crash that happened shortly thereafter. But what it provided us was an opportunity to have a little bit of stability in the organisation, access to some excellent executives. Over the time that HT&E's been involved in Soprano, we've had access to their nominated board members and that's allowed us to be a little bit more rooted in what is best practice and what would be the best way to do things. So it bought us a lot of expertise, a little bit of money, but more importantly, the expertise has been most valuable.

Stay with me, Richard. We'll be back in a minute.

Stay with me, Richard. We'll be back in a minute.

My guest this morning is Dr Richard Favero, founder of Australian communications company Soprano Design. So why do you think Link Mobility, the Norwegian organisation, why do you think you were so attractive to them?

My guest this morning is Dr Richard Favero, founder of Australian communications company Soprano Design. So why do you think Link Mobility, the Norwegian organisation, why do you think you were so attractive to them?

Well, they're the largest CPaaS (Communications Platform as a Service) organisation in Europe.

Well, they're the largest CPaaS (Communications Platform as a Service) organisation in Europe.

Sorry, CPaaS?

Sorry, CPaaS?

Sorry, Sean, CPaaS is a Communications Platform as a Service.

Sorry, Sean, CPaaS is a Communications Platform as a Service.

Right.

Right.

So the software that drives the communication, software like we do today. And they're the largest provider of that in Europe today. So partnering up with us where we have a footprint that is quite different to theirs. We have a presence in Europe, but a lot in countries where they don't, aren't quite as strong. So the hand in glove was quite extraordinary with Link. They don't have a presence in Asia or ANZ, Australia, New Zealand. Their presence in the US was limited as well and in Latin America. So we can bring them an instant global footprint and a wonderful set of technology and customers along the way. So it's a really exciting opportunity for them to expand globally. And it's wonderful for us because we get to continue to do what we do already, but in a larger framework with a larger opportunity set.

So the software that drives the communication, software like we do today. And they're the largest provider of that in Europe today. So partnering up with us where we have a footprint that is quite different to theirs. We have a presence in Europe, but a lot in countries where they don't, aren't quite as strong. So the hand in glove was quite extraordinary with Link. They don't have a presence in Asia or ANZ, Australia, New Zealand. Their presence in the US was limited as well and in Latin America. So we can bring them an instant global footprint and a wonderful set of technology and customers along the way. So it's a really exciting opportunity for them to expand globally. And it's wonderful for us because we get to continue to do what we do already, but in a larger framework with a larger opportunity set.

And you'll still be involved?

And you'll still be involved?

Yeah, like my involvement is not fading away in the business, so I'll take a position in the Link board, assuming all of the regulatory hurdles get jumped and then continue to have an impact on the business now but on a much larger organisation.

Yeah, like my involvement is not fading away in the business, so I'll take a position in the Link board, assuming all of the regulatory hurdles get jumped and then continue to have an impact on the business now but on a much larger organisation.

It must be really exciting. And putting the money aside, just the fact that you've worked on this for 25 years, particularly if you've worked with five or so software engineers and you've all more or less been in the same boat for that period of time to get to this point where you can actually say, well, we are successful.

It must be really exciting. And putting the money aside, just the fact that you've worked on this for 25 years, particularly if you've worked with five or so software engineers and you've all more or less been in the same boat for that period of time to get to this point where you can actually say, well, we are successful.

Well, it's often hard when you're in your office to actually realise the impact you're having and the success that the teams manufactured over this time. We don't tend to court a lot of the noise in the market. So we are quietly in the background achieving what we do. So the transaction represents a wonderful validation of what the team have pulled together and it gives the team confidence that we are best in class. And moreover, for our customers who have been so brave to choose us over those years, for them to know that they've actually made wonderful decisions in choosing Soprano technology to power their communications.

Well, it's often hard when you're in your office to actually realise the impact you're having and the success that the teams manufactured over this time. We don't tend to court a lot of the noise in the market. So we are quietly in the background achieving what we do. So the transaction represents a wonderful validation of what the team have pulled together and it gives the team confidence that we are best in class. And moreover, for our customers who have been so brave to choose us over those years, for them to know that they've actually made wonderful decisions in choosing Soprano technology to power their communications.

Richard, I think you're understated. Move over Atlassian, move over Canva, bring on Soprano Design. I mean, I just think is a wonderful story of an Australian software company making it big on the big stage and proving its worth.

Richard, I think you're understated. Move over Atlassian, move over Canva, bring on Soprano Design. I mean, I just think is a wonderful story of an Australian software company making it big on the big stage and proving its worth.

Thanks, Sean. That is well appreciated.

Thanks, Sean. That is well appreciated.

Richard, thank you for talking to Fear and Greed.

Richard, thank you for talking to Fear and Greed.

Wonderful, Sean. Thanks very much.

Wonderful, Sean. Thanks very much.

That was Dr Richard Favero, founder of Soprano Design.

That was Dr Richard Favero, founder of Soprano Design.

This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer. Enjoy your day.

This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer. Enjoy your day.