Simon Hackett was one of the first into the internet, then electric cars. Now it’s home storage batteries, he tells Lunch with the AFR.
Lunch with Simon Hackett opens on a macabre note. It seems natural to ask the Tesla electric car owner and amateur aviator – he has a Swiss-made Pilatus PC12 – if there are any electric planes flying about.
Turns out there’s a two-seater trainer on the market – with a catch. Like Tesla, electric planes use lithium ion batteries, which can catch fire or explode if they get too hot – scary for something that belongs in the sky.
But it can be combustible. Hackett ploughed some of the $95 million he received from the sale of Internode – the internet service provider he founded in the early days of the world wide web – into Redflow, developer of a battery that uses more stable technology.
Redflow’s battery is a marathon runner, he says, suited to stationary uses like storing solar power. “Lithium ion batteries are sprinters,” he adds. “I love those batteries in cars.” The Hacketts are among Tesla’s best customers in this country, with a fleet of three and more on order.
We are at Bergerac in Melbourne’s King Street, a traditional French restaurant with a cluttered, 1970s ambience.
Hackett discovered his affinity for computers at high school in Adelaide during the 1970s. It was the dawn of microcomputers, the school bought an Apple II and he had to figure out what made it tick. That led him to computer science and maths at Adelaide University, where he earned pocket money writing software for industrial machine tools.
“I really liked using software to make machines do things,” he says. Hackett has made his fortune out of doing just that, and is still doing it – and enjoying it.
After graduating he got a job as a system administrator at the university, just as the internet chirped and beeped into being. He was one of the people who built AARNet – a research network connecting the universities back to Melbourne University and the USA. Business then was oblivious. Vice-chancellors paid for it and the boffins bought Australia’s first Cisco routers and put it together.
Our waiter appears to take our orders. Hackett chooses crab ravioli, duck confit with duck sausage and red cabbage, and a glass of Chateau de Villeneuve Minervois. I opt for snails cooked in red wine sauce, crispy skinned barramundi with zucchini ribbons and capers, and Henley Hill Chardonnay from Yarra Valley.
It was a tremendous experience, but Hackett had the urge to start a company, which became Internode. “I don’t know where [the urge] came from,” he says. “It’s an affectation of a subset of the population.”
He still talks like a system administrator – in complex sentences. He dresses like one too – black trousers, open-necked blue shirt and black jacket with the Pilatus aeroplane logo displayed on the breast pocket.
In the late 1980s, Hackett and colleagues connected a toaster and a stereo to the internet – Australia’s first “internet of things” demo. A quarter of a century later businessfolk talk of nothing else. Hackett set up Internode to do this, but instead sold software to connect Digital Equipment Corporation mainframe computers – then a top make – to the internet.
By 1994 it was obvious households were going to connect to the internet, not just firms and universities, and Digital was faltering. Hackett hosted equipment for Hugh Irvine’s connect.com.au, an early ISP. “I saw it and I thought I can make that work,” he says.
He invested his profits from software sales to set up Internode as an ISP. By 2000, Internode had 10,000 dial-up customers in Adelaide. In 2001, he “bet everything again” and Internode became a national ADSL broadband provider, “reselling” Telstra’s ADSL service.
Game the system
First courses arrive and Hackett is impressed that photographer Wayne Taylor is taking pictures of the plates. “We are just doing food porn here,” he jokes.
Hackett saw first hand how Telstra could game the system and frustrate its customer-competitors. He spent “a lot of quality time with the regulator to make it work”. ISPs won the right to install their own ADSL2+ equipment in Telstra’s exchanges rather than using Telstra’s.
“Telstra had such high margins we could charge our customers less and still make a profit,” he says. New equipment could pay for itself in 18 months, a fact he used to cajole loans out of Commonwealth Bank.
After selling Internode, he spent three years on the board of NBN Co, an experience that makes him angry with politicians on both sides for mismanaging it. By pretending it was a commercial, off-budget venture they forced NBN Co to charge ISPs seven or eight times the true wholesale cost.
As ISPs switch over from Telstra’s network to the NBN, they face such a steep hike in costs that one ISP, TPG Telecommunications, had to issue a profit warning last week. They’re just the canary in the coal mine.
Hackett says this will hurt every ISP, right up to Telstra, and end the golden era of competition in which Internode and other ISPs flourished.
To keep the entry-level service cheap, NBN has to charge heavy broadband users – the ones you want to encourage from business and innovation points of view – too much. This creates artificial scarcity out of fibre’s abundant bandwidth.
Hackett has enjoyed his crab – “lovely” – the buttery sauce reminds him of a behind-the-scenes restaurant tour in Tasmania where he learned the key to better tasting pasta is burned butter. He thinks Labor’s former communications minister Stephen Conroy – the NBN’s architect – and subsequent ministers – who include Prime Minister Malcolm Turnbull – should have had the courage to treat it as a 50-year investment in national infrastructure. Then NBN could have charged more realistic prices. “We are a rich country. We could treat it as if it were a new road system and get on with it.”
Full of electronics
Hackett is now relishing his duck. “Ooh yum!” The sausage, the breast and the confit sauce are all good. My barramundi is delicious too.
Hackett has been flying gliders for 30 years, powered aircraft for 15 years, and bought his Pilatus PC12 for $US4 million in 2012. The 10-seat turbo-prop is used by the Royal Flying Doctor Service and the cockpit is chock full of electronics – perfect. He flew it home from Switzerland in nine hops, via the Egyptian resort of Sharm el-Sheikh and Agra, India – where he landed at a military airfield and visited the Taj Mahal. Now it earns a living as a charter plane and ferries the Hacketts around on holidays.
He’s had one petrol-driven performance car – a Ferrari 308 – but got the electric vehicles – or “EV” – bug when he encountered General Motors’ ill-fated EV1 in the 1990s.
“I was hooked. EVs are the bloody future. I knew that in the 1990s. Ever since then I wanted to buy an EV that didn’t suck.”
When Tesla’s Roadster came along in 2009, he dropped $250,000 buying the first one in Australia. Now the family drives no other make. Hackett and wife Anna each have a Model S, and they have a Model X SUV and a Model 3 compact on order. Their four children – aged eight to 18 – will also drive EVs when they’re old enough.
Neither Anna nor his former partner – the family is the sum of “a series of mergers and acquisitions” – has sounded alarms about his passion for fast cars and flying. “Teslas are the safest cars on the road,” he says, implicitly inviting me to object that they’ve had a few fatalities – which he’d doubtless meet with a wall of statistics. He thinks Tesla’s incremental approach to autonomous driving makes more sense than Google’s all-or-nothing plunge. Driverless cars “are going to take longer than the optimists hope”.
No shying away from dessert at Bergerac. Hackett picks out a chocolate mousse gateau and I plump for the sticky date pudding. He came across Redflow because he wanted to invest in companies using technology to improve environmental sustainability. The same idea – and his love for the cars – got him into Tesla at $US28; they’re now $US200. “In five years, they could be $US40 or $US400. I’m betting on $US400.” He also invested in a pilot software company – Moorabbin Airport-based AvPlan – because he liked the product.
Redflow had developed a unique “flow” storage battery, the only one in the world small enough to be used in a house. It works by sucking zinc out of a zinc bromide solution and laying it down on plastic plates to store energy; the zinc returns to the solution when the energy is used. But it was targeting telecoms companies, which are wary of new things. Hackett thought they should start with the fledgling home storage market, where decisions don’t take a couple of years to make, as a stepping stone to the industrial market. He installed a couple at his Adelaide house, and had an epiphany. “I could not work out how to interface it. So I had to solve that problem.”
Making Redflow’s battery “plug and play” easy was right in his wheelhouse. He became chairman, and then CEO. This week, the first shipment of ZCell household batteries arrived in Adelaide. Hackett is convinced home storage will be big.
“It feels like the start of the internet boom.” At some point in the 1990s, one could talk about the internet at dinner and not be a pariah. Now the same thing is happening with batteries.
Hackett traces his love of electronic gadgets to the Apple II at his high school. While other kids played games on it, he had to work out how it worked, how to program it.
“That innate curiosity has served me very well in business. I seem to be interested in both the very fine detail and the high-level vision, and content to leave the bit in the middle to someone else.”
Bergerac: 131 King Street, Melbourne
1 snails baked in earthenware ramequin, shallots, red wine & garlic butter, $16
1 home-made crab ravioli with a blue swimmer bisque, $18
1 duo of duck confit and duck sausage braised red cabbage, green pepper corn sauce, $34
1 crispy skin barramundi with zucchini ribbons and crispy capers, $37
Sparkling water, $13
1 Glass Henley Hill Chardonnay from Yarra Valley, $9
1 Chateau de Villeneuve Minervois, $10
1 chocolate mousse gâteau, coffee cream ,raspberry coulis, $17.50
1 sticky date pudding and vanilla bean ice cream, $16
Two coffees, $9