You're listening to KBKast, the Cybersecurity podcast for all executives cutting through the jargon and hype. Do you understand the landscape where risk and technology meet? Now, here's your host Karissa Breen.
Joining me today is Jason Van Der Schyff, chief operating officer from SoftIron. And today we're going to be talking about Australian sovereignty. So, Jason, welcome to the show. This is a really hot topic at the moment that people want to get answers to, so I'm really keen to sort of dive on in now. What are your thoughts on Australian sovereignty just off the top of your head? Like, what do you think is going on? I think people talking about it. I mean, people are worried that things are going to start costing more. What are your thoughts?
Jason Van Der Schyff (00:59)
Yeah, I think it's a confluence of events that happened over the last couple of years. Right. There's obviously been a lot more activity from the Chinese, in particular in and around Australia and things like the Solomon Islands. I think Cobb had really shone a spotlight on some of the downfalls that we've had around just having over reliance on an import focus supply chain. We ran out of toilet paper, we were running out of all of these essentials and it all came down to the fact that they were stuck in containers in botany. Right. And I think those things coming together, people have just started thinking about that a little bit more, like importing everything. And then I think you have this other kind of technological backdrop of exposing apps like TikTok, and we won't just pick on them specifically, that maybe data is being harvested by foreign governments and going elsewhere. And I think that just gives everyone a little bit of unease. Yeah, okay.
This is such a big one. So this is interesting because speaking to people that are not in cyber or tech or like, oh, well, supply chain is one thing, but I don't think people are sort of really, you know, it's not eliminated to them on the importance of it. Now, I say this because I was having a chat with someone the other day and because of the Russia Ukraine war, which again is added to the problem, there was a factory running in some country, but they're sort of closing it down because the cost of fuel something costs a lot more to run, obviously, because of what's happening. But then they're like the biggest exporter of bathroom tiles or something random. And so apparently, like in Australia, if you want to renovate your bathroom, now is not a great time. And so it's like there's so many delays, it could take twelve months, 18 months, but then the flow on effect of that is, okay, well, builders are going to start going out of business, which is what we've seen especially here in Australia in the last twelve or so months. So do you think that the average person, the average business person is yes, in some way, yes.
This is about tech and sovereignty and all these things, but it actually can relate to them, their business and even them on a consumer level. But do you think people are getting this? That this is a thing that could impact them and will impact them?
Jason Van Der Schyff (03:09)
I think they are, but really slowly. And I think that's because it is starting to become a more recurring event. Six weeks ago, a little bit over, that there was a lettuce shortage. Hungry Jackson, Burger King, whichever, couldn't put lettuce into their sandwiches. It's grown somewhere else. And I think for those of us who live in a tech cyber world, we've been able to see this for a long time coming, particularly around the impacts of what a supply chain shortage may look like and our inability to get servers or laptops or desktops or all of these types of things. But I think people are really starting to get it at home when they can't get their bathroom Renault across the line because they can't get those tiles in or they're not able to get building materials. And then you start to see where it gets worse when we have cost of living is going higher, not just because of what's happening in the economy, but also because all of these things are having to come in. I think there's a little bit of a light at the end of the tunnel. And he touched on the Russia Ukraine event.
Jason Van Der Schyff (04:14)
I think wheat farmers in Australia are going to have a great year this year because we're able to now start exporting a hell of a lot more wheat than we previously have because of what's happening elsewhere. So I don't think it's all doom and glowing, but it is very much this idea of people are now feeling it at home and not just in sort of a cyber tech space.
Yeah, a good point. I think on the consumer front, when people start feeling that, I think that's when they start to pay attention. And to the latest point, I had this conversation literally two days ago. The Uber driver met Lettuces and I was like, look, apparently my partner bought a letter home the other day and it was like $2. But for like most of the year they mean $9. I've never seen in my lifetime a $9 letters ever. And it's crazy. But then he's like, yeah, but I think that was sort of related to the floods and stuff like that. So yes, there is definitely the flooding side of things because of the global warming or whatever you want to call it, that was impacted. But then of course the inflation and things are going up and I just don't know if people like, unfortunately, people have to sort of choke themselves as consumers before they start, like, making a move and start understanding a little bit more about how does it impact on their business, what sort of advice would you have for people from a tech or cyber perspective? Like, how does impacts us?
Jason Van Der Schyff (05:35)
I think we have to look a little more at home for where we can get solutions than always looking abroad. And I think this is really what we're feeling now as kind of a society. And I think what's fueling this desire to increase our sovereign capability is really born out of 25 to 30 years of policy that's been both in the government and also corporate policy that's led to this notion that. Well. It's much cheaper if we just go and do it in a foreign country because the cost per product is significantly lower and maybe we don't have to worry about the environmental impacts of our manufacturing process or production process. But here we are and the rubber is really hitting the road. There's products which are blowing out to insane lead times that are really impacting our abilities to deliver on kind of home grown projects. And so I think it's really just that idea of like, there are amazing things that are happening all across the country and obviously you get the unicorn success stories, the Atlassians of the World, but there's so many more little cyber companies that are solving really hard problems and I think that will naturally lead to manufacturing innovations.
Jason Van Der Schyff (06:54)
Australia has had this great history over its entire life of coming up these amazing innovations, not necessarily always capitalising them in the best way, but I think people are starting to change that thinking as well. Like, hey, we can come up with little bits of hardware or new technologies and we can manufacture those in Australia. And I think that's really the important part is let's look at what we can do here. We're an island nation. We're a long way away from a lot of parts of the world. And if Koba taught us anything, it should be increasing our selfreliance, whether that's food, energy, technology capabilities. And I think there's a real opportunity there. And you can see that not only the former government that has sort of led this, but it's really great to see that the Albanese government's come in and really starting to make really strong commitments about investing in Australia, which is just really overdue.
Yes. So a really great point that you raised there. So a couple of things that come up in my mind. So on both sides of my family, they migrated to Australia from overseas to do cane farming because it's a big thing here. People in Australia didn't want to do it. There was a lot of money in it back then, but then at some point it ticked over where Australia was like, no, we're not going to buy as much sugar cane or sugar effectively from Australia, we're going to get it from China. And then the whole industry just died, right? So now they're trying to bring it back. But the thing is, it costs more to buy it here. And I remember growing up like, or even today, you'd say like, oh, it's an Australian made, like that little green and yellow sign symbol thing that you'd always see. But do you think that people are very focused on price? Because I remember even growing up it's like, oh yes, and it's Australian product, but it's ten times the price stuff that I'm just going to go for the foreign option. Are you seeing that this will then change?
Because we have to be more reliant with stuff that we're producing here. But will that then mean the costs will go up? And do you think that people will be less reluctant to those price rises or what do you think?
Jason Van Der Schyff (09:03)
Yeah, I think historically, sort of putting the triangle with the kangaroo that said product of Australia was a bit of an excuse to jack the price up and it's pretty unfortunate, but I guess capitalism is what it is and I think that's not so much the case anymore. I think people are now seeking out the domestic product alternate not necessarily on price. They don't want to pay 510 X for something. But I think there is this notion of if you look beyond just what the product is, that product didn't come about by itself. The packet of sugar didn't pack itself. Even if it was done on a machine, there were still people in the factory that were doing that and that leads to jobs. And we'll have jobs pay tax and tax pays for healthcare and roads and all of those types of things. And I think there's an opportunity here for people to really start to understand a little bit more of the circular nature of the economy, that buying something for the cheapest price you can get may not be the right decision in the long run. And I think from our perspective, what we're trying to do at Soft Iron and our product is we manufacture hardware, we manufacture data centre appliances and that's pretty unheard of in most parts of the world, outside of a number of countries in Southeast Asia.
Jason Van Der Schyff (10:27)
And the fact that we do that today in California and we're in the process of building a factory to do that in Australia. People think that we're crazy sometimes in the fact that we're doing that. But what we're actually able to demonstrate to the phishing point is we can deliver a product that's domestically manufactured in the same price bracket as a mass produced product that is coming out of a factory in China or Taiwan or Vietnam. And it's about taking a slightly different approach to deliver the same end result. And I think it's just about making manufacturers smarter. Don't just kind of do the dumping and try and replicate what's happening in a foreign factory, because of course it's going to cost more money. You have to look at, okay, how can we change our products? Or maybe the cost of the materials is less because we don't need to put a whole bunch of things on there that are superfluous. How can we look at the way that the product is composed? It doesn't use software that requires licencing, it uses software that is open source. And to be able to bring those together, to be able to say, hey, here is a legitimate alternate, that it doesn't have to cost headache.
Jason Van Der Schyff (11:39)
And I think that's true not in just what we're doing in sort of technology, but it's also true across the industry and multiple industries where the same thing can be true for soft drinks or food or parts that go on aircraft or submarines or whatever it is. Necessity is their mother of invention, right? That's sort of the thing. And I think we've kind of become a bit lazy. It's the easy option is to just buy it from China.
Look, you probably already somewhat answers, but I just want to get maybe more of a definitive answer from you. Jason, why do you believe the government's really pushing Australian's sovereign capability? I sort of got my own theories, but I'm really keen to hear from you. Do you think a lot of it has been from the incidents that have occurred over the last few years? Or do you think, like, do we have to wait until these awful incidents occurred for the government to sit there and say, oh, well, now we should be focusing on our own sort of turf?
Jason Van Der Schyff (12:40)
Yeah, I think it's probably I think we're coming to this a little bit late in the game. It would have been nice to have seen a little bit more focus on dabbling sovereign capability and kind of defending our sovereign capabilities earlier. I think the timing, though, whilst it's a little bit late, is still very opportune because I think what we are seeing is there are nation states that are becoming more aggressive, particularly on a cyber front, and they're sort of muscling into our turf a little bit. It's breen a huge investment by the Chinese into the southern islands, similarly in Papua New Guinea. I think that's just getting a little bit close to home and I think there's parts of the country that really need to sort of have their defences bolstered, if you like, a little bit more attention given to them when you view that the sort of perimeter is coming in. And I think now is really the time for the government to start to act. The Australian economy has Breen really strong for a while. There's money in the coffers, as it were, and so I think it's really great when we're starting to see things like the National Reconstruction Fund that's Breen promised by the incoming government to invest in these areas.
Jason Van Der Schyff (13:53)
Like, let's put a billion dollars into cyber, because we need to start to develop the skills associated with that. And I think that's a huge part of it. And I think. For me. That's where we're a bit late to the party. Is you can't just snap your fingers and get 100,000 cyber security experts. Because now there's this latent threat. It's going to increase the amount of education. Increased investment that will naturally increase the number of companies that are contributing. And I think they're really trying to do it before there is this sort of black swan event. If you like. That looks like huge data breaches. Or even worse. Infrastructure being disabled or something like that. The capability exists sort of on both sides of the table for those types of things to happen, and I think for too long we've been really complacent that it won't happen to us. This is the type of thing that happens elsewhere in the world and I think the reality is that Australia is very much a potential target for a state based cyber attack and that's only going to get stronger when you start having nuclear submarines and nuclear facilities.
Jason Van Der Schyff (15:05)
That's just going to bring more attention to us. So I think it's very timely that the government is now sitting up and really paying attention to the latent threats.
Why do you think we're such a big target?
Jason Van Der Schyff (15:17)
I think we're incredibly resource, wealthy, incredibly educated country, so I think our ability to innovate, we are also a safe harbour for our big allies. And so it's almost a strike that looks not just like hitting Australia, but also hitting infrastructure that may affect people like the US and the UK. I think at the same time, we're also very vulnerable because we're a huge country, we're very spread out, we've sort of got these very dense pockets of population, but our interconnect between those cities is reasonably fragile. To disconnect the west from the east, from a telecommunications perspective is not that difficult. There's sort of one big highway between the east and the west coast and all the infrastructure goes along that. And so I think it's this idea of we don't have great resilience because of the size of the country and the population base. And so I think a very targeted attack could be really crippling because we end up with a lot of infrastructure in very few places.
So when you say resources, do you mean like mining and minerals? Is that what you mean?
Jason Van Der Schyff (16:31)
Yeah, mining and minerals, that is our biggest exporters. Right. We make huge amounts of money, so strategically getting access to that would obviously be beneficial for foreign states.
So here's another random sort of question for you. I don't know, you may be able to answer, you may not be. I mean, it doesn't matter to your opinion. One of the things that I'm noticing now yes, you spoke before, there's a lot of great sized security companies out there. There are. They're being overlooked, though. They're being overlooked for an American company. Oh, you're an American company, you're better. I feel that Australian investors will overlook a really, really good cyber based company here in Australia for an American one or a one based in the UK. Why is that? So we're pushing Australian sovereign capability, but yet we're not even looking in our backyard for the companies that are here and supporting them. I feel like a lot of guys out there are not getting any support and again, they're being overlooked for a company that may actually not even be that good in comparison with what we've actually got here. We've got really smart cable companies and people backing up, sort of leading them. Do you have any thoughts on this? I mean, obviously, you're living in the US, you're Australian based company, you've got a presence in the US as well.
But I don't know, I'm just curious on this. It's something that's bothering me a little bit.
Jason Van Der Schyff (17:42)
Yeah, look, I think from the investor perspective, as much as I think even the Australian based funds would really like to support Australian based businesses, the market ultimately just isn't really that big in comparison to the US Europe. And so I think then what you end up seeing is the classic brain drain, which is those small companies that are struggling to get fraction in Australia end up generally on the west coast of the US, where they quite often get more success in a shorter period of time because the potential is identified and they're forced to talk about the US market. I think one of the challenges that Australia can sometimes have is not addressing the overall worldwide market. And so you end up saying, well, you've got this opportunity in Canberra or with a government department, and that's going to lead to this, versus, well, hold on a second, every Fortune 500 companies should be deploying this in 5% of their infrastructure, which is going to be worth X number of hundreds of millions or billions of dollars of revenue over a period of time. And so there's a little bit of that that I think goes on certainly from the investment perspective.
Jason Van Der Schyff (19:03)
I think it happens a little bit in reverse when it's on the procurement side, where you either end up with these really sort of interesting scenarios where you see, like, the really small company that somehow has this incredibly massive contract and it sort of doesn't make any sense, and that's just because, hey, they're local and they can supply this thing that we need. That definitely happens. But then I think the negative part that happens is they sort of go, well, yeah, that's great. You're based here in Australia, you've got a couple of clients, but who in Europe is using this? Or which of the American companies are using this? And it's in this way of we want it to be domestic, but at the same time we want to know that it's being used somewhere else. And I got told this years ago by a guy who spent his career in technology, an American guy, Spanish technology career in Australia, and he said, Australians, if you put sport to one side, australians hate being anything other than second. So don't want to be first to adopt a piece of technology quite often, but they don't want to be anything after second.
Jason Van Der Schyff (20:13)
And I think that happens where it's like, well, we sort of want somebody else to be the first adopter to take that burden of risk, but then we want to make sure that we come to the party really soon. And I think that is, in a way, inhibiting that adoption of those smaller technology companies that do have things unique, because we're looking at how we can mitigate that, who else is already using it. I don't want to be the first department to adopt that piece of cyber security technology. I want somebody else to do it. And ideally, I want that to be a big US company or a big European company that I can lean into. And we see this with defence all the time. Our biggest primes in the country are all fundamentally foreign owned businesses that have come in and sort of leaned in and then as a result, we sort of look to them and go, well, what's BAE solution? What's the talis solution? How do we get the thing that they've got? It kind of becomes a self fulfilling prophecy, but in a bad way, which is the small companies never really get the start and then the big organisations never get exposed to this amazing technology that might exist.
Jason Van Der Schyff (21:25)
And so you end up looking at the technologies that are deployed and they're not industry leading, they're not the best solutions that are available on the market, they're just the ones that have lots of logos on their website. And it's really unfortunate.
Everything you're saying. I'm nodding my head. You're so right. I mean, I've got another interview coming up with another company again, made it big time. The US didn't quite make it here. Very common story, very sad. So I'm curious as to know, because this is a big one, we're pushing this sovereign capability thing, but it's like we're not even backing our own guys out here, right? Like, is this going to change? So the government is standing up here and saying, okay, all right, we're going to be Australian made, but then we're still not backing our team here. So is this lift service, is this going to be a legit thing? Like, are we going to see change or is it going to be the old story where it's like, went to the United States, made it, came back now? Okay, nell except you. And mind you, this is across industries. Actors, actresses are the same. They make it the US and then Australia finally accepts them. So how do we break the cycle? Or else companies here won't be able to compete and we are going to lose this sovereign capability that we're so desperately trying to push.
Jason Van Der Schyff (22:43)
Yeah, I think we have to look at the bigger picture, if you like, of how to solve the problem, because it's not just about saying, great, we're now going to manufacture this widget in Australia. It's really getting to one of those foundational industries that are going to come in and make a real change that allow us to have this become a sort of indigenous to the country expectation that these types of products are built in Australia. And it's strange, because there are certain industries that have done this incredibly well, and now world leaders, because they have invested in that. And I think aluminium shipbuilding in Western Australia is a great example of the kind of fast ferries and ended up being military patrol boats that, as a case study, started because there was investment in the TAFE programmes. Because if you want to build lots of aluminium ships, you need lots of people who can do welding and you're not going to recruit those people off the street or straight out of high school. So they had to philtre people into those educational opportunities to then come up and then they had to look at automation.
Jason Van Der Schyff (24:01)
And there's a different skill set for the people who could do something manually as to the people who could run the robots. And so there was more vocational training opportunities that were opened up. And so what you've now got to a point is it's very prestigious to go and work at one of those companies in the parts of south of Perth where they're building those ships. And it's really taking this approach. And I think we have to do the same thing with cyber. It's no good having a bunch of 20 to 30 to 40 something sitting in a room talking about what we're going to do with cyber. For sure, we need to have that happen because we need to sit in that group as the doers who are implementing things. But where's that next generation coming from? Where's that six year old, ten year old kid who's sitting there going, I want to work in this industry and I can see it, it's real, because all of these things are happening to then be aiming towards doing that as a career. And I think my hope is that the government doesn't just look at this from a perspective of what can we solve in the next five years?
Jason Van Der Schyff (25:09)
What are the things that we can build in Australia today as much as what are the things that we really need to be building in Australia in 10, 20, 30 years time? And so what are the commitments that we need to make to industry as far as large capital projects to maybe do things that we've never done here before in places that we've never done them before. So lots of regional development. I think regional Australia is so grossly underdeveloped and so technologically sparse as a result, that money going into there will just feed this whole problem forward. So really it doesn't matter if we build more things in five years time. We need to be building more things in 25 years time than we're doing today. Also making sure that the investment then doesn't go to the other extreme, which is let's not think about, you know, computing investment today. Let's just put all of our eggs in the kind of quantum computing basket. I think that's a real trap that governments can fall into as well, which is they miss that immediate need of the things that we really need in that ten to 20 year processes as well.
Jason Van Der Schyff (26:20)
It can't just be all about the shiny stuff. You know, politicians have a tendency to sometimes be like magpies and they just go to the new shiny thing. How do we actually fix the bits that are actually broken? There's lots of great opportunities, there's lots of great companies trying to do these things in Australia to really bolster those. Tesla is going to come out of Australia. That's almost not, I think, what you want in a way, but team that's worked out how to make a high energy density rechargeable battery that can be recycled, legitimately recycled or renewed or refreshed, as opposed to ending up in a landfill. Yeah, those are the types of things that we want to be building in this country because we're really good at that spot, if we can get that across the line, because we're then able to also export that technology. And so I think that's a huge part of we're good at exporting stuff that we dig out of the ground or that we grow in fields. Let's get really good at exporting things that are incredibly high value that can continue to build an industry. They're not just one offs, right?
Jason Van Der Schyff (27:30)
It's not just another ship full of wheat or a cargo ship full of red dirt. It's a high technology product that gets sold in high volumes to all around the region.
Do you think we need more leadership in the space? And you mentioned sort of phrase before, like, rubber hits the road. I'm a big believer in that. I like to see walking, not talking. Sometimes in Australia, people do a lot of talking. Right? So do you think that if we had perhaps some stronger leadership in certain areas, especially if we're talking about Australian sovereignty piece, we're going to see the rubber hitting the road?
Jason Van Der Schyff (28:05)
I think we do. We definitely do. And my hope is that we've got some of those people now willing to really stick their neck out and force the topic. I think it's very easy to have done a lot of the. Hand waving and posturing and money committing that we've seen not just at a federal level, but at state levels as well. We've got to stop talking about building precincts that could be technology hubs and we've actually got to start doing them. We've got to stop talking about building facilities that could do manufacturing one day. We've actually got to start doing them. We have to lure the big companies that are involved in this type of manufacturing into the country. And I think that means we have to put our hands into our pockets at times, because there are organisations that are going to want to see tax breaks or incentives or commitments from the government to drive that forward. And I think we talk about $7 billion for Red Spice. Great. Well, got killed by the next government. They haven't put their hand in their pocket yet. I'll give them a break. They've not been going at it for very long, but now is the time they have to do that.
Jason Van Der Schyff (29:15)
So I'm really interested to see the commitments that they start to make out of things like the National Reconstruction Fund. That's a great opportunity to actually put their money where their mouths are. How do we build future industries with that investment today that will feed forward into the future to create these sovereign capabilities? But they're going to have to do it at a meaningful scale. Hundreds of millions of dollars to billions of dollars, not hundreds of thousands of dollars to millions of dollars, which has traditionally been the approach. We'll give you a little bit of money, you can buy that new machine that will help you along your way. It's like, no, we need big investments. We're going to build world leading facilities to build world class products that haven't been built in this country before. That's the type of action that needs to happen.
So how manufacturing locally benefit people in the long run? Like, you've sort of touched in a little bit more, but I'm keen to sort of get into a little bit more fidelity from you, Jason.
Jason Van Der Schyff (30:18)
The biggest thing is you can shorten supply chains and you can shorten lead times by manufacturing things domestically. If you build something in a different country and you put it on a plane, it costs more because it costs real money to put that in an aeroplane and flight across the world, real fuel, and there's real environmental impacts on that. So by manufacturing domestically, you're instantly taking that premium off the table. The other part is if you maybe say, okay, well, that's fine, Jason, you can put things on a boat, you can sell them across the world. That takes time. Now, there's a time and money function that exists and so you can trade one for the other. But if you don't have that now, you're in a situation where, okay, well, I have to live with the fact that my laptop is going to take eight weeks to get here because it's being built in a factory somewhere else, and it's going to sit in a boat for 45 days and then sit on a dockland. So time is a huge benefit of that. I think the other benefit that you get out of manufacturing locally is the evolution of the jobs and then the evolution of the skills that happen.
Jason Van Der Schyff (31:29)
So we're super lucky in this country. We have reasonably low unemployment rates, which means we don't really want to create more jobs, right? That shouldn't be a focus of the government in investing in manufacturing, is to create jobs. We're actually pretty good on jobs, but we need to create skills, and then we need to fill those skills moving forward so they become higher skilled jobs. When I think about manufacturing, and the way that we think about manufacturing at Soft Iron is I don't want to just hire people who use screwdrivers to do assembly. I want to replace those people with robots to do the assembly. But I want to have those people working out how to make the robot more efficient, as opposed to just making people more efficient. And I think what that starts to do is it increases the skill sets required to enter and operate in the workforce. Those skill sets generally get remunerated at higher levels than very basic manual labour rates, which moves people through the sort of middle class, if you like, and their ability to then own property or invest in education for their children or whatever. It is, making the country wealthier overall.
Jason Van Der Schyff (32:49)
And that is about creating higher skilled positions for people. And so you have to then invest in the education, whether it's inside the company or inside the existing educational system of the country, to be able to do that. So it's investing in Stem programmes in high schools to create more engineers than people who are going to do manual tasks. And I think that's really, for me, the benefit of coming and manufacturing domestically. It improves the economy overall, not just with the product, not just with the price or the lead time of the product. It's those sort of intangibles that happen on the periphery of the actual thing you're building.
Okay, if you manufacture locally, for example, will the price be the same, more expensive or cheaper than perhaps getting sourcing, something from overseas, or is that going to depend on the product?
Jason Van Der Schyff (33:43)
At some level, it's going to depend on the product. I would say it's probably rare that it's going to be cheaper. There are some really cheap parts of the world that you can get products made depending on what it is. But I think there needs to be a huge premium. I think this has just been an excuse that we've had for a really long time, which is like, well, I've got to make this huge investment, and then I've got to advertise that. I think the government has a role to play here, which is to take part of that away, take the need and that desire to amortise capital expenditure costs onto the products. But the biggest thing that will drive that free market economy is competition. And I think that's one of the real opportunities for Australia and Australian businesses is to start competing in places where we've never competed before, where we've just assumed there's been an incumbent business and yeah, they're the company that builds that widget, right? We don't need to mess with them. And then what ends up happening is that's not how the rest of the world views it. They don't go, oh, there's a company in Australia that's building this nice widget.
Jason Van Der Schyff (34:53)
We'll leave them alone. Of course not. They get to, we can build a cheaper one. And so what ends up happening is the market here becomes vulnerable because there's only one or two vendors doing something. An overseas entrant comes in, they come in with their big marketing budgets. We see this all the time. And this is a story of cyber security in Australia. There's one company that has a Firewall product and now competes because maybe the market perceived to not be big enough to compete, and then you get a huge American company rolls in and just destroys the entire market by taking 100% ownership. And I think it's really time that we sort of get that point of let's not just be one company doing something in Australia, let's have five companies that are all sharing the market and that will stop the external companies coming in in kind of the waves that they do. And price will naturally fall out of that as a result. That's sort of the great thing about a free market economy, is that is one of the variables.
So what do you think the immediate opportunities are for Australian based companies at the moment? From what you're seeing?
Jason Van Der Schyff (36:02)
Increasing the amount of domestic content, I think for me is just a huge opportunity. And if that's the thing that we should have taken away from the last two years when it was hard to get externally manufactured parts. That's where we should be investing our money and we should be looking at where are the small businesses that can produce those parts for us and how can we increase their size by committing to onshore some of that manufacturing that we may be doing or parts that we may be sourcing. I think that's a huge one. And then I think part of that is we have to commit to that, right? If we're on Shoring, we've got to commit to that as a long term strategy and not let ourselves fall into a trap of feeling like it's going to be cheaper in the future and we'll go back offshore because it'll just be history repeating itself. But I think that's the takeaway for me is look at what's in your supply chain that you legitimately can bring onshore and into an Australian manufacturer. And don't restrict yourself to just looking at the neighbourhood that you're operating in.
Jason Van Der Schyff (37:10)
There's a diverse range of suppliers and manufacturers all across the country. There's very few things that we don't have the ability to manufacture in Australia. And then I think those that we can't, that's where we have to make the investment.
So I want to okay, I want to flip the conversation and think of it from a customer's perspective. So customers that are procuring vendors, software, product, whatever it is, how do we change the mentality? Because we're sitting here, it's all about Australian based sovereignty, but then it's like, I don't know, you can have some CTO guy saying, no, I hear this little Aussie company over here. Yeah, they're okay, but I'm actually going to go for the company that's Breen birthed out of Silicon Valley and they've got, I don't know, Mark Cuban has invested in them and they're awesome and they got great marketing budgets and cool T shirts. How do we change that conversation? I often see that that's what happens for people that are making purchasing decisions. Do you see that as well?
Jason Van Der Schyff (38:02)
It absolutely happens. Right. They go, I saw this company on Sharp Tank. Of course we've got to pick up the size as opposed to the Hong Kong one. I think part of it is those companies have incredible reach into those procurement offices. They get a lot more visibility. I think one of the things that small companies can do by themselves but are also hampered in doing because of budgets, is getting that visibility. And I think that's really where alongside this investment that the government has to make is it has to then also assist these companies getting visibility. Because those big companies, if they're not household names by the entire nation, certainly in sectors, if you're Cyber Security Procurement Officer inside a department in Canberra, you're going to recognise these names and you're not going to recognise the small Aussie companies. And I think part of that investment in creating sovereign capabilities, it's no good just building it and having it in the country. You've got to have it used by the departments and the companies in the country. And that shouldn't solely rest on the kind of small mega budgets that a startup company can have.
Jason Van Der Schyff (39:18)
I think there's opportunities as we're building these tech precincts, as we're investing Commonwealth money into some of these smaller companies to create sovereign capability. We've also got to look at how we can take them and put them in front of the right people. We do a phenomenal job of this, actually, outside of the country, and Odds Trade does a phenomenal job in taking small companies and taking them to trade shows and Team Australia and all of these type of stuff. But we don't do it here, we don't do it at home. We're not having the Sovereign Capability Show in Canberra, where all of the small cyclist outfits are really put front and centre. The problem is the big companies come in and they overshadow the smaller companies. I think it's really that is you can't just invest in them to try and grow them, you have to invest in them to put them in front of the decision makers who actually can really drive that growth. Because the overall way that that sovereign capability will come to exist is because these are robust companies that are running profitably and they're not relying on the next government handout.
Jason Van Der Schyff (40:33)
And so that means they've got to get the contracts or they're just going to pack up and they're going to go to where the money is. And that probably looks like Silicon Valley.
Do you think people just are drawn to if I'm some Aussie based, I don't know, CTO that is drawn to American companies more than Australians?
Jason Van Der Schyff (40:49)
Look, I think there's an allure of Silicon Valley for sure. I can say that as an Aussie that lived there for twelve years, but I think in a lot of instances it's because Silicon Valley markets itself really well. It markets itself as this hub of innovation that every great idea in the last 25 years has come out of there. That's not true. It's simply not true. But it's built momentum and I think this is the part we've got to start. If you want the giant snowball at the bottom of the mountain, it has to start as a small snowball to get that momentum. And it's what you said we have to stop talking about it and we just have to do it well.
We're coming up to time now. Jason, do you have any sort of final thoughts or closing statements for our audience today?
Jason Van Der Schyff (41:35)
Look, I just think go back to how do we actually make this happen and how do we grow this sovereign capabilities? It's really looking on shore. Let's look as a collective what we can do more domestically, how we can make our small providers that we have here bigger providers and add fuel to the fire and grow from there.
Love it. Love it. I think that this is a really awesome interview. Great timing, because everyone's talking about it, people want to get answers. I really appreciate you answering hard questions that perhaps people need to listen to. Right? I'm asking you hard questions because this is the reality of what's happening in Australia at the moment. So I really appreciate you coming forward, sharing your thoughts and your insights and for your time today.
Jason Van Der Schyff (42:17)
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