STEPHEN LETTS: There's a prevailing wisdom that Australia may be a nation capable of coming up with some ingenious ideas, but often the next lucrative step of turning them into a successful business is lost overseas. Now, one exception to that is the anti-theft technology 'DataDot', which grew out of a one-time Sydney insurance broker's pursuit of a bright idea from a struggling company in the United States, and has grown into a global business with an impressive stable of well-heeled clients such as BMW.
EXCERPT FROM CSI TV SHOW: DataDot technology – every disc is laser-etched with an ID number. Certain car dealerships started added data dots to headlights, because they were being stolen so often. This isn't just any number – it's the vehicle identification number of a Mercedes Benz.
IAN ALLEN, DATADOT: I knew if enough assets were marked, it would be come a deterrent for thieves. I am not quite sure how we got it to work and no one else had. I don't think anyone else from the insurance industry tackled it, had got a hold of it.
STEPHEN LETTS: Ian Allen is an accidental entrepreneur. A tangential thought led him from a career as an insurance broker to setting up a global leader in the asset identification business with his company DataDot.
IAN ALLEN: I thought that if I could start a database and record all the items, the assets that I was going to insure, and somehow mark these assets for deterrence, for theft deterrence, and also for recovery, then I would be able to reward my clients or customers by giving insurance concessions. And that's what started me into the whole identification process, which is now DataDot technology worldwide.
STEPHEN LETTS: The original idea dates back several decades into the murky world of espionage, although rather than MI6, it was a business on the verge of bankruptcy, working with a small police force in the remote north-west of the United States that provided the key intelligence.
IAN ALLEN: And I saw an article about the Spokane police using these tiny microdots for sting operations. It was in chapter 11. Brent had attempted, with a number of partners, to get the dots system up in America, but it just failed. We re-engineered the whole lot, and have now taken it back out to the world, which is really not how it happens. Normally it's the other way around. I knew we needed a spray system. I didn't know what the spray system was going to look like until we developed it through trial and error.
STEPHEN LETTS: Ian Allen had to transform himself not just into a manufacturer but a financier as well, mortgaging his home and ploughing $2.5 million into the venture.
IAN ALLEN: It was very difficult. With private funding, you are on a limit all the time. Any people out there in business today, they know that to start a business from scratch, you are not going to get anything out for the first four or five years, maybe six years. Anyone that gets there any quicker is either very lucky or, from what I've seen, it is not sustainable.
We did all sorts of things to get the money in through the door and I used to say to our guys in a crisis, I said, "Look, we can either lie in a foetal position with our thumb in our mouth or we can become more creative." We did float in January 2005. We listed on the ASX and raised $10 million, and we got some money in the bank and we've just been back to the market recently for another $7.8 million, and we have enough funds to get us through now to exactly where we want to be.
STEPHEN LETTS: Where DataDot wants to be is splattered all over car parts, or indeed anything likely to be targeted by thieves. The likes of BMW, Audi, Porsche and Subaru all signed early, with theft in some models dropping by more than 90 per cent since being dotted. It's effectively a global monopoly now operating in 30 countries. But Ian Allen says monopoly rents can't be gouged.
IAN ALLEN: When you start working with manufacturers, of course, your margins are chopped to the bone, and you really have to work on your operating procedure and get your costs down. And we are doing that by getting all of our manufacturing processes in-house so that we don't have to have anything outside, and that’s helping us one heck of a lot.
IAN ALLEN: But the dot's moving on. The next step in development is marking bulk commodities like plastic, concrete and even explosives, and a retail product for home use is expected on the shelves later this year.
IAN ALLEN: And I liken it to getting on a merry-go-round. The merry-go-round starts to get a bit quicker, and it's starting to ride and go a bit faster, but it goes so fast and goes so quickly, that if you get off, you are going to hurt yourself, and hurt yourself big time. And that's exactly what happened to us – we were all on this merry-go-round and couldn't get off, so you survive and you keep on going!
DDT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
