Ross Hughson: Into the startup world

The former CIO of Inland Revenue Department and Westpac NZ is now immersed in the world of business incubators, venture capitalists and crowdfunding.

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Five years ago, Hughson opted to take a less trodden pathway for CIOs – to create a start-up business, having worked part-time as a business strategy consultant and independent Director while building his own company.

At that time, he had already left the CIO role at Inland Revenue Department, which he held for five years, and before that, taking the same role at Westpac NZ for two years. Previously he was CIO for AXA (formally National Mutual).

His entrepreneurial foray has been through a company called Personal Information Management (PIM). This company initially created myINFOSAFE, a digital vault application that people can download to their PC to help them organise and protect their personal Information.

In 2012, his company prototyped a cloud-based service that sits between organisations and individuals, to aid the control and integrity of personal data exchange. The company called this a Digital Vault, where people can control and manage their own personal information, and was one of the early iterations of a ‘personal cloud.’

Two years ago, he says, PIM realised the importance of identity to its Digital Vault service. During a trip to Silicon Valley, he and his business partner Aaron Stewart, met the owners of Edentiti, a major online identity verification company in Australasia. PIM became the New Zealand reseller of Edentiti’s greenID service, and Edentiti agreed to sell PIM’s services across the Tasman.

PIM launched the greenID service in New Zealand in November 2014 and now has many customers using this service including New Zealand Post, and Air New Zealand (through partners REVV). One of the major banks will go live with this service before the yearend.

In a nutshell, Hughson explains how the greenID service works: “When an organisation needs to verify your identity online (e.g. when you are signing up for a bank product like a credit card) the bank will call our verification service. Banks need to do this to comply with the Anti Money Laundering legislation or to check if someone is misrepresenting a person’s identity.”

GreenID will check the customer information against ‘authoritative’ databases. These include the passports database of the Department of Internal Affairs, the birth registry, citizenship file, and the Automobile Association for access to drivers’ licenses, and the Companies Office and Land Information New Zealand.

In the past, the customer would have to go to the bank and show these documents. “We can enable that to happen remotely,” he says.

“Through our process, we can ask the person to provide a bit more information about themselves, and we can verify the details they are giving are correct,” says Hughson. “Subject to the business rules we agree with that business, we can verify that person through our process.

“We check a number of points, and basically we can come up to say, yes, this person has been verified or not.”

Biometric checking services, based around mobile technology, will be added to greenID by the end of the year.

There is a need for technologies that help individuals manage, organise and protect the avalanche of information they have to deal with in the age of big data and the Internet of Things.

Ross Hughson, Personal Information Management

Based on the learnings from both the Digital Vault and electronic identity verification, PIM has also developed a new service, code named KeepMe (previously called KnowMe). “In our original digital vault, you can store all your personal information, from contacts to passwords, to credit cards and other information about your finances,” he states. “But for you to interact with others, you really need to be sure who people are.”

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With the first version of KeepMe, users will be able to manage details for all their personal, work and organisational contacts – updating everyone at once from one place. Different profiles will help manage different relationships, roles, and contexts. A KeepMe user can text you to invite you to connect via KeepMe. If you have not got the app, you can download it and establish your own details.

“We then do what we call a ‘swap’”, says Hughson, and both parties will share their profiles. If you change your phone number or email address, the contacts are updated so it becomes a live contacts database, he states.

Further services will be added or become evident within KnowMe over time, including integration with greenID. This will result in the user having a powerful tool to help them manage their personal information and their online identity. The free app (soon to be formally named) can be downloaded from the New Zealand App store.

PIM is a fast growing startup that was incubated in Wellington’s Creative HQ, which has a 5 per cent shareholding. PIM has attracted a number of local investors into the business and is now getting international interest as well, says Hughson.

PIM is also planning to raise funds through New Zealand’s leading equity crowdfunding platform, Snowball Effect, in the near future.

The PIM startup has now grown into a team of 10 people, prompting them to move to bigger quarters in Wellington in September.

Hughson says his experience on both sides of the business technology sphere – vendor (IBM) and customer – gave him the insights that spurred him to start PIM.

“I have learned much about the value of information to organisations,” he says. “But in the information age, individuals need to understand the value of their information. There is a need for technologies that help individuals manage, organise and protect the avalanche of information they have to deal with in the age of big data and connected devices, the Internet of Things.

“We are focused on finding new ways for people to manage their personal information,” he says, on PIM.

He says the next step is to connect the KeepMe service with organisations, so they can get real time updates from their customers as their contact details change. From the customer’s point of view, this is real customer centricity – where organisational systems treat the customer as the source of truth.

It’s not like that today, but Hughson thinks KeepMe will change this: “Today when you change your job, email address or your phone number, or your physical address, you have to tell everyone about the change.”

But when companies use KeepMe to connect to their customers, the change of details can ultimately go straight to their CRM system.

“Would you like a live customer database as opposed to a static one? When I was a CIO using such a service would have made huge economic sense.”

He says there is a cost for a company having to manage returns of their letters or messages. There are estimates it can reach up to $20 per addressee if you add the time and management to fix that, and post it to a new address or update the database.

“Our business model is when an organisation gets an update of an address to their system, we get a small amount. And for that, individuals get a tool to start controlling the interface with the people and organisations they deal with, in a secure and trusted way,” he says.

“The success of the app will be dependent on the number of users, and organisations that sign up,” he explains. “A number of organisations have already signed up for the service, and as users swap details with each other, the number of users will grow. When it gets to the stage where an organisation requires use of the service for updating contact information, we will know the service has been fully understood and accepted by the market.

“I believe that people undervalue their own information,” he explains on what drove him to create the app. “Today, they are very used to giving it away to the likes of Facebook and Google. Facebook and Google make money out of it.

“Here is a system for you to start managing your own data and getting value from your personal information. You are actually controlling it. KeepMe also basically becomes your digital identity over time and you control that as well.

“We are getting it going here, and we are then going to take it to the world,” he says.

He says New Zealand is a great place to do this project, which was also the opinion of some of the Silicon Valley specialists he has connected with in this area.

“It would be difficult to get this up and running in the United States. But in New Zealand, you can get one or two organisations on board – a telco and one bank, for instance – and suddenly for New Zealanders, it will become the default way of managing your personal information.”

Going back to his roots

Hughson says he has not met a lot of former CIOs who have gone the same route. The closest one would be Scott Houston, former CTO of Weta Digital.

Houston built GreenButton (acquired by Microsoft last year), which provides data processing services on demand, based on his experience from working on the Lord of the Rings film where filmmakers needed bursts of processing power at certain times of production.

They have known each other for many years and Houston allowed Hughson to use his Silicon Valley apartment as his base when he was meeting his contacts in related areas in San Francisco.

According to the 2015 State of the CIO report, New Zealand and global CIOs have similar aspirations for the next three to five years; 45 per cent see themselves continuing in the same role.

Only 6 per cent see themselves becoming an entrepreneur, more specifically, leading a startup. For New Zealand respondents, this figure dips lower, 2 per cent.

“I am part of that 2 per cent,” says Hughson.

Hughson says when he was working in the corporate sector, at the back of his mind he had wanted to run his own business.

“I have always had that in my blood,” he says. His parents and many of his siblings ran their own businesses. The family traces its roots to the Shetland Islands where their descendants migrated from around 135 years ago. They settled in Taranaki where they ran retail businesses.

“I ended up in the corporate world because I enjoyed it and I got a lot from it. But deep down, I was saying I wanted to make it happen, run my own business.”

The idea for PIM came when he was with IRD, and had in fact started the first versions of it when he was still in central government. He thought, “If I don’t leave now, I will never do it.”

So he just went out and started the company. At that point, he says, his children were fairly grown up and he was in a comfortable financial position. “I could choose what I wanted to do and not have to say I have to keep on working in another company.”

He is cognisant the path he took is not applicable to all CIOs.

“It is a matter of knowing what you want to do with your career. If you are happy doing what you are doing, like staying as a CIO, do it. If you are not, then make changes.”

Ross Hughson quotes Sir Ralph Norris: “There is so much you have to do in the CIO role that gives you really good skills to go on doing other things.”

Mentors matter

When he was a CIO at AXA, Hughson was mentored by Sir Ralph Norris.

Norris was then CEO of ASB, and though they only met a few times, their conversations always stayed with him.

“He said, ‘If you can do the CIO job well, you can probably do any other job in the business. There is so much you have to do in the CIO role that gives you really good skills to go on doing other things… if you want to,’” he quotes Norris.

“I also asked him how he moved from CIO to CEO. He explained a lot of it [was] he just took on extra responsibility and kept on doing a good job. So they kept giving him more.”

Hughson is likewise frank about putting the hard yards in building a startup.

“If you are not passionate and committed, it will not work.

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“I had to do a range of consulting activities to keep the funding going,” he says on the early years of his post-CIO career. Today, he says, he spends 80 per cent on the business, and 20 per cent on directorship roles in technology companies like Optimation. He has also been doing Gateway Reviews for some government agencies.

“The skills needed by entrepreneurs are different from that of the corporate world,” he explains. “As a CIO you are generally dealing with internal bureaucracy and big vendors and not entrepreneurs.”

He says as CIO of IRD and Westpac, he was on the global customer council for Unisys, Novell and SAP. “I got to see and connect with a lot of vendors on the global stage, and got to see a lot about how these organisations run.”

The startup world presented a learning curve. “I have never created a product before,” he explains. “My skills are primarily management, governance and strategy.”

He credits Creative HQ and the “fantastic network of entrepreneurs in Wellington” for easing his introduction to the world of startups and incubators.

“The thing that stood out to me was we should not be scared of doing stuff like this from New Zealand,” he says.

“It is one of those opportunities where we can diversify our economy. The likes of Rod Drury (founder of Xero) and Vaughan Russell (founder of Vend), these are the people doing a great job, and we should be having a lot more of these organisations that result in more jobs and contribute to growth in the New Zealand economy.”

Companies like these also do not impact the environment, he states. “They sell weightless goods that are easily delivered to the rest of the world and yet supported locally.”

This is part of a special report in the Spring 2015 edition of CIO New Zealand on: What is next after CIO?

Send news tips and comments to divina_paredes@idg.co.nz

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Click here to read the Spring 2015 edition of CIO New Zealand

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