Legislate meets Sam Michael from Ox Mountain

A conversation covering F1, maintenance and contracts

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In this episode, Legislate meets Sam Michael, CEO of Ox Mountain. We discuss Sam's background in F1 and how Ox Mountain are applying F1 and aerospace techniques to maintenance in capital intensive industries. Sam also shares his tips and advice for creating contracts.

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Charles Brecque:

Welcome to the Legislate podcast, a place where we talk about the latest insights in property, business, and contract drafting. Today, I have a wonderful guest, Sam Michael CEO of Ox Mountain, a company applying machine learning to maintenance processes in capital intensive industries. Sam, welcome to the show! Before starting Ox Mountain, you had a background in formula one. So maybe would you like to introduce yourself and Ox Mountain?

The story behind Ox Mountain

Sam Michael:

Yeah. Thanks Charles. It's a pleasure to join the podcast for Legislate. If I jump to your question on Ox Mountain, after just over 20 years of doing formula one I looked with a couple of other people as to what we could do in software and machine learning and how we could apply a lot of knowledge gained from industries like formula one, or tech driven industries, like formula one and aerospace to software. And so we started the company in 2015, as you said, we operate in the maintenance optimisation software space, we basically focus on the automation of processes that are typically manual or not done at all. Just due to the size of the data sets that we're dealing with. Our clients are mainly tier one mining and freight rail and petroleum companies. And yeah, that's all. The companies going really well.

What's been your favourite moment so far?

Charles Brecque:

Well done, so the company's going really well and it's now been six years. What's been your favourite moment so far?

Sam Michael:

Ah, yeah, you're right. Six and a half years. We've just gone over approximately. I think the most enjoyable side for me has been just seeing the team grow from just a couple of people, now to over 20 people. Now we've got locations in Oxford, Perth and Sydney, and our software is deployed globally in almost every country. And that's been really rewarding from a product point of view. It's also really great from a team standpoint, just seeing the people grow into their roles. We've got quite a young team at Ox Mountain and they're really keen software engineers and statisticians and project engineers. And it's just rewarding to see them watch the company grow from nothing into into a competitive company that's disrupting the maintenance space. So I get a lot of enjoyment out of seeing that and then mentoring the people in the team.

Charles Brecque:

Legislate is only a year and a half old and so we haven't been growing as long, but I can definitely relate to seeing the team grow into roles and the enjoyment from that.

Sam Michael:

Yeah, that's right. That's good.

What do you wish you had known before getting started?

Charles Brecque:

One other thing I noticed, when I started Legislate, is that certain things weren't quite as I expected, both in a good and bad way, so I'm going to ask you the same question. What would you wish you'd known before starting Ox Mountain?

Sam Michael:

Once you have dealt with formula one teams and people in F1 you get used to people that don't need any incentive to improve meaning their incentive is part of their day-to-day work and work-life. You end up being very technically focused on solutions and that spoils you a lot because I think the improvement programs that you see in lots of other industries involve a huge amount of people and teamwork just to get those teams to work properly. I'm not saying that you don't have challenges like that in formula one, but everything's all relative. So those types of challenges are definitely different. I think the the other thing is that just the dynamic outside of F1 is different because I'd spent not only 21 years in F1 and spent my whole life in motor racing so I was very used to doing stuff by tomorrow morning, it was the sort of timeframe and long-term was a couple of months. And that was the first thing. The second thing is the data progress with data and sensors. Systems in F1 are just really far in front. And I probably, I would have underestimated that when I left F1, but that gives us an advantage because there's lots of things that we had strong ideas about with what you can and can't do with analytics and it gives us a sort of running start on a lot of other companies. So both of them are, were, surprises.

Charles Brecque:

And so with those surprises, how has your vision for Ox Mountain evolved over those six years?

Sam Michael:

Yeah it evolved from, it evolved dramatically on day one because myself and another engineer called Charles Dibsdale who came in had aerospace and marine experience with Rolls Royce. So he was very much in the predictive analytics and sensor space, the same as myself from formula one. So we realised very quickly that the type of data, transactional data, the big companies use has far more depth to it than sensor analytics. Especially going back six years ago. That's changing very quickly, but still you can have transactional data going back 25, 30 years. So that pretty much pivoted our view of what the best way to do maintenance was very quickly in the early days. And then the rest of it's just been continuously disrupting. So trying to just look at where our competitors are, direct and indirect, and realising that small companies like Ox Mountain exist because we disrupt. So if you're not doing that, if you're not doing things quickly and more effectively there's no real number one. You'll find a very hard time to sell your product but also your whole reason for being there is to disrupt. So if you can't do that disruption I look at and think why do it? You have to have a business model and something that you disrupt. That's what makes it exciting and worthwhile.

Charles Brecque:

And so you mentioned, formula one's heavy with sensors and then in this new world of tier one mining it's more heavy with transactional data, how did you adapt?

Sam Michael:

Just to go to the first point, it's not the fact that the capital intensive industries don't have sensors. They do. They've got plenty of it, but it's not the same. They don't leverage it to the same extent as what a formula one team does for example. So it's used in quite a different way, by the way. There's a really obvious reason why. It's  expense because for a formula one team, even though they're well budgeted, they're running two race cars. A mining company could easily have 50 to a hundred trucks on one mine. So it's it's a completely different economy of scale. So that really changes the the sort of financial equation, if you like. So if you took a mining company, you could run the trucks and the mining company the same way as a formula one car, but your maintenance bill would go up by 10 times. And there would be no point because with the cost of downtime you can just accept a 20% failure rate in mining. That's perfectly acceptable. That's existential for a formula one team. They have to always be aiming for 100% reliability because their cost of failure and downtime is extremely high for that window that they're running in qualifying or a Grand Prix. So that changes the way that you use that data and the approach you take.

What are the key contracts you interact with the most?

Charles Brecque:

I guess the objective functions are very different. So you've been, growing the business, disrupting the industry. I imagine you've created quite a few contracts in those six and a half years, what are the most common contracts that you've been dealing with?

Sam Michael:

I guess on a day-to-day we deal with a lot of non-disclosure and confidentiality agreements. Yeah. Imagine for every client that we have, there's a lot of potential clients as well that you're talking to about your product. We're happy to talk about our product, but we don't go into how we do it with everyone and sometimes you have to go to a bit more depth with new clients. So yeah,  confidentiality agreements, employment contracts, obviously for our staff. So we deal with that all the time. And then of course our client contracts for engagement. So when we're actually selling our software and product so those are the three sort of areas that I'd say we spend the most amount of time on from a contractual perspective.

Charles Brecque:

And with those contracts especially NDAs, are there any common objections or areas of negotiation, which come up?

Sam Michael:

Occasionally in a NDA, but they don't tend to be too bad as long as you have a standardised form obviously almost all of the NDAs we are involved with are mutual. So they go both ways because it's very difficult to have a conversation without trading, exchanging information, both sides. IP is always front and centre for us. It always has been from the start. So that's always a strong thing that we look for in, in basically every contract that we do, it's centred around IP for the company, so to protect Ox Mountain, and all of the sort of IP that we've generated, our team's generated. That's probably the major focus point. I think NDAs and confidentiality agreements are generally pretty straightforward with the ones that we use.

Charles Brecque:

And are those provided by the client normally? Or do you take the initiative?

Sam Michael:

So we typically always take the initiative. So we use Legislate that we will push through to the client. Sometimes in the early days, it tended to be that the client would prefer to use their own NDAs or confidentiality agreement. We've seen a big change. And then probably in the last couple of years, interestingly, since we started working with Legislate, I don't know if that's a coincidence or not, I think that they went from thinking it was easier to go through their own process. And for some reason they've moved away from that. Maybe it's also the fact that we've been around for six and a half years as well. So they trust us. So I don't think I've signed a non Ox Mountain - Legislate NDA for probably almost a year and a half now which is good because it's easy for us.

Charles Brecque:

And do you think that it could also be explained by the fact these larger organisations are realising that, maybe their contracts are very complicated to process for small businesses?

Sam Michael:

I think that's what it is because that was actually the original reason for using their own agreement, because they'd say, if you try and introduce a new one, it's got to go through all of our legal procedures. Now I think the speed with which we can produce contracts because we're a small company as well and because there's just a couple of people that need sign off, we can do it very quickly. I think that's inverted. Anyway, I guess on an NDA, you're looking for things like the term, what's the difference between IP and background, IP, foreground, IP. And what does it say about that? Making sure that it's true, truly bi-directional, mutual is important.

Charles Brecque:

And I guess the commercial agreements though, are on the client's paper still?

Sam Michael:

You mean for a client contract and engagement? We're seeing both on that front as well. Yep. So I'd probably say that they do still tend more to the client, but not necessarily again. It's changing pretty quickly actually. The last couple of contracts have have come from ourselves, not from the actual clients and they are major, tier one players. But again, I think it probably just sits on the fact that we know what we're doing so we're talking the right language and the contracts protect the client as well. So as long as they can see that the contract's fair, then I think you can pretty much move on.

If you were being sent a contract to sign today, what would impress you?

Charles Brecque:

That's great. So I'm conscious of your time. We've got a closing question that we ask all our guests. So if you were being sent a contract to sign today, what would impress you?

Sam Michael:

If I was being sent a contract now, I'd say  I've already given away with a strong bias towards IP. So I pretty much, whenever I'd read a new contract, I go straight to the IP clause to see what someone is asking for. But I guess it's also the simplicity. I've seen the same worded contracts take, 15 pages or 50 pages. And that simplicity is the thing that makes a contract, easy to absorb and agree on. I think there's, especially when you get into sort of data protection acts, data security and cyber security clauses, and appendices, the contracts can really grow and most of those contracts are really hard to maintain for big companies. And actually they, I know why that happens because you have layer upon layer that adds to these things. So yeah, I guess probably to answer your question, two things: nice and simple contracts and good IP protection.

Charles Brecque:

Yeah. I think simplicity is definitely one of the most common answers we receive. And one thing that we're trying to do at Legislate also because, as you said complexity makes it hard to maintain for the client, but also difficult to actually follow for the parties, and for a lot of our users, who are for example landlords, letting agents and tenants, if tenants are in breach of their contract, it's often because the contract was too complicated in the first place to easily understand.

Sam Michael:

Yeah, that's a good point, Charles. And I think when you see that complexity the chances of a mistake goes up and you think you need a lawyer to help. I'm not a lawyer but I regularly have contractual discussions because you end up in that situation straight away, if you're in business development, sales and we've been very fortunate at Ox Mountain that we've got good people working inside the company that have legal experience. But I'd say 90% of all of that is they have to check. Once you go to really complicated contracts, you then have to think about getting legal involved. If it's simple, then you just don't need that. And the reason why you've got to get legal involved is because you think this is complex and you can't make a mistake here and you might miss something that's going to come up in two or three years time. And the classic mistake as well is to think that the person you're doing the contract with could still be there. And when you have an issue, because especially in big companies, people move around and change positions or even leave the company. So you've got to look at that contract literally plainly as you see it on the paper, because you could be talking to someone completely different who you didn't sign the contract with originally.

Charles Brecque:

Very good point. Thank you Sam for being on the Legislate podcast. Hopefully we can have you on again later! Thank you for your time.

Sam Michael:

No problem at all, Charles really enjoyed it and thank you very much for your time as well. And good luck with Legislate. Hope it keeps going on the same curve it is at the moment. Thank you.

Charles Brecque:

Hopefully we'll catch up with Ox Mountain in terms of success!

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