Wisetek founder Sean Sheehan tells Gerry Byrne how recycling computer equipment and securely shredding digital data has led to a global expansion of the Cork company.
When a businessman says his laptop is seven years old, he’s probably moaning and hoping somebody will order him a new machine. When Sean Sheehan, the founder and chief executive of Cork IT company Wisetek, says the same thing (which he does), he is boasting.
You imagine that someone who is responsible for selling many thousands of laptops annually would be keeping abreast of the latest technology. However, Sheehan’s laptop stock is different because few are younger than three years old.
The Cork entrepreneur is a central player in the booming worldwide market for refurbished second-hand laptops, to the extent that some computer stores, like one near me, sell nothing else.
The inspiration for Wisetek came from Sheehan’s experience at data storage giant EMC, where he was responsible for taking back leased equipment as contracts expired. The function was always regarded as a corporate inconvenience, he recalls, and Sheehan realized it had the potential to be a lucrative nuisance.
In 2007, after 16 years with the firm, Sheehan left EMC’s Irish subsidiary, and the following year he established Wisetek with the idea of doing his former job more profitably. EMC agreed to a contract giving Wisetek responsibility for retrieving and recycling equipment coming off lease.
The arrangement with EMC, then the world’s largest manufacturer of data storage equipment, provided an invaluable early calling card, which soon leveraged Wisetek’s growth and global reach beyond its County Cork origins.
It wasn’t long before Sheehan opened a facility in a Thailand freeport to handle used computer equipment flowing in from Asian lessors and outfits such as banks and other large firms renewing staff computers. In addition to Thailand, Wisetek has offices in the Middle East and China.
“We were lucky that we started off with a blue chip like EMC,” says Sheehan. “For the first couple of years we had to watch our finances, but we were providing a service and we got paid for the service. We never really had much bank debt until the last couple of years. From a financial point of view we are in very good shape. “
The phrase ‘the stars were aligned’ could have been coined with Sheehan in mind, as macro developments have repeatedly triggered significant growth opportunities at Wisetek.
In Europe, for example, various iterations of the EU’s WEEE directive proved to be godsends. WEEE forbids the dumping of electronic waste in landfills, while also compelling manufacturers to accept more responsibility for the disposal of their IT products.
More stars aligned in 2016 when EMC merged with Dell, enabling Wisetek to forge close links with yet another of the world’s largest computer manufacturers.
Wisetek performs three functions for clients. It grades the quality of returned equipment and decides what can be kept and reused, and what should be scrapped. It refurbishes the good stuff and markets it, sharing the income with the client who provided the equipment for recycling.
Wisetek also erases the data on hard drives and SSD drives to ensure that commercially sensitive information does not reach the outside world. It also scraps the junk, and if a computer is being scrapped the drive is usually mechanically shredded.
To date Wisetek has either erased or destroyed almost 14 million disk drives, and processed over 19 million IT components. The company’s dedication to the circular economy has led to it devising a plan for in the future only destroying the platters (the magnetic silver ‘floppies’ inside the drive that contain data) while preserving the drive’s shell, printed circuit boards and motors for reuse in new hard drives
While GDPR has been a pain for most businesses, it has been a boost for Wisetek since 2018, when corporate computer owners and lessors became legally obliged to ensure that sensitive customer personal data was kept under wraps.
This proved to be a huge boost to Wisetek’s activities. For example, Sheehan says that a single client is responsible for a throughput of 170,000 computers annually.
“You can get sued if there is personal information remaining on a laptop that goes into the marketplace,” Sheehan explains. “That works in our favor because people are very nervous of what happens to a laptop or other data carrying device after it leaves their premises. “
So much so, he adds, that a specially equipped ‘wrecking’ van can be driven to the client’s offices for on-the-spot destruction of hard drives. Complete erasure is a complicated procedure as confidential data can still be recovered from an intact drive from which data has been conventionally deleted by the user.
There was a time, Sheehan says, when the cost of computer disposal was the major issue raised by a potential client. Cost is now fourth in a potential client’s list of concerns because nowadays they are primarily worried about security.
“They want to make sure that their device is taken care of properly,” says Sheehan. “They are looking for reputable people to provide a solution and ensure the data is safe. If it gets into the wrong hands you can potentially be fined millions.
Another macro factor that has worked in Wisetek’s favor is Covid. “There was huge demand for laptops, even refurbished ones,” says Sheehan. “We couldn’t keep up supplies at one stage when everybody was working from home. “
In recent years, Wisetek has expanded in the United States where policies similar to WEEE and GDPR are now being implemented. In 2019, Wisetek merged with peer firm Computer Discounters Inc, which traded under the Data Killers brand, and this year Wisetek opened its fifth US facility, a 42,000 sq ft premises in Northborough, Massachusetts.
The other US plants are located in Austin, Texas, Winchester, Virginia, and Sacramento, California, where there are two. The company has also launched a US online sales platform, Wisetek Market, to sell refurbished laptops and other equipment.
Similar Wisetek sales platforms serve the Irish and UK markets. Of its 440 employees worldwide, 200 are now based in the USA, where it has the capacity to deal with 20,000 laptops or other devices daily. US employment is soon expected to reach 300, outstripping Irish employment, which totals 204.
In September 2021, Wisetek opened a 40,000 sq ft facility in Milton Keynes, to complement its existing Reading operation. An earlier partnership with a UAE-based recycling company had cemented its reach into the Middle East.
Sheehan has also established strategic partnerships with similar companies in South America and other regions to which it subcontracts work. Wisetek’s reach extends to a total of 83 countries as a result, Sheehan says.
Sheehan has noticed dramatic changes in public attitudes to second-hand equipment. “Five years ago people had no interest in buying a laptop that was three years old. Now that old mindset has changed and a recent survey showed 90% of people being prepared to purchase a used laptop.
Turnover at Wisetek Solutions Ltd improved by 22% to €78m in the year to October 2021, with operating profit topping €5m last year. Net profit in FY21 was €4.1m, raising the company’s net worth to €10m.
Sheehan (62) has expanded the business while retaining equity control. He speaks for 47% of the company shares while Orla Sheehan owns 21%, with Kiemar Registrars, where Brian Ronan is the principal, accounting for 32%.
The FY21 accounts filing discloses borrowings of €2.7m from US investors Chris Scott and Zachary Boorstein, briefly directors at Wisetek, with the loans redeemed during the year with company shares. In 2020/21 Wisetek also reduced bank debt from €6.7m to €5m, while total liabilities were scaled back from €21.3m to €18.9m.
With annual sales having more than doubled in a three-year period, Sheehan believes there is more to come.
“It’s a huge marketplace and there are laptops and desktops everywhere. We want to grow more into the market and improve our services. There is a lot of interest in this area because it is a new industry, although I imagine it will consolidate in the next few years and several big players will emerge.”