Paul Wallbank | Paul Wallbank - Communications Professional

Labor’s pitch to repair Australia’s broken technology dreams

The Australian Labor Party makes its pitch to transform the nation’s workforce and technology sector. Cynics have heard this before.

“It’s like we lived through five minutes of innovation sunshine,” says Federal shadow treasurer Chris Bowen about the Australian government’s innovation policy.

Bowen was appearing at the Future of Innovation panel at Sydney’s Stone and Chalk fintech hub with his colleague Ed Husic where laid out the Labor Party’s platform for the tech industry and the changing workforce.

Both Husic and Bowen represent Western Sydney electorates which, along with outer suburban Melbourne, are key election battlegrounds and the districts dealing with most of Australia’s surging population growth.

Uneven spoils

As Bowen indicated in his speech, those regions haven’t shared in the country’s economic growth over the past ten years.

Some parts of the Australian economy are doing well. Other parts are doing it tough.

Half of all the jobs created in Australia in the last decade have been created right where we are: in a two kilometre radius of the Sydney and Melbourne CBDs.

The economy feels good from this vantage point.

Not understanding the mismatch between different parts of the economy was one of the failures of the government’s 2015 Innovation Statement. The multi million dollar advertising campaign was full of fine buzzwords but none of the rhetoric resonated with the broader electorate, something not helped by the Prime Minister retreating from his policies at the first opportunity.

Spreading the gains

Bowen and Husic made a good case for their policies being focused on the wider population as a changing workforce is going to affect all parts of the economy.

So I spend a lot of time travelling to and talking to people in regional economies. It doesn’t feel as good there.

Regional central and North Queensland. Tasmania. South Australia.

Here, unemployment and youth unemployment are high and show no signs of budging.

So Bowen’s commitment for his party to work on innovation, education and industry policies that help suburban and regional Australia – not just the leafy bits of upper middle class Sydney and Melbourne – is welcome and essential for the nation.

Refreshingly Bowen also acknowledged many of the jobs that currently exist in suburban and regional Australia are very likely to be automated and that education, reskilling and investment are all critical factors in dealing with employment shifts.

A familiar tale

However we have heard this before, the Rudd Labor government came in with high hopes when it was elected in 2007 which it quickly dispelled and then compounded its errors with cancelling the COMET commercialisation program and making a mess of employee option schemes.

Given this history of poorly conceived thought bubbles posing as policy, this writer asked (or rather begged) Bowen to consult with industry and the community before announcing major policy changes – something both parties have become notorious for.

In answer to the comment about consulting with the electorate before substantive policy changes, Bowen suggested a Shorten ALP government will be requiring senior public servants to be more engaged with industry.

Suggesting that senior public servants should engage with the community and industry is a good idea. That the idea is seen as revolutionary illustrates the problem found by former Digital Transformation Office boss Paul Shetler when he arrived in Australia with the country’s top bureaucrats being isolated and aloof from the citizens they deign to rule. This isolation is in itself a challenge facing Australian governments.

Memories of earlier oppositions

The Sydney tech community’s lauding Husic and Bowen bought back some memories. Fifteen years ago Australian technologists were doing the same thing with another Labor shadow spokesperson, Kate Lundy. We ended up with factional warriors Stephen Conroy and Kim Carr when Labor finally won. While both were no doubt wonderful at delivering the numbers to party faction warlords their understanding of the changing economy was marginal at best.

While the Rudd government at least paid lip service to the Twenty-First Century, unlike the Howard government which was firmly focused on taking Australia back to the 1950s – with some degree of success it should be said, the Labor Party did little apart from getting the National Broadband Network underway.

In opposition, the Liberal Party too made similar noises however communications spokesperson Paul Fletcher, like Lundy, has been marginalised since winning power and Paul Keating’s description of Malcolm Turnbull as ‘Fizza’ has never seemed more apt since Malcolm became Prime Minister.

For Australians hoping some of the Lucky Country’s luck would be applied to the nation’s tech sector, government policies from both parties have been a succession of broken dreams.

Husic and Bowen are promising this time it will be different. Many of us hope it will be, it may be the last chance for Australia to have a fair economy fit for the 21st Century.

Harnessing refugee talent

Techfugees shows what can happen when migrants and refugees are given access to technology and capital.

Last week saw the inaugural Sydney Techfugees Meetup at the Australian offices of TripAdvisor, an initiative that not just assists new arrivals to the country but shows the importance of keeping a society diverse.

Techfugees is a UK founded initiative harnessing the international tech community’s skills to assist with the global refugee crisis, the Australian offshoot was set up in 2015 with the aim of helping refugees settle into the Australian community.

Moving countries is stressful for most people and migrants often face problems accessing services and capital. For refugees who’ve been traumatised by dislocation and war, the problems are even greater.

Having had four hackathons, the Sydney meetup was an opportunity for the organisers to showcase their work and five new projects that addressed problems facing immigrant communities.

A refugee’s story

Kicking off the event was a brief presentation from Mahir Momand, former refugee from Afghanistan and now the Australian CEO of Thrive, a microfinance business for refugee businesses.

Momand’s story tells us much about the refugee story, born in Afghanistan his family fled to Pakistan after the 1979 Soviet invasion. Twice he returning to his home country before having to flee each time after his charitable work incurred the wrath of the Taliban.

For migrants and refugee families, microfinancing an important idea, with few assets or business links in their new country is hard for them to access capital so this is an important way to stimulate employment among groups that tend to be entrepreneurial. This is one area where an concept designed for developing communities applies just as well to advanced economies.

Presenting the apps

The groups that presented at the meet up were diverse, One Step App offers walking tours which aims to build bridges between the immigrant and established communities while Cinema of the Oppressed looks at using video and other creative tools to help alleviate depression and isolation among new arrivals.

On a more functional level, Water Democracy is developing a cheap and accessible device to purify water in disadvantaged communities while mAdapt uses mobile technology to increase refugee access to essential reproductive health services.

Upload Once, the first project to present, is intended to keep a new arrival’s documentation in one place to make it easier for them to maintain and access important records which is essential for dealing with the bureaucracy when arriving in a new country.

Bringing in diverse skills

All of the Techfugees projects showed the diverse range of needs and talents of refugees and new immigrants.

In these troubled, and scared, times it shouldn’t be forgotten how refugees and immigrants have been the strengths of most the successful Twentieth Century economies – most notably the United States and Australia, countries which are erecting greater barriers at the same time they are congratulating themselves for their successful immigrant societies.

With technology changing the workforce, harnessing the talents and work ethic of displaced people could well be one of the strengths for this century as well. Techfugees is a small taste of what could be done.

Coping with ignorance in a dysfunctional market

Startup investing involves working in ignorance, rather than managing risk says one veteran funds manager

“We discount uncertainty and ignorance too much,” says funds manager Jack Cray.

Cray was giving his From Risk to Uncertainty to Ignorance presentation at Sydney’s North Shore Innovation Network where he went through some of the lessons from a career of managing funds in North America and Australia.

Groupthink is one the great risks Cray sees in the investment community with funds managers tending to recruit from a monoculture drawn from economics and finance degrees. “Diversity amplifies signals,” says Cray.

Compounding the groupthink is the focus on risk, believes Cray. Risk can be managed while the other factors in investment – uncertainty and ignorance – can’t.

Traditional investors, particularly those in the public equity markets, understand risk well. However those established models also mean create process driven risk averse institutions.

In the Uncertainty field, typified by the private equity markets, fixed models don’t work so well as a consequence investors have to be more risk tolerant and patient as they deal with a world where things can’t be assumed.

And then there is the world of ignorance where no-one can quite be certain of what’s going on, which is typical of the tech startup field. In this space, investors have a high risk tolerance and are often muddling through while being buffeted by unexpected factors.

“To succeed in a world of ignorance you have to be honery and less concerned about certainty,” Cray observes with a wry smile.

This explanation makes a lot of sense when looking at why institutional investors struggle with the startup world and why private equity investors – largely a group of financial pirates – are so profitable.

In answer to my question that saying startup investors are operating in a world of ignorance implies that sector really is an insider game, Cray was ambivalent – it can be, but the endorsement of a major VC or highly regarded investor will by its nature be seen as information in a field where everyone is short of data.

Cray also had an interesting perspective on how markets and pundits see change differently, “investors overlook while futurists overcook.”

Speaking to Cray after the event, he had some thoughts about the internet itself, while it’s a great source of information it also creates too much noise. Cutting out that noise is essential for a good investor.

When it comes to investment all of us are dealing with different degrees of ignorance, Jack Cray’s views were an interesting insight into how managing a stock portfolio or picking ventures is more than just understanding risk.

Clerks, Dying Videos and Culture Clashes: Links of the week

The race to rescue VHS tapes, how Ford lost Google and the fascinating world of London legal clerks are among last week’s interesting links.

London clerks

Inside the antiquated, but very lucrative, world of London barristers’ clerks. A fascinating a look at one aspect of the English legal profession where old traditions have conveniently merged with modern fees.

Saving VHS tapes

One of the banes of modern culture is shifting standards. As VHS tapes decay, researchers are racing to preserve the culture of the 1980s and 90s, reports US National Public Radio.

Google and Ford clash cultures

Joint ventures and business partnerships are often problematic, as Ford found in their abortive autonomous vehicle project with Google.

Voice security becomes a technology race

Software products that imitate people’s voices shows how security is a technological arms race

Voice authentication has become a standard in recent years but now it appears software has bitten with a Canadian startup, Lyrebird, demonstrating how they can mimic people’s speech.

Last year at one of their industry events Adobe showed off their ‘photoshop for voice‘ where anyone’s voice can be analysed and then remixed.

So voice recognition turns out not to be a foolproof as many in the security industry hoped. Like most biometric systems, anything that can be captured electronically can be spoofed or modified.

What’s notable in the Lyrebird story is how voice security companies like Nuance are deploying artificial intelligence to counter digital fakes. Once again we see security being a technological race.

The trouble with crowdfunding

Crowdfunding is a useful tool for some ventures, but it isn’t without its risks

This story originally appeared in Business Spectator in July 2015, with the recent crowdfunding stories I thought it was worth revisiting.

Last week home automation start-up Ninja Blocks announced it was closing down after three years, two successful Kickstarter campaigns and burning through $2.4 million of investor funding. This follows the winding up of smart lighting venture Moore’s Cloud late last year.

Both companies relied heavily on crowd-funding to raise their profile and attract capital for their projects. The two Ninja Blocks campaigns raised a total of $800,000 to fund their two products while Moore’s Cloud fell short of the target they set.

Former Moore’s Cloud CEO Mark Pesce was bitter about the company’s failure to meet its target, telling Technology Spectator last year he would rather eat bullets than go through a Kickstarter campaign again.

Not better, just different

“People say it’s a better way of getting investors, it’s not better it’s just different.” Pesce said in reflecting on a campaign that raised $350,000, only half the amount needed to get the product onto the market. “If you do a crowdfunding campaign you have to be customer-focused from Day One. You have to do a marketing campaign and customer support from the first day, you have to build the customer infrastructure first.”

Ninja Blocks’ former CEO Daniel Freedman agreed that ultimately crowd-funding is not the best place to raise capital for a new start-up, “Kickstarter is a great place to launch a product but I don’t think it’s a great place to launch a company,” Freedman also told Technology Spectator last year.

“I think there’s two different things there,” Freedman said. “Unless you get several million dollars like some of the larger Kickstarters have, you need to get external funding. If you were to price in everything you need to do to get a product worldwide shipping then you’d be selling a two hundred dollar product for six hundred dollars.”

Impeccable qualifications

Ninja Blocks boasted an impeccable pedigree for a start-up, being a 2012 graduate of the high profile Sydney Startmate program that included a $25,000 cash for a 7.5 per cent stake in the business. The company also received a million dollars in seed funding that year from a group of prominent Australian investors that included Atlassian founders Scott Farquhar and Mike Cannon-Brookes.

The company went on to raise another $800,000 through two Kickstarter campaigns and last year secured a further $700,000 from investors including Singtel’s Innov8, Blackbird Ventures, and the prestigious 500 Startups project to expand into the United States.

Despite the resources and high profile backers, Ninja Blocks still ran out money. Something that didn’t surprise 500 Startups’ founder Dave McClure who responded to the news on Twitter with “not all startups will be unicorns and making things is hard.”

Hardware is hard

Co-founder and director of Australian crowd-funding site Pozible, Rick Chen agrees with McClure’s views, “startups needs to realise building a hardware product is difficult, they need to understand how the hardware developing cycle works, get their hands dirty and do some actual work to make sure things are in control before crowd-funding.”

The complexities of running a hardware start-up were acknowledged by Freedman during his interview with Technology Spectator last year, “there are things you would never have thought about when you ship a product worldwide, things like certifications, recycling programs in Europe and foreign language manuals.”

However, Chen sees crowd-funding as having a role in funding hardware start-up projects, particularly in protecting the founders’ equity in the venture. “Crowdfunding offers a unique way to build and engage with an audience base for hardware companies, it is a fantastic tool if used well. The core value of a crowdfunding campaign versus investment funding is those supporters and early adopters of your product and of course not losing any percentage of the company.”

Crowdfunding lessons learned

For the investors in Moore’s Cloud and Ninja Blocks they may well now be thinking it would have been better to insist on that work being done earlier, however start-ups are a risky business and most will fail, something that Chen points out.

“Crowd-funding is not easy, it combines fundraising, product launching, marketing, PR and other things all in one package, it requires a lot of energy to plan and execute, and the result is unpredictable,” Chen states. “But I don’t think crowd-funding itself adds any extra dimension to the difficulties of creating a start-up, all the process is required with or without a crowd-funding campaign and the result is as always, unpredictable.”

While crowd-funding is still going to be attractive to capital starved entrepreneurs, many start-up founders and their investors will note the lessons of Moore’s Cloud and Ninja Blocks’ failure. Crowd-funding certainly isn’t the simple path to raising funds.

When artificial intelligence becomes pervasive

Artificial intelligence is shaping up to the next battleground between vendors, but users won’t really care as long as it works.

Once upon a time computers were unusual, getting time on one was only for select employees of large corporations and scientists. Famously IBM’s Tom Watson forecast there would only be a need for five computers, although it seems he never said that.

Today we’re surrounded by computers in everything from our cars and phones to our teapots and razors and now we’re considering how those devices will affect our future workforce.

At the core of the discussion about computers and the future of work, is artificial intelligence. What’s notable though is it’s unlikely that AI is going to be an competitive advantage for technology vendors as the functions become built in.

This is already being seen with Microsoft building AI into its databases and increasingly the intelligence is going to built into the chips themselves.

In our recent interview with Xero founder Rod Drury, he flagged how AI is going to drive small business accounting. Drury was speaking at the Sydney AWS summit where the hosting company was showing off many of its AI driven services.

While artificial intelligence is going to be embedded and almost invisible to the user, it is going to be important. A good example is Google’s struggle to maintain quality and honesty in its local search results, a process that is beyond the company’s resources if done manually.

For the software vendors, the quality of their AI features is going to be one of their key selling points. This is why AWS, Amazon and almost company in the industry is announcing their own initiatives. Google itself should be one of the leaders in this field.

As automation becomes increasingly taken for granted, artificial intelligence is going to be seen as a fundamental, and invisible, part of computing.

While AI is going to be essential for the technology vendors, for users we won’t notice it as long as it works properly.

Crowdfunding the energy revolution

As technology changes so to do business and investment rules. The solar energy market is a good example.

“We have no shortage of investors,” says Tom Nockolds of Sydney community solar farm group Pingala in an Australian Broadcasting Corporation’s report on small business power projects.

The ABC’s report focuses on Bakers Maison, a suburban Sydney bakery that raised 400,000 dollars to extend its solar solar electricity system to slash its power bills and promises investors a seven percent return on investment.

Seven percent is very good in these days of low yields so it’s not surprising investors are lining up for projects.

It’s also an indictment on the modern banking system that smaller businesses like Bakers Maison have to issue debt directly to the market rather than getting a loan, which would have been normal a generation ago but today Australian banks would rather lend to property speculators than productive businesses.

This isn’t to say such fund raising is without problems as there is a real risk of fraud which Australia’s prescriptive fund raising laws are designed to avoid, even at the cost of stopping genuine investments.

“We’ve had to duck and weave our way through the regulations to set up this kind of operation,” says Warren Yates of Clear Sky Solar Investments – another volunteer group – about the laws which were developed after the financial scandals of the 1960s mining boom and the 1980s entrepreneur period.

As a consequence, the ABC story points Australia is lagging jurisdictions like Germany, Denmark and Scotland in developing these schemes.

With the banking system having left the field of funding growing businesses and responsibility largely falling on volunteers to provide services, reforms encouraging community crowdfunding need to be developed to provide capital to industry and local initiatives.

That many of the current reforms in this area such as America’s Jobs Act or Australia’s Innovation Agenda focus on a narrow set of industries – specifically the tech startup sector – which means we’re missing most the value in an evolving economy. A bakery, factory or hotel deserves the same investment advantages as the next potential tech unicorn and they could employ just as many people and deliver even more benefits to the broader economy.

New technologies have always demanded new investment and business rules and we’re seeing those pressures developing today, all of us have to demand regulators and politicians pay attention to the changing needs of our economy.

With investors clamouring for new opportunities and businesses wanting capital, it would be a tragedy to miss the possibilities of today’s technological, financial and energy revolutions.

Telcos and the battle to diversify

Australian telco Telstra’s attempts to diversity are part of the broader industry’s struggle to find new revenue streams.

How Australia’s incumbent telco, Telstra, deals with the industry’s commoditisation is the topic of my interview in Diginomica with the company’s Hong Kong based director of Global Platforms, Jim Fagan.

The need to diversify is pressing upon Telstra with the company’s income down 3.6% in its last financial report with mobile sales, by far their biggest revenue earner, down eight percent.

Across the developed world, telcos are seeing their markets slowing with global smartphones sales largely static, formerly big profit generators like SMS declining and broadband data rates collapsing.

In the US both formerly untouchable telcos are struggling which has seen them attempting to diversify with AT&T buying Time-Warner for $85 billion and Verizon buying Yahoo! despite its problems that saw a $250 million discount after the service’s hacking scandal.

With the pressures on the telco industry, it’s not surprising they are looking at alternative income streams and Telstra’s strategy seems to play more to their traditional strengths than a media play, which Telstra has tried previously and failed.

It could be though that Telstra, like all telcos, could be destined to become a utility service. While that might disappoint executives and shareholders who dream of glamour, excitement and high profits, that might not be a bad thing.

How your next CEO could be a robot

The path to management is changing as the connected workplace evolves, but it may well be the top jobs themselves will soon be automated.

“In 30 years, a robot will likely be on the cover of Time Magazine as the best CEO,” Alibaba founder Jack Ma said told a technology conference in Zengzhou, China, last weekend.

One of the things underestimated about this wave of automation is how AI will be applied to management, Knowledge Management expert Euan Semple makes an important point how being supervised by a bot could be a lot fairer and transparent than human managers.

In the normal course of work many people don’t see much of their manager. Too often the experience is frustrating and unhelpful. The predictability and transparency of automated systems could potentially be fairer and more effective than an incompetent, prejudiced, or bullying manager.

The news for those looking at climbing the greasy management pole through getting professional qualifications isn’t good either, reports the BBC.

For the last fifty years, getting an accounting or law degree, often supplemented by an MBA, was the best path for a management position but shifting work patterns and technology is devaluing those qualifications while it’s appearing there will be less management positions anyway.

Tomorrow’s workplace is going to look very different to that of the past half century. Those of us currently in the workforce, as well today’s kids, need to be looking closely at the skills they have for a very different world.

When the middlemen get desperate

As internet startups struggle with huge valuations, the temptation for unfair and unethical business behaviour increases.

Sometimes business practices go bad. A good example of this is a survey of restaurant reservation systems by the Marketing4Restaurants website.

A striking allegation in the survey is how some of these services advertise on Google against their own clients, called ‘adwords arbitrage’ by one competitor to the established booking services.

One of the failed promises of the internet was the removal of the middlemen. Many of us thought the web would enable businesses and individuals to communicate directly to the public without the need for intermediaries.

We were wrong, rather than eliminating middleman the internet gave birth to a new breed of bigger global breed with the rise of Google, Facebook and Amazon being the most prominent.

The success of the ticket clipping culture has seen thousands of platform services and online exchanges that do little more than try to lock small businesses and contractors into into their systems for little if any benefit.

However advertising against your own customers as Open Table and Dimmi are alleged to do is another level of bastardry and, at least in Australia, quite possibly illegal.

Even if this behaviour does turn out to be within the letter of the law, a business competing against its own customers is being run by ethically challenged people and is almost certainly doomed in the medium term – what client is going to pay to subsidise its competitors?

As internet startups struggle to justify huge investor valuations we can expect more behaviour like this. Hopefully though most of those businesses, and the investors who fund them, are doomed.