Nov 292015

The Turnbull government and its ministers face a big test in the upcoming innovation statement this week and will need to follow through with tangible results.

In 1976 Clive James visited Sydney fifteen years absence from his hometown. In his book Flying Visits he described the changes that had happened during his time away including some observations on the nation’s thriving movie industry with the comment “premature canonization is the biggest threat facing the young Australian film director today.

James’ words came back to me at an Australian Israel Chamber of Commerce in Sydney last week where the hosts were gushing over 25 year old Wyatt Roy, the Federal Assistant Minister for Innovation, last week.

There’s a lot to like about Wyatt Roy, he’s an intelligent and articulate minister with a self depreciating sense of humour and a touch of humility – qualities generally not associated with Australian politicians – though the old guard gushing over his youth and the achievements of his two months in office can be embarrassing.

In many ways the fawning over Wyatt Roy is emblematic of the general sense of relief in Australian business now the Turnbull government has left behind the nightmare of the vindictive and petty middle aged adolescents who made up the Abbot administration while also being a world away from the backward looking grey Liberal Party stalwarts of the Howard era and the self interested suburban Labor apparatchiks of the Rudd and Gillard years.

The question though is whether the hopes pinned on Turnbull and Roy can be realised which is why there are so many hopes being pinned on this week’s expected release of the government’s Innovation Statement laying out a policy framework for the nation’s economic pivot.

For Australia the stakes are high, the resource sector is collapsing and the property market – the real key to the nation’s suburban prosperity – is looking brittle. Policies that encourage new businesses and industries are now essential to maintain the country’s living standards.

To date Canberra’s policy makers have not managed the economic changes well; the Intergenerational Report earlier this year blithely ignored the effects of technology on the future workforce and its implications to incomes, jobs and government budgets, while three years after the Gillard government’s Australia in the Asian Century report it’s remarkable how dated the document with its underlying assumption of never ending resources demand now looks.

So the Innovation Statement matters in laying out a strong view for the future of Australia however even if it does prove to be a strong, forward looking document, the Turnbull government will need to follow up with substantial actions.

The real risk with all the talk of innovation is that it will be siloed, along with IT, as “something the geeks and young kids” do. For the this week’s announcement to be anything more than more fine words from the Innovation Bureaucracy then it has to be backed by strong reform to taxation, social security, immigration and corporate governance regulations.

While the canonisation of Wyatt Roy and Malcolm Turnbull may well be premature many Australians, including this one, are hoping those hopes are well founded. This week’s Innovation Statement will be the first test.

Nov 242015


Things are going crazy in the Israeli startup scene as investors and multinationals and startup pile into the country’s tech sector.

In order to understand what’s happening I spent the morning at The Bridge, an Israel Australia Investment Summit staged by the Israeli Trade Commission and Invest in Israel.

Of the morning sessions, the two panel segments gave the most insight into what’s driving the Israeli tech sector with Nimrod Kolovski of Jerusalem Venture Partners emphasising the industry-g0vernment-academia collaboration, military spending and tight personal networks.

“In Israel we can make two phone calls – to someone who was with them in the army and to someone who they worked with at the last company. You don’t get a chance to repair your reputation in Israel,” says Kolovski of those tight personal networks.

Kolovski also highlighted an important part of venture capital culture – just as much in the US as Israel  – is the willingness to admit failure, “if you don’t then you’ll lose credibility”.


The broad message from the morning’s sessions is that the Israeli tech sector happens to have the combination of factors that aligns with the Silicon Valley and US corporate view of the world coupled with a strong underpinning of high level, defense led research and personal networks forged to a large degree during National Service.

For a long time I’ve been skeptical of the Israeli and Silicon Valley model being replicable in other countries, particularly Australia, and the morning’s sessions only confirm that view. There is more to this which I intend to explore in some future blog posts.

The lesson for other countries though is that personal networks, research and access to capital matter in creating new industry hubs. The challenge for each country or region is to find the combination that plays to their society’s and industry’s strength.

For Israel, it’s hard to see how their tech sector isn’t going to continue to thrive in the current climate however it’s the result of long term focused investments, research and policies. Taking the long view is probably the most important lesson of all.

Nov 222015

Kevin Ashton is best known for coining the ‘Internet of Things’ term in 1999, however that’s just one part of a varied career that’s included building a number of tech startups, co-founding MIT’s Auto-ID Center and leading some of the early development work in RFID (radio frequency identification) networks, which led to the IoT label being born.

Since exiting his last business Ashton’s focus has been on consulting, mentoring some of the startups he’s invested in and writing with his last book “How To Fly A Horse, the secret history of creation, invention and discovery” released at the beginning of this year.

During his visit to Sydney last week, he spoke to Decoding The New Economy about his startup experiences, the future of work, skills needed for success and why the media is a doing a poor job on reporting technology.

Let’s kick off with your book, what was the motivation behind writing it?

In the late 1990s I started a lab at MIT and most of my talking was about the research we were doing. I’d talk and then they’d hear it. But occasionally someone would say, oh, but you’re leading a very innovative team, and we’re very interested in innovation. Can you talk about innovation and how things get created?

So I started giving talks about my experiences of driving an innovation and trying to be innovative, and so on. And that became more and more popular through the 2000s. Eventually I was giving a talk in Napa Valley, California, and a friend of mine came to watch, and at the end they were like, “Oh my God, that was amazing! You need to write a book.”

I  started writing a book of the talk and it did very well. People really liked it. And it was weird because, I guess, you kind of get used to a way of thinking about things, and it seems you forget that to other people it might be insightful.

The book is really my experience and my strong belief that creating is not about magical flashes of inspiration and being a special kind of person, or being a genius, or whatever. It’s got a lot more to do with being willing to just keep going even when it’s not working, even when you can’t see a way forward.

And it’s also not an individual thing. It’s very much about building on the work of other people. Creating itself is very individual, which turned out to be a controversial point as well, that you’re always part of a community of people you know, people you don’t know, people that are still alive, people that died years ago. You’re making these incremental steps, building on the work of others. So that was always my thought, and that’s the book that I wrote. And I’m lucky. People seem to really like it.

What’s your thoughts on the current startup mania?

I think, by and large, big companies suck at doing new things, and the reason is structural. Every big company was a small company at some point. Someone was doing a new thing. And eventually they happened upon something that worked.

The first thing you tried doesn’t work, the second thing you tried doesn’t work, and accidentally you stumble across something that does work and starts making money. Maybe those people move on, maybe they stay, but it’s easy to become addicted to the comfort and safety of the thing that works.

And the money that flows from the thing that works, it’s easy to believe that that thing will continue to work. Or you make a slight change. You only had a red one, and now you’ve got an orange one, and you feel like you’ve been profoundly innovative.

So if you really want to do something new, you probably need to be in a small, passionate group of people. Now it is possible for a big company to take a small, passionate group of people and sort of stick then in an airlock somewhere and leave them alone. Theoretically, that’s possible. It seldom happens, and particularly because most of innovating is failing.

I’ve seen time and again is the people who rise to the top of big companies are often people who are very good at avoiding failure, or the appearance of failure. Very good at taking credit for other people’s success. They’re often from a privileged class. It’s typically white men. The typical CEO is a tallish white man with a full head of hair and a deep voice. I see that all the time. Failing is not good for your career. Ironically, because it is good for creating.

So, I think startups, meaning small companies, small groups of passionate people who are either not scared of failing or don’t have any choice but to keep failing until they succeed because there’s nowhere else to go, are always going to be the engines of innovation and creating.

Now, I will qualify that. There is also a class of privileged white men called venture capitalists who like to make you think that unless they’re allowed to give you some money that you can’t succeed and that you’re not a credible startup unless somebody blessed you with some venture capital or something. And I think, frankly, that’s all bullshit.

The last thing you want to do as an entrepreneur is, and I’ve done it. I’ve started companies without venture capital, and then taken some eventually. My my most successful company never took on any money from anybody else. There was kind of in the middle somewhere.

Not only is venture capital and outside investment not a prerequisite for having a successful startup, it’s really a last resort. Because what comes with that money is loss of control and people who don’t…You know, you start to get some of the problems that come with a big company. Venture capitalists who hear this will just throw up their hands and hate it when they get called out on their shit, but that’s true.

And by the way, a lot of very successful companies that…take Microsoft, or Amazon, or whatever…had a very slight relationship with venture capital. So it’s entirely possible to build a large, successful, high-tech company, without venture money.

The discipline that comes from living hand to mouth and trying to find a customer and trying to make a profit and not wasting your money on bean bags and air hockey or whatever, that’s a good thing. So, I’m all for people of all genders, colors, sexualities, shapes and sizes trying to do something by themselves. I think you can be successful. I don’t think you need anybody’s permission.

Which was your most successful company?

Zensi was a company I started with some academic friends, and it was a very smart way to identify how people were consuming electricity and water. I was very into knowing things relatively. In the case of water, for example, we put a very simple sensor that you could screw under the kitchen sink. It was just a little diaphragm. But every time you use water anywhere in your home, the pressure in your water system changes.

So you turn on the shower upstairs, and throughout your water system, there’s a pressure drop, and then a pressure stabilization as the system gets back to its regular pressure. And what we found was, you could analyze that pressure change and determine someone had just taken a shower, for example.

It’s a very simple sensor connected to the internet, a bunch of algorithms in the cloud. And you could identify leaks, you could tell people where they were wasting water. So, we started that company, basically, with cash of our own and that was in January, February 2009. So that was the depths of the recession. When nobody was starting anything, by the way.

What do they say? They say buy low and sell high. Well, guess what? When you can buy low, nobody’s buying. They’re scared, right?

So we started it 2009, and about 10 months later we had a couple of people trying to acquire it for a lot of money. The best answer you can ever give somebody when they want to acquire your company is, we’re not for sale, because then the price just keeps going up. You have to mean it, right?

Eventually, we got an offer we really couldn’t refuse. At the same time, we were thinking about trying to raise venture money, and so on. It wasn’t like a deliberate strategy to never do it. But the acquisition deal was just so much more valuable. And the beauty of that is, you’re not sharing the money with anybody else.

Today you’re an author and speaker?

Author, speaker. I’ve got some investments in some Austin-based startups. I do a little bit of consulting here and there. So, companies I’m interested in. I have done the MIT thing. And then three startups. And I’m actually enjoying not having a very formal schedule. It gives me a chance to write, which I love. It gives me a chance to come here and do this. I’ve never been very successful in companies that I was not in charge of.

I find that a lot of the kind of mansplaining and bullshit and endless PowerPoint and people wanting to have nothing but meetings and, you know, a lot of posturing and politics and stuff. I mean, like a lot of people who are interested in innovation and passionate about creating new things, I have a very low tolerance for that crap. I’m very bad at it. So, I love my life right now, because I really choose. I’m very much the master of my own destiny, and I don’t have to…I’m not obliged to deal with too many idiots. Which is good for me, because I’m not good at it.

So onto that inevitable question that you’re going to get about the Internet of Things. Do you regret coming up with that tag?



No, I joked one time that I should have called it the internet for things, and people took that a bit too seriously. I mean, I had no idea that it was going to have a life outside of the PowerPoint presentation that I was working on at the time, but it has a poetry to it. It’s specific enough that when people ask what it is, I think you can give a good explanation. It’s general enough that it’s not limiting itself to one application, or something.

The other thing I think is really curious to me is…so the internet of things was something I talked about a lot between ’99 and 2005 or something. And it was reasonably well known in the fairly small community of people who are interested in ubiquitous computing and embedded computing.

And then it took on a life of its own in the late 2000s and sort of the last few years. And I think there’s a couple of reasons why. Right? One is that there are a lot of people graduating right now who are really internet natives.

So the idea of things not being networked, or of things being wirelessly networked, the idea of computers only getting information via keyboard, that’s not a paradigm they’ve ever lived in. And they are…I think I got that slightly wrong, that sentence, so let me rephrase it for you. But there are a group of internet natives graduating right now who have never lived in the paradigm where computers are not connected.

And they’ve never lived in a paradigm where computers don’t gather their own information. So it’s very…the internet of things idea is incredibly natural to them. People who were using computers, let’s say, in the 80s and the early 90s, pre-internet, it can be a little less intuitive. So that’s one thing, but the other thing is, just a complete coincidence, I think, is Twitter. On the internet of things community on Twitter we use the hashtag IOT.

Now, it just so happens, first of all, IoT is very Twitter-friendly because it’s very short. But by calling this thing the internet of things, I inadvertently happened upon a three letter acronym that was distinctive. There aren’t many of those in the world. But there isn’t anything IOT stands for. Now, we never used the term IoT in the early days because it wouldn’t mean anything to anybody, right? But I happened upon this distinctive three-letter acronym, and then Twitter came along. And it made it very easy for all these kids that were kind of internet of things natives to find one another and communicate with one another, and that really helped. That really helped. So there was some coincidence in that realm.

In the presentation that preceded this interview you were quite scathing about some of the more trivial commercial consumer IoT examples.

Oh, stupid. Yeah.

I couldn’t help but think of Marc Benioff a couple of years back, waving his connected toothbrush around at Dreamforce.

People will do everything. If you’ve been in tech for a while, people have been doing that for years. It’s bullshit. I mean, the…So you must live in a super smart home. Not really, no. And they’re like, what have you got?

They think I’m going to have Roombas talking to light bulbs or some bullshit. But the one thing of those consumer products I found useful is my bathroom scale is on WiFi. It’s crazy expensive, but it means that I can never lie to myself about whether or not I’m losing or gaining weight, because it’s like, there’s something on the web, it’s keeping a record. That’s useful. But I think…one of the things that’s kind of curious to me. I talk about it a little bit in my book actually is, there seems to be this obsession with consumer applications in technology.

Which is coupled with a complete lack of curiosity, particularly with respect to you, on the part of journalists and editors and people like that, about how the world actually works. Right. The manufacturing, supply chain, distribution, agriculture, the history of technology. They don’t want to know. It’s like, what is it? And this is a thing. Journalists are the only people who their life is writing about stuff, and then they go out into their kitchen, which is why…they don’t really seem to care about how stuff gets to their kitchen.

It’s like, tell me what it means for my toaster. But there’s so much more to the world than freaking kitchen appliances, you know? And I’m sure there’s something interesting you might to do with a kitchen appliance, but I can’t really think of it. And I don’t see why I have to.

Look at Uber,  the interesting thing about it is, people think I’m cheating. I’m like, so, you’ve got GPS, right? Yeah. Well, that’s a sensor. It’s network connected. That’s part of the internet of things. Oh, yeah, okay, like, not really. I’m like, yes, really. That really is. Right? And it’s the same with…so, oh, I’ve got a smart watch now, and I’m measuring how many steps I take, or something. Great. If you’re doing that, that’s internet of things, right?

And on and on it goes. So there’s a real ignorance among a certain class of people, a kind of communicating class, about how the world works, how things are made, how complicated and miraculous that is. And also there’s kind of an anthropomorphic tendency they have that, when you point out that a phone has a camera and a camera is a sensor, that’s kind of confusing, because unless it’s a human-like sense, it kind of doesn’t count, right? Well, we don’t have GPS, but GPS is still location-sensing.

So I think all this is part of paradigm shift, as well. So it’s not that surprising to the internet of things generation, which is really people, for one, like, I don’t know, after 1990 or something. It’s fairly obvious to them, but to older people it’s like, oh, what does the fridge say to the toaster?

I’ve encountered that myself where producers or editors aren’t interested yet the audience enjoys the discussion or topic.

I mean, that’s the thing, and that’s why I made that joke on the stage. It’s like, I don’t actually agree with these filters. My audience isn’t interested in this because I speak to thousands of people a month, and they’re all interested in it.

So supply chain, it’s amazing to me that there’s a couple hundred eight meter high freaking self-driving trucks in the Pilbara but because people don’t care about, well, what is a strip mine, and what the hell are they strip mining?

What is it that Rio Tinto do anyway? It looks kind of dusty, and the things are big and yellow, and not quite black and shiny, or whatever, so we don’t care. That’s amazing technology. And we depend on the minerals those guys are mining, and they can’t necessarily afford to pay 200,000 Australian dollars a year for someone to drive that truck because nobody wants to live there.

I get that a $200,000 a year job is nice, but living in that place probably isn’t, right? So there’s a dehumanizing thing about that kind of work, as well. Mining is horrible. The fewer people that have to do mining…we need mining. The less manual it is, the better. Dangerous, nasty, it’s bad for your health. So that’s really cool, in turn things technology. But you’re right, try pitch it to an editor.

This touches on a constant theme with the IoT and automation. Where do you see the job coming from?

We have to be real careful when we talk about jobs, because there’s a hard piece to this which is on the individual level, it can be quite devastating. Okay? If you made a living as a cab driver, for example, in some license-regulated monopoly city taxi service, Uber is a threat to your livelihood, and there’s no getting away from that. So on the individual level, new technology can be very disruptive, and I don’t want to trivialize that at all.

However, there were people asked that question, they’re generally asking on a macro level. And on a macro level, what we see all the time is that technology tends to humanize the workforce. You are replacing…what technology can do compared to what humans can do is relatively basic. Again, I talk about this in the book. But a thousand years ago or something in the textile industry, there were people whose job was to stomp up and down on wet cloth all the time, right?

To prepare the fibre for weaving, manual weaving, or whatever. And they got replaced by water mills and wind mills. And then you had apprenticeships, right? So people learned to weave as apprentices, and that predates the education system. So, instead of it being enough for you there to stomp up and down in time to some song people were singing, you got trained in a skill. You became more valuable. I think that’s a more fulfilling life.

Then weavers got replaced by automated looms. But that created a volume of sophisticated new textiles that required management jobs, and so people were taught to read. I’m simplifying slightly, but the macro trend is very obvious. As technology replaces menial and manual labor, we need more skilled workers, we need more educated workers, and that’s why we can all read.

Our three times great grandparents or something were probably illiterate. As were all our ancestors before that. Reading is a very recent skill, and now it’s public education, and it’s considered elementary. That’s why it’s called elementary education. It never used to be. So, in terms of where the jobs come from in the internet of things age, I think the internet of things generates efficiencies that allow us to produce more things and allows to give people longer, better lives, and managing that production and that productivity requires skills. It’s really that simple.

I remember trying to explain to some friend’s mother, old mother or something one time, what I did, when I was just in a marketing job at Procter and Gamble. And she was like, oh, so you don’t really do anything. And she was very explicit. But it’s like, no, I don’t really do any…I don’t do any manual labor. I’m a knowledge worker.

I think that comes from something Drucker said in the 1960s. But that’s what happens. And the more we move to a knowledge economy, the less your job is a health risk, and the higher your quality of life, and the higher standard of education your nation is going to want to give you.

I don’t want to be too cynical about it, but countries don’t invest in public education for your sake. A lot of the time, they do it for the sake of the economy. I was just talking to some lady about why Australian school kids need to code. That’s a great question. That’s an important thing. And it’s not coding that matters. It’s advanced mathematics, advanced critical thinking skills.

And by the way, as we end up with a more informed population, a more informed electorate, we end up with a more enlightened society, because it’s harder for some guy on a pulpit or something to talk about brimstone and hire and spew hatred. And that’s another…there’s these huge social trends that we see that come partly from the more educated workforce you need in a more high-tech society. All interconnected.

So what skills do you see being in demand?

I think coding is a little bit…you’ve got to understand, coding is a little bit yesterday’s skill, actually. I did want to say that to the coding lady. But the thing I mentioned to the panelist today, but the thing that’s more important than coding now is data science.

And data science is not coding. Data science is understanding statistics and maths and modeling in a way that means you can write an algorithm which you or somebody else then turns into a piece of computer code.

But basic mathematical equation, that can separate the wheat from the chafe in a big pile of numbers, and identify what’s interesting and what’s not. It’s a little bit like solving a puzzle, and it’s really quite cool. Auto-correct is an example of it, and Netflix recommendation algorithms is an example of it.

It’s a wild and interesting frontier, particularly for mathematically-inclined kids, or puzzle-solving, chess-playing kind of kids. And there’s a huge skills gap. Huge. And these guys are making a fortune coming out of school. They’ve got 20 job offers. And that will be true 10 years from now.

I’m trying to push my kids into doing statistics and data science. It’s a hard sell.

Yeah, I get that it’s not for everybody, but the kind of kid that might get directed toward coding is probably the kind of kid that could also be directed towards data science. And you know, they’re not mutually exclusive, but that’s the bias that I like to lean people towards, because technology is changing very rapidly.

We have to think about what’s going to be needed 5 to 10 years from now and not what’s needed today. You don’t want your 12-year-old to be learning a thing they need to know today, that the workforce needs to know today, that’s not going to be relevant in 10 years from now.

Nov 092015
radio programs for techonology, web, social media, cloud computing and computer advice

For November’s Nightlife tech spot we’ll be asking if wearable technologies overhyped and looking at what is going on with Australia’s sudden discovery of startup businesses.

Wearable technologies have been the next big thing. Two years ago Google Glass was all the news and earlier this year the Apple Watch was released to great fanfare.

Now Google Glass has been wound back in the face of widespread indifference and Apple are discounting the new watch as market experts find that wearable technologies are just not interesting to customers.

So are wearable technologies overhyped? We’ll be discussing where having a computer on your wrist or in your glasses may be useful and taking your questions on them.

Australia’s startup goldrush

There’s been a shift in the Australian business community since Malcolm Turnbull became Prime Minister and now tech startups have become the new black with a wave of corporate initiatives being launched to support fledgling companies hoping to be the next Facebook or at least Atlassian.

So why now all the interest and can Australia be the next Silicon Valley?

Some of the questions we’ll be answering include.

  • So where can we get a cheap Apple watch?
  • Have Apple done this sort of thing before?
  • What are the experts saying about wearable technologies?
  • Are there some industries they can be used in?
  • So why is Malcolm Turnbull so keen on startups?
  • What sort of things are governments doing to support the startup communities?
  • How many Australian tech industry successes have there been?
  • Can Australia be the next Silicon Valley?

Join us

Tune in on your local ABC radio station from 10pm Australian Eastern Summer time or listen online at

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

You can SMS Nightlife’s talkback on 19922702, or through twitter to@paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.


Nov 042015
building sydney as a smart city

“I’m not sure what to do with this,” frowned the public service executive to a group of blank faced departmental staffers. “I’ll take it,” I said to break the silence.

With that, I was on a journey into exactly what Sydney’s startup and digital media communities looked like and learning why governments struggle to build technology hubs.

I’d been working for the state government for two months after a specularly unsuccessful exit from a business and in the shadow of the 2008 financial crisis getting a public service job seemed like a good idea.

Vague ideas

The project being discussed by Bob, my then director, was a single line in the recommendations from the then Premier’s Jobs Summit which was convened in the panicky dark days of the 2008 global financial crisis – “A digital hub will be setup around the Australian Technology Park.”

Bob, and the management of the New South Wales Department of Trade and Investment had little idea of what a ‘digital hub’ was and my position of ‘Manager, Creative Industries” – with a staff of precisely zero – was vague given the state’s support to the creative industries was, and remains, based on throwing big buckets of money at the Hollywood movie studios.

So the Sydney Digital Hub was born and the quest to find out exactly was was needed, or at least would keep the Premier’s office happy, was on.

It immediately became apparent the Australian Technology Park wasn’t going to be the centre of anything as far as Sydney’s startup community was concerned. The complex was too far away from the city and too expensive for most of the businesses.

Replacing what’s existing

“We already have a digital hub,” was the other response. “It’s Surry Hills.” Which was a far call as a large part of the Sydney startup and digital media communities were based in the suburb on the edge of the city’s centre.

This actually worked well as the exact wording of the committee’s recommendation was “create a digital hub around the Australian Technology Park.” In this case, Surry Hills was ‘around’ the ATP.

Eventually the project became Digital Sydney and by the time it was launched, the state had gone through two Premiers, elected another party into government and I was long gone from the department, having lasted just 19 months.

Before leaving, I had managed to steer through a million dollars in funding for the project from the then Labor minister – since caught up on corruption charges surrounding coal mine leases – which, to their credit, was honoured by the incoming Liberal government that took power shortly after.

Dying a slow, unfunded death

That funding was renewed and the project died a slow death, which didn’t really matter as Sydney’s startup and digital media communities had developed despite of, not because of, any government policies. Indeed, the New South Wales’ government’s economic development policies were, and remain, focused on property development and coal mining.

Which brings us to the present day, where the Sydney startup community is upset at the Sydstart conference being poached by the Victorian government and moving to Melbourne on the promise of a million dollars in support as part of the state’s startup program.

The promoters of the now relocated and renamed conference are adamant it matters, but the truth is it doesn’t. In fact the biggest ticket item of NSW government support to the IT sector is the annual CeBIT conference that in truth has added little to the state’s technology industry and many similar initiatives in Victoria have had a similar lack success.

A lack of long term vision

Part of the reason for that lack of success is a lack of consistency and long term strategies, in fact the Australian Technology Park itself is under threat as the state government looks at selling the site to apartment developers despite the protests of the tech community.

Another aspect is state sponsored conferences, hubs and initiatives are not enough to create an industrial centre. There has to be an organic, or business, reason for a hub to develop.

For industry hubs, be they tech startups or anything else, the core need is a critical mass of investors and skilled workers with easy access to markets. For internet based businesses, the latter isn’t an issue which is why Wellington in New Zealand has done better than either Sydney or Melbourne in recent years.

Providing stable frameworks

The role of governments in this is to provide a stable framework for businesses to work within, something that hasn’t been a feature of state or Federal Australian politics in recent years with leadership instability and the increasing prevalence of policy by thought bubble, a good example being the latest scheme to create a new technology hub even further out of downtown Sydney on the site of disused power station.

While the talk of government sponsored initiatives is nice and keeps my former colleagues at the state government occupied writing ministerial briefings on pink paper, building the tech hubs of the future needs motivated entrepreneurs, investors and skilled workers. The best thing governments can do is make sure they encourage all three groups and leave the community building to the community.

Nov 032015

Watching from afar, the reaction to Malcolm Turnbull becoming Australia’s 29th Prime Minister has been remarkable as suddenly the nation seems to have collectively woken up to the fact they are fifteen years into a new century.

In a few short weeks Australian public servants have started engaging in hackathons and business leaders whose idea of an investment was a property plan disguised as a casino have started raising VC funds.

The question though for Australia is this too little and too late after three decades of concentrating on property speculation and betting on a never ending Chinese economic miracle?

New leadership

In Malcolm Turnbull – who only rejoined the Liberal Party in the early 2000s after careers as a journalist, barrister and banker – Australia for the first time in forty years doesn’t have a party apparatchik as Prime Minister.

While this wasn’t a problem during the 1970s and 80s under Fraser and Hawke, by the 1990s the shrinking membership base of Australian political parties meant increasingly the ‘talent’ coming up the ranks was lacking perspective outside the narrow factional groupings most of them were beholden to.

This became brutally apparent with the last three Prime Ministers who were fully hostage to their party factions. In Gillard and Abbott Australia had two party operatives who were no doubt talented in internal party manouvering but hopelessly out of their depths as government leaders – Abbott often seemed to be more interested in settling the battles of 1980s Sydney University student politics than governing the country.

Describing Prime Minister Rudd would take a thesis in political psychology which is way beyond the scope, or interest, of this writer.

The consequences of this were an Australian political leadership that was disinterested in the real economy beyond guaranteeing the social compact that property prices would double every decade and ensure their support in the key swing electorates of suburban Australia.

An insular business community

For the business community the insular focus of Australian society and its politicians worked well too. As the economy turned inwards in the 1990s under the Keating and Howard governments, so too did Australia’s conglomerates who realised clipping the ticket of a consumer economy was far easier than competing on global markets.

The best example of this were Australia’s banks which essentially gave up on lending to business unless it was guaranteed by property. This graph from Macrobusiness illustrates just how the nation’s banks focused on property speculation.

Australian bank lending, courtesy of Macrobusiness.

Australian bank lending, courtesy of Macrobusiness.

That focus on housing and consumer spending underpinned on rising property prices distorted the entire business sector and ingrained in the Australian psyche that the key to riches and prosperity was to get a relatively low skilled ‘safe job’ and borrow as much money as possible.

A good example of this are the regular stories of sweet twenty something wunderkinds who have built multi million dollar property portfolios while working in pizza shops or as administrative assistants.

Possibly the greatest damage Australia’s property obsession has been on the nation’s youth where the message has been ‘don’t gain a globally competitive skill set or education, just get an entry level job at the real estate agents and buy as much property as the bank will allow you.’

Turnbull’s challenge

Like Gough Whitlam, the last Prime Minister not a creature of their party factions, the reform challenge facing Turnbull is immense as 25 years of complacency have left Australia with an uncompetitive economy – as it had for the incoming Labor government of 1972 – with added complexity of having to maintain property prices to keep its economic miracle and social compact ticking over.

The similarities to Whitlam are also striking in the support Turnbull has from the population. One of the striking things on returning to Australia after spending most of the last three months in the United States has been the sense of relief that the inept horror movie of the Abbott government (Attack of the Clueless Zombies) is over and a realisation that Australia has actually entered the 21st Century and not regressing back into the 19th.

Agendas for reform

Entering the 21st Century won’t be easy though for Australia. Completing the reforms of the education sector, started half heartedly by Gillard and then trashed by Abbott in settling the scores of his student politics days, is one major challenge along with reforming tax and social security systems that focuses on asset hoarding and speculation over productive investment.

Possibly a greater challenge is to wean the Australia business sector off its ticket clipping mentality and rediscover its desire to compete globally. It may well be that encouraging the startup sector makes more sense in rebuilding the economy’s competitiveness as many of the nation’s insular conglomerates and their well fed executives are too used to milking the domestic consumer rather than taking on the world.

The end of kitchen renovations

The biggest challenge of all though will be to wean Australians off their property addiction, particularly those under 50 who have neglected their global skills as they focused on renovating their kitchens.

Given the scope of these reforms, such an agenda will require a clear mandate from an electorate that has been complacently accepting guaranteed good times as long as refugees are turned back, the terrorists among us imprisoned and gay couples prevented from marrying for the last 25 years. Making the argument for change is probably going to be Malcolm Turnbull’s greatest task.

For Australia the stakes are high. It’s not likely the 21st Century will be as kind to The Lucky Country as the Twentieth was.

Oct 292015

While San Francisco and Silicon Valley remain the biggest magnet for tech startups, many other countries are trying to attract entrepreneurs with preferential visa arrangements and subsidies. Successfully doing this will define the rich nations of the 21st Century.

Israel is the latest country to join the competition with the Israeli Ministry of Economy, the Ministry of Interior and the office of Chief Scientist will launch the program in the next few months which will allow entrepreneurs from around the world to come to the startup city of Tel Aviv for 24 months in order to develop innovative projects.

Entrepreneurs who wish to stay in Israel and open a startup company will be granted a specialist visa. Aryeh Deri, the nation’s Economic Minister said, “tThe Startup Visa will enable foreign entrepreneurs from around the world to develop new ideas in Israel, that will aid the development of the Israeli market”.

Israel’s Startup Visa programs joins Tel Aviv’s city-to-city-collaborations with Paris and Berlin, which allows entrepreneurs from the cities to receive a soft landing package including desks at co-working spaces, advice on visas, regulations and legal issues around starting up companies, as well as one-on-one mentoring assistance and access to the ecosystem in each town.

Just as Israel, France and Germany are opening up, it appears the UK government is tightening up its visa requirements much to the anger of their startup community.

The tech startup community is only a small part of the bigger economy, the challenges facing all these countries is the fight to win the global race for talent and young workers.

For almost all the developed world facing stagnant growth rates and ageing workforces, winning that race will define their prosperity for the rest of the 21st Century.