Feb 112017
 

Last week, the annual Startup Muster report on the Australian startup sector was released, giving investors, founders and policy makers a valuable snapshot of a vibrant sector of the economy.

The 2016 report had 2711 responses to the online survey which the researchers whittled down to 685 startup founders, 239 potential founders and 474 startup supporters.

Compared to the previous years, the replies are an increase from the 602 in the 2015 survey and 385 the year before. It shows how the Australian scene is growing and evolving.

Still a boys club

A key finding from the 2016 Startup Muster report is the changing gender composition of a group that, quite rightly, has been criticised for being too much of a ‘boys club’. This year’s survey found 24.6% of founder respondents were female, up from 17.4 and 16.1 in the previous two years.

One area where Australia’s startup community does boast diversity is in its industry composition with 17% of the country’s startups in 2016 being focused on the most popular category of Fintech. Notably that sector came in at seventh in 2015.

2015 2016
Marketing Fintech
Content/Media Retail
Retail Content/Media
Big Data Internet of Things
Health Education
Education Marketing
Fintech Social media

Also notable in that list was the disconnect between startups and investors. While 17% of Australian startup founders were focused on Fintech, 42% of investors were. The area most of interest to investors was medical technology (47%) with the Internet of Things second (43%).

Over the next few years it will be interesting to see how investment fashions change, in the UK the bottom seems to have fallen out of the fintech boom while global investments seem to have increased. It’s likely Australia will follow a similar pattern to the wider global trends.

Sydney’s decline

Another interesting shift is the balance between cities and states with New South Wales and Sydney remaining dominant but its position slowly falling,

2015 2016
outside capital cities n/a 23.1
NSW 44 40.9
Vic 17 18.8
Qld 16.5 19.3
WA 8.9 7.3
SA 2.9 6.3
Tas 0.6 2.3
ACT 6.4 6.2

The fall in Western Australia is probably due to the state’s economic collapse in the face of the dying mining boom – many of WA’s skilled and affluent workers are moving out rather than struggling with a declining economy.

Efforts by the Victorian and Queensland governments to promote their startup sectors seem to have had some success although the real winner is South Australia, something underscored by US incubator TechStars’ recent launch in Adelaide.

The big question though is how attractive Australia is as a location for startups and investment capital.

Funding woes

In the 2016 Compass Global Startup Ecosystem Ranking report, Sydney fell four points from the 2012 survey to 16th while Melbourne fell out of the top twenty city rankings.

Due to its position as the second lowest on the Growth Index within the top 20, and its comparably weak statistics around Performance, Funding, and Market, Sydney now ranks #16 (down from #12 in 2012).

Compass’ findings show a critical problem for the Australian sector, regardless of its location, industry or founders’ gender – the lack of later stage investment funds.

That lack of funding means Australian startup founders are particularly sensitive to money issues with Startup Muster finding the most common hindrance to people launching startups is life circumstances requiring a stable income. In a high cost society, the need for a regular salary isn’t surprising.

Startup Muster’s 2016 report is a very useful snapshot of the state of Australia’s tech startup community. It serves as a good guide to what business founders, investors and policy makers should be considering.

Jan 312017
 
Will the US Jobs act create American employment and is it relevant to Australia

When the Obama administration approved the US JOBS Act in 2012 it was almost certain the crowdfunding aspects would attract charatans looking to separate gullible investors from their money.

And so it has turned out, with the New York Times reporting how some crowdfunding sites are worried by the poor quality of startups touting for funds on some platforms.

The Times piece follows the story of Ryan Feit, the founder of New York’s Seedinvest who tells how he has rejected substandard proposals only to have seen them embraced by other crowdfunding platforms with often terrible results for investors.

One of the early companies he rejected was shut down by regulators — who labeled it a fraud — after it raised $5 million from investors. And Mr. Feit expects it won’t be the last.

That fraudsters would be attracted to crowdfunding sites is unsurprising and with regulators still working out how to manage investor protection the field is still very much ‘buyer beware.’

High valuations are also an investor warning sign.

Mr. Feit has been particularly worried about companies that have assigned themselves sky-high valuations that will make it hard for investors to ever make their money back. In several cases, companies that he rejected because of their high valuations have shown up on other sites with the same valuations

The unicorn mania of recent years is the cause of this focus on high valuations and is strange for investors as those richly priced stakes are not in their interests or those of employees taking equity in the business. If anything, a ridiculous market valuation should be the biggest warning of all to potential stakeholders.

Ultimately though it may be that crowdfunding equity isn’t about taking a stake in a business but more showing one’s support for a venture suggests, Nick Tommarello, the co-founder of Wefunder.

Mr. Tommarello also noted that many small-time investors so far were viewing their investments more as donations to businesses they like, rather than as investments that will make money.

As JOBS Act equity crowdfunding campaigns are limited to a million dollars each, being the modern equivalent of the ‘friends, families and fools’ may be the future of these capital channels. Hopefully there won’t be too many fools.

Nov 042016
 

Friday was a bad day for former startup darlings FitBit and GoPro with both companies disappointing investors.

GoPro, whose cameras for a while defined a new wave of adventure videos, announced a loss of $104 million dollars on the back of production issues and further disillusioned stockholders with a forecast of further poor sales in the upcoming holiday season.

Those shareholders have many reasons to be disillusioned with the camera maker’s shares reaching $98 two years ago after floating at $24. Today they are sitting at $11.

FitBit shareholders have suffered similarly, with the fitness band’s shares falling to eight dollars after listing at $20 almost two years ago. Their announcement of further problems on Friday saw the stock price dropping thirty percent on the day.

It may be easy to scorn investors in hindsight, but both companies were emblematic of a new generation of wearable technology and much of their problems today owes as much to them trying to stay ahead of the curve as it does from smartphones developing most of their products’ functionality.

The travails of FitBit and GoPro are typical of a time when new technology is changing business. Some companies  shine brightly then fade while others have a rocky road to success. We’ll have to wait and see if FitBit and GoPro survive.

Nov 012016
 

Last week accounting automation service Blackline listed on the NASDAQ stock exchange with a valuation of over a billion dollars.

The listing was a triumph for the company’s founder and CEO Therese Tucker who started the company in 2005 after a client asked her to find a way to manage the ten thousand spreadsheet their firm used for accounts reconciliation.

We spoke to Therese last year during a visit to Australia where she described some of the challenges of building a business.

Therese’s journey is an interesting, and inspiring, tale of how you don’t have to be a twenty something white guy to build a billion dollar tech business. Her story is worth listening to.

Oct 182016
 

As part of Telstra’s Muru-D business accelerator opening its latest startup intake this week, Annie Parker and Ben Sand, the organisation’s co-founder and Entrepreneur in Chief respectively, spoke to a small group of journalists on Tuesday about what they were looking for in the next batch of applicants and how the tech startup sector is changing.

Ben’s entrepreneurial journey from a scrappy, underfunded Aussie startup to a hot Silicon Valley property and back to a corporate incubator is an interesting tale in itself.

His first venture, an edu-tech startup called Brainworth founded in 2010, operated out of a dilapidated inner city Sydney terrace. The business acheived traction and Ben’s team won a ScreenNSW interactive media grant two years later.

Failing the Kickstarter test

Ultimately Brainworth petered out after missing a Kickstarter round. As Ben says, “I focused on getting out the maximum viable model rather than the Minimum Viable Model and the money ran out.”

As Brainworth withered away, Ben joined former university friend, Meron Gribetz at his Augmented Reality startup Meta which went onto join the Y Combinator program. The company went on to attract $23 million dollars in investment, primarily from Hong Kong and Chinese investors, and now has 150 employees.

Earlier this year, Ben returned to Australia after seeing Mick Liubinskas’ blog post about moving to the United States. In that article, his predecessor put out a call out for those interested in replacing him at the Sydney office which Ben answered.

Australian advantages

Now firmly settled into his Sydney role, Ben sees computer vision as one of the biggest opportunities in the tech sector. Bringing together disparate technologies like virtual and augmented reality, artificial intelligence and smart sensors, computer vision allows machines such as autonomous vehicles, drones and medical diagnostic equipment to pull together sources of data that lets machines see what is going on in the world around them.

Computer vision is a field where Australia has an advantage, Ben believes. “Adelaide is the second most funded city in the world in computer vision,” he points out with investments like Cisco’s into South Australia’s Kohda Wireless driving the local industry.

Ben and Annie don’t see the next group of Muru-D applicants being restricted to any one field despite Ben’s background in AR and interest in machine vision. “It’s more the psychology of the founders,” he says.

Mentoring the next wave

Three years of experience is also delivering dividends, observes Annie. “I’m starting to see the early cohorts starting to mentor and support the newer ones. That’s part of what Muru-D is part of, creating the ecosystem.”

Over the three years, there’s also been quite a few adjustments to the Muru-D process, Annie observes. “We change the model each year by about thirty percent.” she says.

Another thing that has changed is that later stage startups can apply for the program which will be open until November 4.

“I’m excited and I’m very confident we’re going to get great outcomes for these people,” says Ben of the next Muru-D cohort. “We’ll be working on getting the most confident founders on board and hopefully helping them to aim high.”

Oct 132016
 
radio programs for techonology, web, social media, cloud computing and computer advice

This Thursday night join Dom Knight and myself on ABC Nightlife to discuss what tools you can use to start or improve your business and how can we encourage more people to have a go.

Last week the last Australian car making jobs finished and a survey of the Geelong Ford workers found only one percent were interested in starting a new business.

If you missed the spot, you can listen to the podcast through the Nightlife website.

Despite the reluctance to start new businesses it’s never been easier to do so with a range of tools making it simpler to run one. Tonight on the Nightlife we look at some of those tools and what we can do to encourage more people to have a go at running their own companies.

For the program, I’ve a compiled a list of tools businesses should be using. It certainly isn’t exhaustive or definitive and if you have any suggestions on better or newer tools, I’ll be happy to add them.

Some of the questions we cover on the program include;

  • who ran the survey of motor industry workers?
  • what were most of them going to do?
  • so what sort of businesses can these workers go into?
  • what programs are being offered to these workers?
  • how has starting a business changed over the past twenty years?
  • is the focus on tech startups intimidating people who might want to start a business?
  • what are the basic tools every business should have?
  • a few years ago social media was all the rage, does it matter any more?
  • what’s the number one advice for anyone thinking of starting a business?

Join us

Tune in on your local ABC radio station from 10pm Australian Eastern Summer time or listen online at www.abc.net.au/nightlife.

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.

Oct 112016
 

This is the last of four stories I did for The Australian on why entrepreneurs are making their way to the United States’ Bay Area.

“It is a very good time to be Australian in America,” says Dr Catriona Wallace , the Sydney based founder of Flamingo Customer Experience. Despite that goodwill she and those who’ve made the move to the US have found the ways of doing business in the two countries can be quite different.

US decision making processes are one trap, Wallace observes. “Americans will say ‘yes, yes, yes then no’, whereas Australians will say ‘no, no, no then yes,’“ she told The Australian. “I had to learn that an enthusiastic “Yes” from an American is an expression of their interest and intention, not necessarily an action that can be followed through.”

Swinging for the fences

Casey Ellis, who relocated his Sydney security startup Bugcrowd to San Francisco in 2013, finds the scale of ambitions are a key difference between the two countries. “Americans are comfortable with those who swing for the fences whereas Australians aren’t.

“I had a million dollars committed already but people weren’t buying my execution because the way I was selling it was that I had it all figured out, which is what I’d been taught what to do in Australia – we’ve figured how to make sausage machine then the key to making more money is to build a bigger handle and crank out more sausages.”

The reality though is different in the United States warns Ellis. “If I’m pitching like that to VCs over here they’re like ‘we like what you’re doing but your vision is too small.’ I always had a big vision for Bugcrowd but I’d been taught not to put that at the front. In the US you put the vision first and the execution follows.”

Figuring out the differences

“I spent some time trying to figure out why it is different,” Ellis reflects. “If you think about it Australia is a country was formed by a bunch of people who were thrown out for stealing stuff, dropped on a rock and told to figure it out, so we’ve got this incredible culture of troubleshooting and innovation but we’ve also got this tall poppy syndrome of ‘don’t stick your head out too far.’ That’s a very strong cultural feature of Australians and how they interact.”

“If you bring that over to America you will fail because this country was formed by entrepreneurs who set out to find a new land,” Casey concludes. “It’s not about saying Aussies are meek, they’re not, but Americans are completely comfortable with swinging for the fences and Australia’s aren’t.”

Peter Grant of Safesite warns not to overplay the Paul Hogan persona. “Coming from Australia is a novelty but you can’t play the dinky di Aussie card, you have display professionalism and represent you are serious about being a US company and serving the US environment,” he told The Australian. “Americans are a lot more accepting of risk and have a fear of missing out on the next big thing.”

“The country is founded upon going out and doing your own thing and being a maverick, so they are a lot more accepting of risk and have a bit more of a fear about missing out on the next big thing, “ Grant explains. “We’ve developed a strategy of saying ‘we’re working on this, this is going to happen and we’re talking to your competitors.’ That seems to work.”

Watching the clock

One respect where Australians’ laid back attitudes come unstuck is in time keeping warns Flamingo’s Wallace, “Americans are super punctual. Conference calls typically start 5 mins before the hour rather than 10 minutes after as it would in Australia. Meetings finish at quarter before the hour so people can get to the next meeting 5 minutes early.”

“If people are delayed and get to a meeting a few minutes late they will apologise profusely for several minutes and then apologise again at the end of the meeting. American’s will warn of the need to finish a meeting at a certain time by saying, “I have a hard stop at quarter before”

Humour lapses

Another difference is the sense of humour, Dr Wallace warns. “Americans typically are not funny in business as we Australians are. There is not much joking in meetings. I once used the enormously funny expression of, ‘That customer experience would have been like having a hot chicken blood enema!’.”

“Instead of this being outrageously funny I was surrounded by a group of 10 executives whose mouths hung open in shock that I had just said something like that. The meeting tanked from there on….”

“All this being said, the American business community love Australians,” Wallace concludes. “They find us hard working, great at relationships, good at navigating politics, honest, authentic and transparent. In some ways they aspire to be more like us. We cut through the bollocks – although they don’t understand that word – or bullshit and get things done. Americans like that. We are generous. They like that too.”