Paul Wallbank – Brilliant Communications

Category: startups

  • Just doing it – the road to Silicon Valley

    Just doing it – the road to Silicon Valley

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

    “Get over here as quickly as you can. Don’t worry about being ready, feeling fully baked or whatever,” says Bugcrowd founder Casey Ellis. “Do whatever you can to get a ticket over here, stay in a hostel and do whatever you need to be here and experience the place.”

    Casey Ellis was speaking in the company’s converted warehouse offices just off San Francisco’s Embarcadero waterfront. “Half the price of SoMA,” he smiles while explaining what intending expats should prepare for when moving over to the United States.

    Ellis has plenty of reasons to smile as a few weeks earlier the crowdsourced security testing service had announced a successful $15 million fund raising with Australian investor Blackbird Ventures leading the round.

    Getting a US base

    While he was delighted an Australian investor had lead the funding round, Ellis believed the company had to have a US base from its early days. “One of the reasons for that is if we’re not here, we’re going to be competing with someone who is,” he says.

    “When I started going full throttle into BugCrowd, the logic I applied to it was this is either going to fail as an idea or it’s going to move very quickly,” he told The Australian. “If it moves quickly we need to be in a position where we are resourced as well as possible. The place to do it is here.”

    “What blew my mind when I got here. I had blinkers on and the move took them off and I’m like ‘there are opportunities here that I hadn’t dreamed of. The reason I didn’t know that was because I hadn’t seen it first hand.’”

    Being social

    Peter Grant of construction safety service Safesite found social media was a good tool to prepare for the shift to the United States. “If you’re looking at moving at over, but generally speaking you need to make sure there’s a good product and market fit. You need to establish your networks over here, even when I was back in Australia at Muru-D, Twitter was a good way to establish communications.”

    “Don’t wait until you get to America, engage with your community and your market as soon as you possibly can. Go onto the webinars, know the language, know the language, know the players – it’s a big country so there’s lots of players. Just start to get involved as soon as you possibly can.”

    Founded in Brisbane after Grant found most construction businesses monitored site safety with pen and paper systems, Safesite first moved to Sydney to be part of the first round of Telstra’s Muru-D program. In 2015 he moved to the US as most of the platform’s users were American based and has since set up a network of distribution agents across the nation.

    Staying local

    “If you’re an organisation like us that needs to be in the US to survive then get over here as soon as possible,” Grant points out. “We have a year on our competitors. If it’s going to be too complex or you already have a profitable business in Australia you may not need to come to the US, you have to be realistic about it. It might make sense to find a local partner.”

    Should it make sense to move to the US then it’s important to capitalise on those initial contacts and market research, Grant believes. “When you get over here establish your product market fit and your face-to-face relationships, the dynamic factors that will influence your growth over here.”

    The move though doesn’t come without costs he warns, “it can be expensive to set up a business over here so make sure your investors and your legal representation have a full understanding of the implications of what you’re doing and the processes.”

    Just do it

    Jindou Lee of HappyCo also warns startup founders have to be prepared for some changes when moving to San Francisco. “If you really want to change the world and see your company succeed, get closer to your customers, you need to make sacrifices.“

    The founder of real estate inspection app Happy Inspector, Jindou moved from Adelaide to the United States in 2012. After raising three million dollars in funding and being accepted onto the 500 Startups program, the company expanded into general business documentation and renamed itself to HappyCo. “My advice specific to moving to the US is… do it,” he says.

    Connecting with the existing networks is also important, “the other piece of advice is to hook up with the different groups that are around,” says Bugcrowd’s Ellis. “The Startmates, the Blackbird folk – figure out who you can get in touch with. People like me who can sherpa you a little bit.” He says “Don’t rely too much on them as you won’t succeed as an entrepreneur if you do, but get a good solid start.”

    Similar posts:

  • A goldmine in your back yard

    A goldmine in your back yard

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

    A combination of accessible capital, a huge market and a collaborative culture are why startup founders are making their way across the Pacific to Silicon Valley and San Francisco.

    Despite their government’s ideas boom and an easier funding climate, Australia’s startups still see San Francisco and Silicon Valley as being the promised land. In this four part series we spoke to Aussie entrepreneurs about why they’ve made the move across the Pacific Ocean.

    In a noisy coffee shop just off San Francisco’s Market Street, PixC founder Holly Cardew explains why she moved to the city. “It’s a place you fall in love with straight away – it’s the people and the attitude,” says Cardew. “You can do anything, people don’t look at you as if you’re crazy if you want to do something big.”

    Wider horizons

    Cardew made the relocation to San Francisco to find funding for Pixc, a photo editing service that in 2014 was one of the first group of startups accepted into Telstra’s Muru-D accelerator program. In moving to the US she found American investors have far wider horizons than Sydney’s business community.

    “Investors ask ‘what’s next?’” Cardew enthused, “in Australia, you don’t even think about that. Americans tend to think a lot bigger. Australians aren’t trained to think about it.” Another aspect Cardew highlights about the Bay Area business culture is how individuals are always happy to help out, “people always ask ‘how can I help’ she says.

    One of those credited by Cardew and by many of the people interviewed for this is Temando founder Carl Hartmann. In an archetypal open plan shared office in San Francisco’s Financial District Harmann explains why he’s quick to help, “I’m here today because people who were kind enough to pay it forward.”

    Being there

    Temando, a logistics service founded in Brisbane, was started to address the difficulties retailers had in fulfilling customers orders across Australia. Hartmann moved to the United States at the beginning of 2015 to access North American customers and to tap local capital markets. “When you talk to the SV funds it’s very hard to raise money if you aren’t here,” he says. “In Silicon Valley it’s where the action is. If you’re not here you are out of sight and out of mind.”

    “It’s difficult to build those sort of relationships from the other side of the world. When you’re here, things can move along quickly because it’s easy to collaborate on things. It’s easier to work face to face. For us it makes sense to be here,” Hartmann says. “There’s a unique energy where everyone has come from all over the world.”

    Jack Gonzales of location mapping service MapJam is an example of how fast things can move for companies in the Bay Area. “Last year we were approached by some of the big players who asked if we had our own map tiles,” he recalls. “We realised we had an opportunity.”

    Gonzales was speaking at the somewhat chaotic San Francisco campus of 500 Startups across from the city’s Moscone Convention Center. Mapjam was accepted onto the prestigious startup investment and acceleration program last year.

    A goldmine in your backyard

    “You have a goldmine in your local backyard and you have to capitalise on that. Sometimes it’s really spontaneous, ‘hey can you guys come in on Friday?’ You can’t do that when you’re overseas,” Gonzales says. “Our main customers are here and I really want to conquer the backyard before I conquer the globe, just within walking distance from here there are thirty major players.”

    Australia does have some advantages for startups, particularly in labor costs for skilled developers. “It’s three times more expensive to employ staff in the Bay Area,” says Affinity Live’s Geoff McQueen in explaining why he’s kept the company’s technical team in the firm’s home town of Wollongong

    McQueen, who moved to San Francisco in 2011 to seek funding for his venture believes “Australia is a good place to do a minimum viable product or proof of concept” and warns budding entrepreneurs to have more “than just just a PowerPoint pitch” when they decide to make a permanent move.

    In McQueen’s view it’s important to at least visit the Bay Area early in the process of developing a business. “Come over as soon as you can – even if you only have a light idea,” he says. “Anchor your visit around a conference, whatever is relevant to your target industry.”

    Achieving your aims

    Despite not finding gold on San Francisco’s grubby streets, most of the entrepreneurs The Australian interviewed were all happy they’d achieved their aims in moving to the US which vary from easier funding availability, access to bigger markets and a more vibrant ecosystem than those in Sydney, Melbourne or the smaller centres.

    Ultimately though everyone mentions the supportive nature of the Bay Area’s startup culture, “people ask what can I help you with,” says Pixc’s Cardew. “You can do anything, people don’t look at you as if you’re crazy if you want to do something big.”

    Similar posts:

  • What Chinese investors are looking for in tech companies

    What Chinese investors are looking for in tech companies

    What does one of the biggest Chinese backed investment funds look for in prospective companies? During their recent visit to Sydney China Rock Capital Management’s Venture Capital‘s Toby Zhang and Matt Lee spoke about the company’s investment philosophy.

    “In general we invest in very early stage investments – we focus on seed to Series A,” says Zhang, one of the company’s partners. “At these stage of development we’re looking at a combination of talent, technology and market.”

    “We like to bring these early technology companies to the markets like China and west coast US where we’re familiar, a lot of the companies partner with us because we can help overseas.”

    Zhang and Lee were in Sydney for the announcement of their investment into a local VR video capture company, Humense, the fund’s first foray into Australia.

    “When we first started CRCM we only invested in Chinese internet companies,” explained Zhang. “While we’re based in Silicon Valley we were looking at what’s going on in mainland China. We’ve launched three additional funds, all three of these are early stage and cross border. We not only invest in China but also in the US, Israel and now in Australia.

    Understanding the founders

    “We spend more than fifty percent of our time understanding the entrepreneurs and who’s behind the company. When we form a financial partnership it’s kind of like a marriage where getting a divorce is really difficult so you have to really understand the entrepreneurs.”

    “Secondly we look for businesses which can easily pivot if they have to. A good example is a company we invested in recently called Music.ly. We were a fifth stage investor in Music.ly while they still  in Shanghai, we saw entrepreneurs who we knew from their previous jobs so we knew how talented they were and we were prepared to back them.”

    “More importantly though was their business’ focus on social media particularly with the age group that the existing platforms were losing traction with.”

    “Finally with technology we’re looking for companies that can create barriers early that allows them to outcompete their competitors.”

    Humense’s volumetric capture relies on an array of cheap, commercially available cameras to collect the images, something that appeals to Zhang’s investment philosophy.

    Opportunities for Virtual Reality

    “We spent a lot of time looking at the VR space, particularly volumetric capture,” says Matt Lee who originally hails from Sydney. “we felt in Australia with the background of special effects and animation so we felt there was a strong talent base we could leverage.”

    Toby Zhang sees the fund making more investments into the augmented and virtual reality sectors. “We think AR/VR is a global tech movement,” he says. “Although historically we’ve been mostly investing in Silicon Valley and China, we have been constantly looking for opportunities to get to know start-ups, entrepreneurs, and investors from all around the world.”

    It’s notable the Chinese backed fund is now looking around the world for investment opportunities and focusing on VR and AR technologies.

    That strategy makes sense as the barriers to entry fall and the tech industry’s focus moves beyond Silicon Valley and into new markets. Where the US investment funds go will be the big pointer of future opportunities.

    Similar posts:

  • The limits of how governments can help startup businesses

    The limits of how governments can help startup businesses

    Over this week I’ve been posting a series of interviews with the candidates for this week’s Sydney Lord Mayoral election. All of the teams have interesting schemes and ideas on how they can improve the city’s profile as a global tech centre.

    While each team’s plans are worthy, it’s worth asking exactly what governments can do to make their communities more attractive to businesses and whether short term subsidies and incentives can help.

    There is some evidence they can, prior to San Francisco changing its tax rules the city took second place to Silicon Valley in the southern Bay Area. In the last ten years, the city has become the focal point for the tech industry.

    However there is a counter argument that San Francisco benefited on a generational shift of lifestyle preferences away from the leafy suburban lifestyles of Palo Alto and San Jose to the grungy but walkable communities of the Mission and SOMA.

    The Bay Area though is a special case, Silicon Valley’s success as a tech hub is based upon massive Cold War tech spending that drove the region’s industry and its that high level support that probably tells us more about government support.

    In the case of London and Singapore, the successes have been due to the national governments putting in broader economic reforms and incentives. Also their proximity to Europe and East Asia respectively has made both cities attractive.

    On balance it’s those broader economic factors that make regions attractive as industries clusters – local incentives count little compared to access to factors like markets, capital and skilled labour. Taxation is, at best, a secondary issue.

    The biggest challenge for Sydney, and most Australian cities, is the the crippling cost of property. In 2013, staff.com released a survey showing Sydney to be second only to Zurich in the cost of establishing a startup.

    In many respects, the cost of property doesn’t really matter to prosperous industry hubs – San Francisco, London, Singapore and New York are all eye wateringly expensive and yet they still thrive – however all of those cities have better access to capital and markets, if not labour, than Sydney.

    Addressing Sydney’s chronic shortage of affordable accomodation is firmly in the state and Federal governments’ remit and beyond giving property developers a green light to build high rise apartments neither level of government has shown any interest in addressing it.

    Similarly, the tax structures which penalise Australian employees of high growth businesses and dissuade investment in early stage ventures are totally the responsibility of the Federal government and it’s hard to see that changing in the term of the current dysfunctional administration.

    The relative powerlessness of local governments leaves initiatives by the City of Sydney limited in scope and schemes to promote the city or offer incubator space are peripheral to the factors that encourage the development of a global industrial centre.

    Ultimately though, the question has to be how much any government can do to create a Silicon Valley, factors such as labour availability and access to capital come down as much to the community’s attitudes and business’ risk tolerances.

    So perhaps we focus on what governments can do for business. Maybe just providing a level playing field can be the best we can hope for.

    Similar posts:

  • Sydney’s Mayoral Tech Race – Lord Mayor Clover Moore

    Sydney’s Mayoral Tech Race – Lord Mayor Clover Moore

    Leading the City of Sydney’s Lord Mayoral race is incumbent Clover Moore. Long a thorn in side of the state’s political and media establishments, the independent Moore has safely held the city’s Lord Mayorship since beating the seemingly unbeatable Labor candidate in 2004.

    Since being elected, Moore has been focused on Sydney being a ‘living and sustainable city’ with the Sydney 2030 plan being the focus of her administration. This election’s platform builds on that scheme.

    While acknowledged in the 2030 strategy paper, the tech sector really didn’t feature in that document – something that reflects how late all levels of Australian government have been in recognising the industry’s role in economic development.

    However in recent years the council has been developing its programs, including the Startup Action Plan and on the Clover Moore team for this year’s election Jess Scully, director of  the annual Vivid Ideas festival and organiser of TEDxSydney, is the spokesperson for the campaign’s tech and cultural platforms.

    “The crucial things are access to talent and space,” Scully told me when I interviewed her a few weeks ago. “There are reasons why people are attracted and drawn into the gravity of precincts in the heart of the city.”

    Scully cites the city’s working with property developers to allocate space for startup hubs in new developments, the council’s support for various events and the support for infrastructure projects, not least the contentious bikepaths, to improve the city’s liveability.

    Like the rest of the candidates’ teams, Jess provided the following answers to our questions.

    What are your policies relating to encouraging tech startups?

    “Clover has been very proactive in supporting the start-up sector and encouraging co-location, which we know amplifies the benefits of having a lot of bright minds working together. After consulting with the sector, the City adopted a Tech Start-Up Action Plan in March, which has the aim of building a robust start-up ecosystem by offering access to affordable space, promoting dense agglomeration and increasing access to funding and markets.

    “Of course, it’s easy to say these things – but under Clover’s direction, the City of Sydney is already taking action – one major step has already been taken. We know Sydney can be an expensive place for start-ups to access affordable space, but in the future we want the knowledge economy well represented in the heart of our CBD. The City has negotiated a Voluntary Planning Agreement with Lend Lease to secure 3900 square metres on three floors in a prime spot on George Street at Circular Quay for tech start-ups.

    “This new development will put tomorrow’s tech and start-up leaders right in the centre of the action, closer to potential clients and partners in the corporate world. This new CBD tech hub will provide affordable space for businesses at different stages of development, co-working spaces and community space.”

    What do you see as Sydney’s strengths in this sector?

    “Sydney benefits from its own gravity – we’re home to over two thirds of Australia’s start-up community – we’re the natural home for businesses that want to scale up and go global from the outset. We’re a global city that’s attractive for talent, and we’re the base for the creative industries, finance and services sectors, so being located here allows you connect with potential collaborators, clients and investors. Other regions have to offer more incentives to overcome the natural advantages that Sydney offers start-ups.”

    What are we not doing well at the moment?

    “We’re still young: Sydney has a relatively new tech start-up ecosystem and we’re struggling with two challenges: skill shortages in ICT, and in attracting capital to scale-up.”

    What are we doing well?

    “I think our start-up ecosystem in Sydney is one of the most supportive and collaborative in the world: I’m so impressed by the generosity and knowledge sharing that goes on in places like Fishburners, Stone & Chalk, Blue Chilli.

    “It’s also fantastic to see how engaged our start-up success stories – the founders behind Atlassian, Spreets, Freelancer, and the incredible team at Blackbird – and how committed they are to leading the next generation, being present and offering support, to raising the tide and growing the sector here. I have been fortunate to work with Blackbird Ventures for the last two years on The Sunrise, a conference they fund and drive to get students, aspiring entrepreneurs and emerging founders to connect with new thinking and with each other. Their work and their investment fund are going to be transformative.

    “From my observations around the world, this generosity and level of support is just remarkable – they’re leading the way in helping Sydney deliver on our potential to be a global start-up and tech hub.”

    How do you see the City’s relations with state and Federal government affecting current efforts?

    “The City has differences with other levels of government on some issues but tech start-ups is not one of them – we have a good relationship with other levels of government on tech start-ups.  In particular, we are working closely with the NSW Government on innovation and new initiatives.”

    Currently Victoria and Queensland are doing better at attracting businesses. Should we do anything to counter that and, if so, what?

    “The City of Sydney is the nation’s tech start-up hub with two thirds of Australian start-ups. The City of Sydney’s economy also grew at 4.5 per cent per annum in the last term – outstripping the national growth rate. Other states use incentives to try and attract businesses to counteract the fundamental strengths of Sydney as the nation’s global city. Our ecosystem is 6 times larger than Brisbane and 55% bigger than Melbourne.

    “Working on the fundamentals that underpin the strength of a tech start-up ecosystem is the key for a successful ecosystem in Sydney – not picking winners.”

    How can Sydney compete globally against cities like Singapore, Shanghai and even Wellington?

    “Sydney is consistently ranked as one of the leading global cities – we are one of the Asia-Pacific’s finance hubs and host high-quality ICT, professional and business services, educational institutions and creative sectors. Sydney also has high liveability which is important for attracting and retaining talent.

    “In addition to improving the capacity of our tech start-ups ecosystem to support local, innovative companies become global companies, we need to address some of the other issues affecting the functioning of our economy and society such as the affordable housing crisis.”

    The Clover Moore team comes with the advantage of incumbency despite the hostility of Macquarie Street and the performance of the City of Sydney and the growth of the tech community under Moore’s administration has been remarkable.

    How much of this is attributable to Moore’s leadership is another question, however her policies are similar to those of other successful tech cities like San Francisco, London, New York, Wellington and Singapore.

    Singapore and Wellington probably illustrate the weakness of Moore’s leadership in that both the island state and New Zealand don’t have a level of provincial government whose parties are hostile to independent administrations as is the case where successive Labor and Liberal governments have interfered in the City of Sydney’s operations.

    That however hasn’t stopped Moore from investing in the city’s infrastructure and making it a place attractive to startups and tech businesses. Making the city a better place to live and work may be Moore’s biggest attraction for the startup sector.

    Similar posts: