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An entrepreneur’s journey – a conversation with Muru-D’s Ben Sand

From a scrappy and underfunded inner Sydney startup to Silicon Valley and back, Muru-D’s Ben Sand has a fascinating entrepreneurial journey

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.”

Being awesome

The Awesome Foundation is an interesting small scale funding idea for local community projects

Last night I went along to the Awesome Foundation’s Sydney chapter‘s celebration of dispensing two million dollars in grants.

The Awesome foundation trustees and ambassadors meet once a month, throw a hundred dollars into the pot and grant a thousand dollars every month to the most awesome pitch they hear. Past Sydney winners have included super pollinators for native bees, Friday lunches for at-risk youth and setting up a rooftop garden for refugees.

What’s particularly impressive about the Foundation is that how the grants come with no strings. It’s a really good way to create grass roots projects.

Hopefully we’ll be seeing more programs like the Awesome Foundation, and more people like the trustees who make it possible.

Bootstrapping becomes fashionable for startups

As VC money becomes scarce for startups, bootstrapped businesses could come into their own

“The sincerest form of flattery is that customers will pay,” says Alex Bard, the San Francisco based CEO of Campaign Monitor, an email marketing platform originally out of Australia.

Two years ago we spoke to Bard who at the time was Salesforce’s Vice President for Service Cloud and Desk.com. Since then he left the cloud CRM giant to run the global of expansion of Campaign Monitor. We caught up with him again today at the company’s San Francisco offices.

Campaign Monitor is an interesting company in that unlike most tech startups it has been cashflow positive from its early days and when it did take investor money, half the funds were raised from private equity rather than venture capital funds.

“Because the financing climate in Australia wasn’t as fertile here in the United States – and San Francisco specifically – until recently, you have a whole crop of tech companies that have been built differently. From day one they’ve been focused on economics and business fundamentals.”

Bard sees this focus on bootstrapping and cashflow as being an advantage in the current funding climate where suddenly unlimited amounts of VC money can no longer be assumed.

It could turn out more conservative companies are better fixed to weather the coming investment drought than today’s unicorns.

Getting fat on venture capital

Going for big investment dollars could backfire on the founders of startup businesses

“Raising money is like ordering dinner,” says startup founder Geoff McQueen about attracting investors. “If you’re only a little bit hungry, you should only buy an appetizer.”

McQueen was writing about his company, professional services platform Affinity Live, achieving its first round of funding. While the amount raised is a relatively modest two million dollars, the main gain for the company is getting some experienced business people on board.

Unlike many of the high profile billion dollar ‘unicorns’, cash flow positive businesses like Affinity don’t need large swags of cash to grow. As McQueen points out, big investment rounds put pressures on management and risks the company’s culture changing “from one of discipline and taking on the world to one of comfort and entitlement”.

Pushing out the owners

Another risk for founders is they could end up diluting themselves out of the business they’ve built, as venture capital investor Heidi Roizen points out it’s possible for the creators of a billion dollar startup to find themselves broke.

Roizen observes “venture capital is not free money. It’s debt. And then some”, something that’s overlooked by many commentators who think a fund raising – and the resultant valuation – goes straight into the pockets of a company’s founders.

Unless it’s Google Ventures doing the investment, it’s unlikely the founders will be buying Porsches after a VC round and usually the funding goes into growing the business. For many big name startups those capital needs can be huge as we see with Uber where reports indicate the company is currently losing two dollars for every dollar it earns.

Beating the burn rates

Most businesses though can only dream of burn rates in the hundreds of millions a year and their needs are far more modest illustrating McQueen’s point about excess capital.

As we saw in the dot com bust it was the lean and focused companies that survived the downturn, there’s little to think the next industry shake it will be different. That’s why companies like Affinity Live and founders like Geoff McQueen will probably still be around when the dust and hype settles.

Adventures in Startupland – the brutal truth of starting a business

Zendesk CEO Mikkel Svane’s book Startupland describes the challenges faced by most business founders and business owners.

Startupland is a magical, mythical place where the unicorns roam free and much of the advice dished out to nascent entrepreneurs has more in common with a romantic fantasy novel than the hard work of building a business.

Mikkel Svane’s Startupland is not one of those books. Svane, the co-founder and CEO of cloud based customer business Zendesk, is instead a tough description of the challenges and personal costs of venturing into business for yourself and the harsh, demanding realities of the Silicon Valley statup model.

“No-one tells you how little you get paid,” warns Svane as he charts his own journey from developing and selling through Stockholm’s computer shops of the mid 1990s a basic program that created 3D optical illusions through to floating Zendesk on the NASDAQ in 2014.

During Zendesk’s journey Svane and his business partners experienced the entire range of challenges that a business founder could face ranging from managing high growth, laying off staff in the face of a downturn, the inevitable pivots and, sadly, the passing of a valued employee.

“Startups are fragile” warns Svane and observes how he nearly fell for the trap all business owners have been tempted by in doing consulting work to provide cash for the business. Invariably the side job comes to dominate and the new venture withers due to lack of attention.

Working from home

For those starting out in business, whether it’s a tech startup or something a big more mundane, the observations and tips on working for home are worthwhile in themselves, if you find you’re one of the type that “sits at home and eats toasts and masturbates” then it’s probably best to find an office or coworking space.

Having had the opportunity to interview Svane a number of times, his own passion and character comes clearly out of the book including his view that seemingly boring things like customer support is sexy, citing how Marilyn Monroe fell for Arthur Miller (although that didn’t end well).

The ‘boring is sexy’ mantra is one Svane repeats throughout the book, and his contention is seemingly mudane areas like customer support are where the real business opportunities lie.

Business is about relationships

Ultimate Svane sees business as being about relationships; between customers, staff and investors. His view on accepting investor’s money is an important lesson from the book.

“Great investors have unique relationships with their founders, and they are dedicated to growing the company,” writes Svane. “Mediocre and bad investors work around founders, and the company ends in disaster.”

The brutal truth

In telling the brutal truth about starting a business Svane gives anyone considering the idea of ditching the cubicle a realistic view of the challenges ahead. That advice alone will save many families from the stresses and costs of self employment and startup land.

Those considering entering the world of startups, small business or self-employment should read Startupland. If you’ve already started that journey, then Svane’s story is worth reading to show you aren’t alone in your daily challenges.

Why being a unicorn could be a bad thing

Most businesses don’t need big VC type investors to help them grow

Andrew Wilkinson doesn’t want to be a unicorn. In Why I want to be In-N-Out Burger, not McDonalds, Wilkinson describes how he’d rather his business is a sleek racehorse rather than a beautiful, mythical creature.

One of the misunderstandings in the current startup mania is the motivation of founders and proprietors; many haven’t gone into business with the aim of flipping the company to a rich sugar daddy for a billion dollars.

In his great presentation “Fuck You, Pay Me” – essential viewing for anyone starting a business – San Francisco designer Mike Montiero describes “We wanted to pick and choose the clients we were gonna work with and we wanted to be responsible for what we’re putting out in the world.”

For businesses like Montiero’s and Wilkinson, having a venture capital investor looking over their shoulder would be as bad as working for a corporation; ceding control of your work is exactly the reason they started their businesses in the first place.

While the Silicon Valley venture capital model is valid for high growth businesses that need capital to scale quickly, most ventures don’t need those sort of large cash injections early in their development – for many, a million dollar cheque from a VC could prove to be a disaster.

There’s myriad reasons why someone starts a venture and all of them pre-date the current startup mania, it’s why every business is different in its own way.

The business or your sanity

Minecraft founder Markus Persson gives other tech leaders a lesson in humility

Yesterday Microsoft confirmed the rumours that it would buy Minecraft developer Mojang for 2.5 billion dollars.

Following the announcement, Mojang founder Markus Persson — aka Notch — wrote a touching blog post on his leaving the company he founded.

The business had become too big and the demands of Minecraft’s legion of fans were taking their toll; it was time for Persson to move on to keep his sanity.

“If I ever accidentally make something that seems to gain traction, I’ll probably abandon it immediately.”

For all the hubris we hear from technology company founders and CEOs, it’s those like Persson who probably will end up making the most difference to the world.

A unicorn in the wine industry

The wine industry once thought the internet was a cute idea, now companies like Vintank are showing them what it means

“I was a closet tech guy until the 2000s,” says Vintank’s founder Paul Mabray in describing how digital technologies are changing the wine industry to the Decoding The New Economy YouTube channel.

We’d spoken to Paul before about the forces changing the wine industry and visiting him in the Napa Valley gives some perspective on the opportunity the sector has in capturing the enthusiastic US wine market.

Paul’s first venture into wine technology was with Inertia Beverage Group in 2002, “when I started Inertia I said ‘hey, there’s this thing called the internet'”, Mabray recalls. “They said ‘hey Paul you’re so cute, the internet won’t be around in a couple of years.'”

The internet being a fad turned out not to be the case and Vintank evolved out of the rising importance of social media to industries like wineries.

“Vintank is the mission control of social media, the one stop engagement platform for the wine industry,” says Paul of his social media listening service which he and co-founder James Jory established in 2009.

Wine is lagging other industries in adopting social media and other digital technologies because it’s avoided many of the disruptions other sectors have had to deal with.

“The wine industry is the last industry that hasn’t been changed by the internet,” Mabray says. “If you look at hotels with expedia.com or restaurants with Yelp or Open Table, that hasn’t happened yet.”

A key facet of Vintank is its use of the freemium business model in offering a basic service for free; a common practice in the consumer (B2C) market but fairly rare in business (B2C) software services.

“It’s a very different way to do freemium in B2B. Freemium in B2C you do mass adoption — that tiny fraction that pay makes it profitable because so many people have it.”

“In the B2B freemium model what you have to do is distribute it for free and then you measure the usage; who is using it the most is where you send the sales team in.”

For Mabray, we’re in early days of using digital media and the wine industry is one of the sectors that needs to adopt the technologies quickly: “The driver for me is this horribly complex problem that needs to be solved — the wine industry needs digital to survive.”

Building a billion dollar start up

Zendesk founder Mikkel Svane describes the journey of building a billion dollar startup

Two years ago we interviewed Mikkel Svane the founder of cloud service provider Zendesk about modern customer support.

Since we spoke to him Zendesk have had a successful IPO and is now worth over a billion dollars.

In the latest Decoding the New Economy video interview we catch up with Mikkel and discuss the journey from being a three person startup to a billion dollar listed company.

Spreading the good news – Canva’s Guy Kawasaki

The tools for building new businesses have never been more accessible says Canva’s Chief Evangelist Guy Kawasaki

“My job is to spread good news,” says Guy Kawasaki of his role as Canva’s Chief Evangelist.

Kawasaki was speaking to Decoding the New Economy about his role in popularising the online design tool which he sees as democratising force in the same way that Apple was to computers and Google to search.

Democratisation is a theme consistently raised by startups and businesses disrupting existing industries and Kawasaki continues this theme.

“The world is becoming a meritocracy; it’s not about your pedigree, it’s about your competence,” states Kawasaki.

Falling barriers to entry

What excites Kawasaki about the present business climate are the falling barriers to starting a venture. “Things are getting cheaper and cheaper, in technology you had to buy a room full of servers, have IT staff in multiple cities. Today you call Amazon or Rackspace and host it in the sky.”

“Before you had to buy advertising for a concert, now if you’re adept at using social media – with Google Plus, Facebook,Twitter, Pinterest and Instagram – you have a marketing platform that fast, ubiquitous and cheap.”

“What excites me is there are going to be more technologies, more products and more services because the barriers are so low.”

Creating a valued and viable product

For those businesses starting into this new environment, Kawasaki believes the most important thing a startup should focus on is getting a prototype to market; “at that point you will know you’re truly onto something.”

“If you build a prototype that works you may never have to write a business plan,” says Kawasaki. “You’d never have to make a Powerpoint, you may never have to raise money as you could probably bootstrap.”

Kawasaki view is the MVP – Minimum Viable Product – model of lean product development should have another two ‘V’s added for ‘Valuable’ and “Validated’.

“You can create a product that’s viable, ie you could make money, but is it valuable in that it changes the world?”

“Is your first product going to validate your vision? If it’s not then why are doing it?”

The story Kawasaki tells is the tools to deliver valued and viable products are more accessible than ever before; that’s good news for entrepreneurs and consumers but bad for stodgy incumbents.

Technology One and cloud computing’s gold rush

Technology One’s Adrian DiMarco has strong views about the outsourcing industry as he steers his company onto the cloud.

“Consulting companies are a blight on our industry” declares Adrian DiMarco, CEO of Technology One.

A quick way to rile DiMarco is by asking him about IT outsourcing as I learned during an interview at Technology One’s annual Evolve conference on the Gold Coast last month.

The 1600 enterprise clients attending this year’s Evolve conference illustrate Technology One’s growth since it was founded in 1987 out of DiMarco’s frustration with the multinational outsourcing companies.

“I used to work for multinational technology companies and as a young person I really used to want to work for them, I found it very attractive and I expected they’d be very attractive and cutting edge.”

The reality DiMarco found was very different; “I worked for them for years and found the opposite, just how bad and inefficient they were.”

“I really didn’t like what I was working with, the software we were using and stuff and I thought we can do it much better here in Australia. The idea was to build enterprise software.”

Moving to the cloud

Having built that enterprise software company DiMarco now sees his Technology One’s future lying in cloud services and empahises the importance of learning from the industry’s leaders.

“We looked at companies like Google, Salesforce, Facebook and Dropbox. These companies are the undisputed leaders in the cloud.

“One thing that we noticed was that you can’t get Google, Salesforce, Facebook from a hosted provider; you can’t get it from IBM or Accenture.

“The leaders in the cloud build it themselves so they are deeply committed to it, they run the software for their customers and they invest millions of dollars each year in making the experience better.”

“It is clearly what the cloud has always meant to be.”

DiMarco though sees problems ahead as vendors look to rebrand their products and warns businesses need to be careful about cloud services.

“It is the next big goldrush in the IT industry. IT companies, particularly service companies have over the last few years seen revenues decline so in order to find new sources of growth they are all targeting the cloud.”

Accountability and the cloud

The lesson DiMarco learned in the early days of cloud computing was that accountability is necessary when you’re trusting services to other providers.

“We had early customers that went to the cloud; we said ‘look, it’s a great idea and we think it’s the future’. They wanted to go with hosting providers and we thought it was a sensible decision and we saw a train smash, it was a train smash of epic proportions”

“They were running data centres overseas in Europe that had latency issues, performance issues and the customers were paying money after money after money.”

“The customer was getting a terrible performance and there was no accountability.”

“We couldn’t fix it because we had lost control over the customers.”

This lack of accountability is one of the reason why so many IT projects fail DiMarco believes, citing the notorious Queensland Health payroll project.

“Queensland Health again used this fragmented model; the party that built the software, which is SAP, used a third party which was IBM to implement it which meant no accountablity.

:That would never have happened If SAP had signed the contract, if SAP had implemented the software, which they won’t do, they would have known the risks that were being taken and they would have stopped that project and fixed it up.??“That’s the difference between our model and the competitors model.”

“They take no responsibility, they implement these systems, they charge a fee-for-service and they have open ended contracts – that’s how they get to be a billion dollars – and do you know who suffers? It’s the customers.”

Shifting away from consultants

DiMarco sees governments moving away from the consultant driven model that’s proved so disappointing for agencies like Queensland Health which creates opportunities for Technology One and other Australian companies.

“For the last fifteen years we’ve not been able to sell software to the state government. It’s just changing, we’re getting in there now, but it was a terrible problem for us.”

The shift from big consultants is a view endorsed by Sugar CRM co-founder Clint Oram who described how the software business is changing when he spoke to Decoding the New Economy last week.

Oram sees the software market challenging established giants like SAP, Oracle and Microsoft; “in the past it was ‘here’s my software, goodbye and good luck. Maybe we’ll see you next year.”

“If you look at those names, the competitors we see on a day-to-day basis, several of them are very much challenged in making the shift from perpetual software licensing.” Oram says, “it’s been a challenge that I don’t think all of them will work their way through, their business models are too entrenched.”

“Software companies really have to stay focused on continuous innovation to their customers.”

DiMarco agrees with this view, citing the constant investment cloud computing companies make in their products as being one of the advantages in the business model.

Building the Australian software industry

For Australia to succeed in the software industry, DiMarco believes the nation has to encourage and celebrate the industry’s successes.

“It’s about getting people to believe in Australian software. I think the Aussie tech industry needs a lot more successes we can point to,” DiMarco observes. “I think that will create enthusiasm, excitement and a hub for the rest of the community to get around.”

“We gotta get some big scale companies with some high visibility and get them successful.”

For the future of Technology One, DiMarco sees international expansion as offering the best prospects with the company having recently announced a UK management team as part of its push into the British local government market.

Hopefully DiMarco’s UK management team won’t have to deal with the local management and IT consultants as they try to sell into British councils.

Seeing the full picture

Data visualisation service Encompass is an example of finding a business opportunity from a scarring experience.

Being able to make sense of data is one of the challenges of modern business.

In the case of data visualization service Encompass, the business was founded after its founders were caught out by not knowing all the information behind business deal.

The latest Decoding The New Economy video is an interview with Roger Carson and Wayne Johnson, the co-founders of Encompass, a cloud based data visualisation company.

Encompass takes corporate information such as credit information and business registration details and renders it into a form that’s easy to read for salespeople, bankers or anyone doing due diligence on an organisation or individual.

“A lot of it is about bringing the information together and making it usuable and simple to use,” says Wayne. “If you can’t get that information easily and it takes relationships with lawyers to put it all together or your own legal advisor takes a long time to get this together, it’s costly and you may miss things.

Wayne and Roger’s path to starting Encompass came from being caught out in a property deal where it turned out some of the business partners wouldn’t have passed close examination.

“The property venture we went into was not a success,” Roger explains. “If we had known about the people and the properties and the companies involved on the other side of that transaction we probably would not have got involved in it.

“The genesis of this product really came about because we were involved in a transaction where we didn’t have the full picture, we couldn’t get the full information quickly and we therefore realised there had to be a better way for people to look at commercial transactions and get the full picture.”

It’s often said that information is power, but the real power lies in being able to understand the data we’re being flooded with. Encompass are a good example of the new breed of business that’s helping others deal with the masses of information we’re all being inundated with.