Paul Wallbank – Brilliant Communications

Tag: startups

  • Breaking the small business drought

    Breaking the small business drought

    In most developed countries the small business community is shrinking. What can governments and communities do to grow what should be the most vibrant sectors of their economies?

    What happens when a whole industry shuts down overnight? Australia is about to find when its motor industry effectively comes to an end this week.

    The fallout for the workers is expected to be dramatic with researchers reporting the soon to be laid off staff being totally unprepared for their predicament.

    So worrying is the predicament of those auto workers that Sydney tech incubator Pollenizer is offering small business workshops for laid off workers.

    Those workshops will be needed. One of the striking things about the research is just how few of the workers are interested in launching their own ventures despite their poor employment prospects in other industries.

    australian_ford_workers_employment_intentions

    While the auto workers are a group with relatively low levels of education and work experience, their reluctance to starting a business is shared by most Australians with the nation’s Productivity Commission 2015 enquiry on business innovation reporting the number of new enterprises is steadily falling.

    australian-business-exits-and-entries

    Despite Australia’s population increasing twenty percent since 2004, the number of new business is falling. The country is becoming a nation of risk averse employees, something not unsurprising given the nation’s crippling high property prices which puts entrepreneurs at a disadvantage.

    Australia’s reluctance to set up new ventures isn’t unique, it’s a worldwide trend with most countries not having recovered since the great financial crisis.

    The tragic thing with this small business drought is that it’s never been cheaper or easier to set up a venture as  Tech UK and payment service Stripe show in their list the software tools being used by ventures.

    Accessibility of tools or even government taxes and regulation isn’t the barrier in Australia. As the World Bank reports, the country is the eleventh easiest place in the world to start a new venture.

    In United States experience shows there’s a range of other factors at work dissuading prospective small business founders – interestingly the United States comes in at a mediocre 47th as a place to start a venture in the World Bank rankings.

    A healthy and vibrant small business sector is important to drive growth and diversity in the broader economy. The challenge for governments and communities around the world is to find a way that will spark the small business communities, in a world awash with cheap capital that shouldn’t be impossible but we may have to think differently to the ways we are today.

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  • Tools for new businesses

    What are the basic online tools for business? Here’s a quick list on what small and startup businesses can use to get online quickly and cheaply. This list will be updated regularly and please let us know if there’s anything we should add.

    Email

    Gmail

    Documents

    Google Docs

    Microsoft Office 365

    Open Office

    Storage

    Google Drive

    Dropbox

    Box

    Websites

    Blogger

    Wix

    WordPress

    Accounting

    Xero

    Saasu

    MYOB

    Social media

    Google My Business

    Facebook

    LinkedIn

    Collaboration

    Slack

    Trello

    Jira

    Basecamp

    Messaging

    What’s App

    Workplaces @ Facebook

    Google Hangouts (being depreciated)

    Analytics

    Google Analytics

    KissMetrics

    Tableau

    Customer support

    Zendesk

    Desk.com

    Payments

    PayPal

    Stripe

     

     

     

     

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  • 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.

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  • 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.

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  • Risks in the disruption machine

    Risks in the disruption machine

    At last year’s Dreamforce, Uber founder Travis Kalanick sat down with Marc Benioff to discuss the ride sharing service’s history and its aspirations to reinvent public transit.

    Those aspirations are coming to fruition reports The Verge as local governments across the US sign agreements with Uber to supplement their public transport networks.

    In entering those arrangements local officials are finding a number of problems, not least the service’s obsession with secrecy that falls foul of US public data practices and legislation.

    That clash between the Silicon Valley obsession with hoarding intellectual property and US open government beliefs is one that will become more common as agencies attempt to ‘Uber-ize’ their services.

    However the Uber model isn’t working well in some markets as the fate of Washio shows.

    A month ago Mic Magazine wrote about how Washio was a symptom of the ‘disruption’ being wreaked on communities by the tech industry as high priced services displaced undercapitalised smaller business.

    Washio’s success, like Uber and most of the tech startups following the Silicon Valley greater fool model, required capturing enough of the market to have a dominant position in the marketplace making it hard for new competitors to enter while driving out existing players who can’t afford to make losses indefinitely. This is path followed by Amazon, Microsoft and even IBM.

    However this strategy is risky if there’s not enough capital, which Washio has now found with the service entering bankruptcy this week.

    The sad thing is Washio’s unprofitable and unsustainable business model let them kill other companies whose owners, managers or investors were unable or unwilling to compete with a loss making enterprise.

    For small businesses in particular the effects of a well funded megalith intent on driving them out of business is particularly cruel – as we saw with booksellers and Amazon.

    Local governments need to be particularly aware of the risk of making Uber the only provider of neighbourhood public transport, leaving them the sole player that owns all their data could well prove particularly costly, one only wonders what could happen had a local hospital done a laundry deal with Washio.

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