Friday, February 8, 2013

Growing Australia's Tech Startup Ecosystem - I'd Love Your Thoughts

More than half of the ASX top 20 companies are made up of either banking or mining companies. Mining makes up 10% of Australia's GDP and a whopping 55% of our exports! That's great for our country at the moment, but we have a huge economic reliance on one industry that is historically very cyclical and involves digging up limited resources. It's important for our country's economic future that we build other industries.

Australia has a relatively small population so we need to be successful in industries where a small population isn't a disadvantage. Mining is one such industry, technology is another. It's possible to build very large technology companies with only a small team. An incredible recent example is Instagram which was acquired by Facebook for US$1b when it only had 13 employees. At the larger and more profitable end of the scale, Apple earns a very high US$1.35m revenue per employee and also happens to the largest company in the world by market capitalisation.

With this in mind, earlier this year Alan Noble and Sallyann Williams from Google organised for a small group of people involved in the tech startup space to come together and see how we might be able to help build the tech startup ecosystem in Australia.

We've had 4 catch ups now and Google have engaged a consulting arm of PWC called "the difference" to assist us. While we're still working through the best approach we're getting the beginnings of an action plan together. The key issue that we all keep coming back to is education. While other issues like those I outlined last year leading up to the Prime Ministers' Forum on the Digital Economy are important, education is the most critical for the long term growth of a tech startup ecosystem. We need more people studying computer science and to a lesser extent courses related to the business side of entrepreneurship. These are the key people who will start technology companies, and they're also critically important hires for building and running them.

So how do we encourage and facilitate more people studying these courses?

  • We need to inspire school students to want to study these courses. This needs to start from primary school but is particularly important in year 10 when students are choosing their final year subjects that often lead to what they'll study at University.
  • We need to engage parents and have them view the technology industry as the industry of the future so they encourage their children to study these courses.
  • We need to improve the curriculum in High School and University, particularly in computer science courses. We need more students to have experiences like our CTO and co-founder Mike did in High School, which helped encourage him to study software engineering.
  • We need to help develop and particularly market some of the great computer science education courses that exist outside the school and University curriculums so that students who are particularly passionate about software engineering know they can take courses in their own time.

We're still working through whether there are other issues that might be as important as education. The above list of the ways to encourage and facilitate more people to study tech startup related courses is only a very early one, and we haven't even started planning targets for what we want to help the industry achieve, nor how we'll do that. So we'd love your feedback! Please share your thoughts in the comments. We'll also be looping back and involving a lot more people in this process so if you're passionate about aims similar to those outlined above, and would like to be involved as we progress this please also let me know in the comments.

The group consists of:

  • Alan Noble - Head of Engineering, Google
  • Bill Bartee - Southern Cross Venture Partners, Blackbird Ventures, (and Shoes of Prey board member!)
  • Iarla Flynn - Government Relations, Google
  • Matt Barrie - CEO, Freelancer
  • Matt Dawes - Government Relations, Google
  • Michael Fox - Shoes of Prey
  • Niki Scevak - Founder StartMate, Founder HomeThinking.com, Blackbird Ventures
  • Sallyann Williams - Program Manager, Google
  • Peter Bradd - CEO and Founder ScribblePics, Founder Fishburners

20 comments:

  1. Agree that education is massively important for the long term benefit of the industry, Michael, so great to see the group addressing that so specifically.

    You also capture what I believe are the remaining core issues in your previous post on the PM's Forum - so not that much more to add there other than to suggest we look at not only supporting the VC industry but also the earlier stage investment industry.

    The beauty of a robust early stage investment industry is that it gives more founders the opportunity to focus on their startup. That focus doesn't always lead to success, but it generally does always lead to practical learnings that then filter their way through subsequent projects / employment with other startups / mentoring etc. into the rest of the community. These practical learnings are a necessary compliment to any theoretical learnings that come through a more structured educational process.

    The other benefit of a robust early stage investment environment is that the crazy ideas get a chance at life. As Paul Graham described in his essay on Black Swans - it would be near impossible to optimise an investment vehicle to attract only the black swans as, amongst other things, they often seem like the craziest ideas at the time. Peter Thiel has expressed similar thoughts.

    So, not only does more early stage capital help the teams with obvious potential, it also allows for funding to go towards those crazy startups that from time to time end up turning into AirBnB / DropBox etc.

    How do we do this? You could take the Singaporean approach of throwing masses of $ at the industry or the UK's EIS approach which looks to make tech startups a more attractive asset class from a tax perspective. Or neither and find something that is tailored specifically to the Australian context.

    Either way, my feeling is that some of the effect of educating startup founders locally will be lost if the capital isn't here to support them at *all levels* of the startup process, Otherwise, we may just end up being a source of great founders that the US, Asia and the UK take the benefit of.





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    1. Great thoughts Kim, and raising both early stage and Series A capital is definitely a challenge for Australian startups, worth exploring ways that can be improved.

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  2. Michael, in addition to education, attracting larger corporations (such as Google and SalesForce) and weaving a tight ecosystem where talent can freely flow (i.e. no non-competes) is also very important. - Good luck

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    1. Couldn't agree more. Working at a larger tech company like Google was a fantastic eduction process for Mike, Mark and I which has been an enormous benefit in helping us start Shoes of Prey and Sneaking Duck. Companies like these definitely need to be a core part of the ecosystem.

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  3. Hi Michael, I'm already planning on doing some talks at the Universities with a view to telling the stories of the success we've had with graduates and getting people excited about working at my company so I'd like to get involved. Can you please email me: scott@terem.com.au?

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    1. Will do Scott. We're still in the planning stages with all this but we'll get in contact as we progress.

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  4. This is a very interesting topic. I studied business marketing but ended up as interior stylist. I also work for an e-commerce site as a buyer and started from day one and watch with interest to see the e-commerce space grow and emerge. Had my university offered more subjects in this space I would have jumped at it. I graduated in 08 (not too long ago really) & the only 'e' courses offered were e-marketing and principles of the Internet. I'm fascinated by the way tech companies are growing in this country and have many friends and colleagues working in the space but none of us studied anything specifically to do with e-businesses and tech companies. We've just been drawn to the entrepreneurial start-up space. I would love to be involved in further discussions.

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    1. Thanks for sharing your experiences Emma, I'll post to the blog when we're progressing things further to get you involved.

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  5. Hi Michael, great to see your contribution in this area.
    An important element of industry statistics is that total employment within Australia comes predominantly from the service sector 76.1%. Industry – (manufacturing, construction, utilities and mining combined) contributes 20.9%, with agriculture contributing the remaining 3%. (2010 ABS figures)
    So, whilst a hefty contribution to GDP and export income is important, encouraging excellence in areas responsible for more than 75 % of our existing employment seems to be often overlooked.
    Good luck with the process - success in this area will help provide long term stability to our domestic economy in a time of dramatic global change for business.
    Regards
    Rohan

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    1. Thanks for sharing those stats Rohan. One advantage of the tech industry is big results can be leveraged from a small number of people, something that can't be done in the services industries, but a well rounded economy definitely needs to be successful in all these areas.

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  6. Few thoughts.

    - start teaching code and logic in primary school. I had a visionary teacher who thought us all basic when we were 8 years old. Pretty much changed the rest of my life for the better.
    - raise the profile and respect of hard science. Science and the scientific method has been taking a beating of late.
    - gov needs to stop subsidizing incumbent industries such as resources, coal fired power gen and distribution, car manufacturing, wood chipping, unsustainable fishing, certain sectors of agriculture, etc.
    - start subsidizing industries of the future. Materials science, 3d printing, solar, energy storage and efficiency, robotics, drones, etc.
    - tendency for duopolies to emerge needs to be reversed. These markets stifle innovation. Not as much as monopolies.
    - regulation actually drives new tech and innovation if designed well and maintained. Building standards in au are woeful, as one example.
    - on the flip side regulation in industries captivated by industry are used to exclude innovation and change.

    We have been talking a lot about a dev school for start ups, women and indigenous Australians. Imho the understanding the basics of code is a foundation skill everyone needs. Plus when you see people break through the 'fear' of code their tech adoption and appreciation skyrockets.

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    1. Couldn't agree more that teaching code and logic early and raising the profile of hard science are critical for all of this. Agree with your points around what can be changed at the government level too, however one thing coming out of our discussions so far is that we don't want to rely on government to make changes to achieve the goals we're aiming for, we want to be able to make the changes ourselves. That's possible to do particularly around raising the profile of science.

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  7. Great post, Michael. Your bullet points to encourage and facilitate more people studying these courses are a really good starting point.

    I'm super keen to get involved in the process. Feel free to ping me anytime -- sam.birmingham@me.com :)

    Among other things, I help organise Startup Weekends over in Perth. One of our strategic initiatives is to better engage the student community, so I'm working towards a "Students Only" Startup Weekend event later in the year -- I believe that the best way to get kids engaged in the startup ecosystem is to help them learn by DOING rather than TALKING.

    On a related note, I have also just enrolled to go back to uni to complete a Dip Ed on the side -- I want to understand more about how the current system works, in order to find out how to improve it.

    Long term, my vision is that every child thinks of entrepreneurship as at least a viable option as the traditional 9-to-5 upon finishing their education... If we even get close to that then things are looking good!

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    1. Great point that 'doing' is the best way to get people involved in the ecosystem. That's some extreme passion for entrepreneurship education to study and Dip Ed to work out how to improve the education system, kudos to you! Will get in touch as we develop things...

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  8. These all seem like good ideas, however I'm hesitant about the "change the curriculum" part, especially with regard to university courses. This may be far from what the group has in mind, but very often I have seen "change the curriculum" in these contexts to mean something along the lines of "provide more practical/real world courses", which I think would be a large mistake.

    Uni courses probably need tweaking, but let's not turn 3 years of computer science in to 3 years of vocational 'this is how to be programmer'.

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    1. Hi Benno, we haven't quite got to the point of how to improve the curriculum but there are some ideas being floated around. Good point that we should be conscious of not losing the theory and turning it into a vocational course, that's definitely not the intention.

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  9. Hi Michael,

    I completely agree with you: we can't rely on government to make changes in order to achieve our goals; we must be proactive and promote the change ourselves;
    I'd love to be involved in your initiative. I am running Sydney Dev Camp, the first developing school based in Australia; we have got amazing people on board and we are looking forward to "fixing" education & boosting the Australian startup ecosystem
    Please, feel free to reach out to me at danila@sydneydevcamp.com
    I'd love to hear from you and learn more about the project

    Danila

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  10. Hi Michael,
    Can I add my 2c on tech and entrepreneurial education? My particular interest is around health tech and innovation and there's not huge conversation and momentum happening around that in Australia at present. This is a sad thing in itself from the perspective that we have lots of problems to solve and great academic research- if only we could leverage that! Medicine and Allied health are vital services for the population, and are in many ways the last bastions of adherence to tradition- perhaps because of the enormous complexity of the issues and the many stakeholders in the outcomes of any innovation. The disparity here is the people at the coalface- the clinicians who are dealing with the patients and the myriad of problems on a day to day basis- are the ones with the least awareness about using technology and innovation to leverage their enormous skills and knowledge for better outcomes. In health care, the idea of running a business in a traditional sense is a bit of a revolutionary concept, let alone the process of iterating a new technology startup concept. In building our tech ecosystem in Australia i'd love to keep health tech and education of health professionals at the forefront of thinking and any way I can be involved in that- let me know lissanthea@gmail.com, @healthinnov8 on twitter

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  11. I agree that we definitely need to encourage more people studying computer science. Recruiting talented programmers is difficult.

    I see another problem in addition to education. That problem is the sort of organisations where the current talent pool decides to put their skills to work. Do they choose to work in the safety of an established corporate entity with a defined career path or do they choose to work in a startup with risk and no defined career path. In the first their skills might be put to good use, but in the latter they are more likely to generate a greater return for the country as a whole.

    Paul Wallbank wrote about a year ago on the question of what Bill Gates would have become if he was born and raised in Australia. He made the argument that he would have studied law and put his entreprenuerial energy into property investment rather than technology. We don't seem to have the sort of culture that leads people to want to work in startups. But perhaps that's because we don't have enough stories of people going to work at startups and becoming wealthy as a result. Like the early employees of Apple, Google, etc.

    Increasing the number of people studying computer science will help solve this problem regardless. But if we had the amazing success stories of people getting equity in startups and becoming wealthy it would help change our culture pretty quickly.


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  12. I'm not sure whether you're aware of quite how bad the following education issue is:

    I finished studying IT at a large Sydney-based university 2 years ago. I made a habit of counting the women & men attending the first lectures of each subject (before students got lazy/bored & stopped attending).

    10-15% of students in my lectures were women. In many lectures (100-300 people), I was the ONLY Caucasian/white-skinned woman. I'm determined, feminist & mature-aged, but it's hard not to feel I was in the wrong place. How would a younger, less confident woman feel? She might have a lot to offer a startups, but will she even finish her computing studies?

    My kids go to an 'alternative' school, which I'd hoped would be reasonably tolerant of diversity. It's clear from parent/teacher interviews that my youngest has a high aptitude for & interest in mathematics. She also really enjoys puzzles. Yet she's already been told numerous times by the kids in her class that maths/lego/robots/puzzles/dinosaurs aren't for girls. They're for boys.

    She's just turned 6. I try my hardest to counter these views, and I guess the teachers try too, but how many times will she hear this before she even reaches year 10 and begins deciding on careers?

    I didn't expect the high level of gender segregation in the newish field of computing & I didn't expect, nearly 50 years after 2nd wave feminism, to have to convince my daughter it's OK for girls to like maths.

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