Pete Cooper on unlocking potential
Pete Cooper: Addressing the 'unrealised upside in one of the biggest booms humanity has ever seen'
It’s time to open the gate, and let our innovative tech startups be free to grab this huge global opportunity. There has been lots of good news and optimism in the last six months, and some great talent focusing on this global opportunity around tech startups with global products.
But the reality is the local ecosystem is still moving slower than our global peers in capturing one of the largest prizes for our economy – Tech Startups – by facilitating their success.
Here are some big picture items for the new Federal government and the next round of State support (since tech startups were basically ignored in our largest NSW State Budget today) despite the opportunity being at least an order of magnitude larger than the much-touted surplus, if we would simply focus on enabling global products by local tech startups. So let’s see how much we can do with less than 1 per cent of the NSW government surplus as a guide.
Unlock Super for startups.
We have seen a handful of progressive retirement funds do deals with smart small scale venture fund managers in the tens and hundreds of millions. This is wonderful and already paying off.
I saw one three-person team recently, aiming for a huge market with a top notch team and concept immediately - within days – get $1.5 million in funding without an MVP.
But the unfortunate reality is that this is not the norm, and is not enough to convince parents and teens this is a safe area to direct their future careers despite an enormous global opportunity.
Superannuation funds represent our biggest hammer in the national future toolbox, with $2 trillion and self-managed (with a huge cash component) simply does not see or have easy pathways to invest.
Meanwhile our regulators’ obsession with listening to the oldest, most entrenched and loudest lobby groups in the room like legacy fund managers (who are incentivised to protect status quo), multinationals (who are not paying tax) and VCs (who can be so much more than a narrowly-defined early-stage venture capital limited partnership – or ESVCLP – structure that we have now).
Let’s start with the basics and track how much Super is going into tech startups that have global products on the internet or mobile devices (whether they are listed, unlisted, local, international, hybrids).
Our goal should be to aim for 2 per cent by 2020 (that is $40 billion in today’s money) and an additional 2 per cent every 2 years thereafter. This is enough to make us a Top Five global superpower in tech startup investments, and capture enough of the risk and reward to start to replace resources.
Unlock Peer Learning
Universities do a great job, but have been biased by funding models that focus on theory over market value for decades. This is exacerbated when it comes to the largest global prize today around tech startups, which are worth at least $100 billion in AU or ten times the NSW Government budget surplus forecast in the budget this week. (This is a note specifically for Premier Mike Baird and Treasurer Gladys Berejiklian, who seem to get concrete and steel but not global software on the internet).
As a result, we are scrambling with little support to prevent continuing falls in STEM, yet miss an even bigger pair of points.
Firstly, we need to grow STEM graduates, not just restore them to previous levels. This is not just in absolute volume, but also quality and diversity. Have you seen how many times the technology industry has reinvented itself in the last three decades? And this is accelerating.
Since I graduated from computer science at UTS in 1988 and worked in 20 countries around the world I would estimate that I have had to largely retrain at least every five years.
Secondly, universities are inherently behind industry. New course curriculum consistently takes two to three years often more and is not tracked as a key metric.
No wonder startup communities rely almost solely on a (tiny) specialist commercial training industry and even more so on peer learning in expert communities (100 per cent volunteer) to catch up and stay ahead.
Lifelong learning is the new norm, and so we must facilitate universities to be more porous with expert community engagement, and to grow 10-20 new expert communities in each major city as soon as possible.
We are obsessing about FinTech (and probably rightly so) but what about HealthTech and MedTech and the Internet of Things? How about transport and agriculture? What about regionals connecting to city hubs?
What about horizontal expert communities that can join these all up and accelerate learning? And here’s one more important point. Where is all this activity to take place?
Federal and State bodies with under-utilised property assets should be held accountable not for just minor cost of an empty cubicle, but for unrealised upside in one of the biggest booms humanity has ever seen.
They are actively preventing us building the innovation foundations of expert peers who level up and then excel. Land banking and bureaucratic boundaries are unconscionable. These new human expert community foundations like Fishburners, Stone & Chalk and The Start Society will stand longer than the concrete ones if we get them right.
Fixing international accounting standards is also required as they are preventing low-cost leases to not-for -profits, social enterprises and communities (which currently trigger lower capital revaluation of the whole building) would also help.
Without peer learning communities to nurture global tech startups now, we won’t have the top of the funnel full enough to support long-term strategies like White Bay and ATP innovation clusters, or even increased Super and VC investment.
TAFEs have been untouched for decades. They can fill part of the gaps and introduce new career paths and practical tools to SMEs/SMBs. They are often in prime location properties with great internet and access to interns from TAFE and universities. These are ideal places to co-locate tech startup communities.
Most of the major communities in Australia that are home to tech startups were created not by billions invested in today’s universities, but by single citizens that ‘get it’ and back a space for specialists to get together.
This is akin to how some of the great universities of old like Oxford and Cambridge were created. One or two founders gathered a following, delivered value in original thinking and became enduring institutions rolled together because they had inquiring minds as a common asset.
This is not a new model, we just need to apply it (and much more.) We should give space and noodle money with as few constraints as possible to the existing players. The Federal Government’s $8 million to accelerators and incubators was bungled, but improved slightly with an additional $15 million committed during the election campaign.
But is less than one dollar per citizen an appropriate investment for the biggest technology wave in human history? No.
Unlock Global Differentiators
Diversity, democracy, and delight. We have unique assets and we don’t shout this from the roof tops nearly enough.
Let’s start with delight. Australia is a lifestyle super power (with fewer guns). If you grabbed any one of the beaches on our coasts and put it in TW, HK or SG, they would probably claim it was one of the best in the world.
Because our beaches ARE the best in the world, we just don’t talk about it. Australia has hundreds of them. And that’s before you look at our skies – so blue they almost hurt your eyes.
And we have a history that is unique. And it is fascinating, from the mind-numbing age of our land, to the culture of our first citizens, and waves of immigrants that have come since.
Try finding ANY of that at ANY similar scale in the major cities in Asia or anywhere else. You won’t.
We joke about our democracy, but we rarely come to blows, it is more than just good. And media makes transparency better than most, despite our constant dis-satisfaction – which is part of the purity of the journey – the value is in the debate itself.
We know our democracy is one of the best in the world. And we have a world class legal system to boot. Try getting a court case heard in less than 5-7 years in many places not so far from here. Try having consistent precedents. Good luck with that outside Oz.
And now let’s talk Diversity. Immigration has not been exactly our best planned portfolio, but we have had some amazing luck. We have a peaceful, highly-diverse population, with incredible cultural representation and connectedness.
I doubt any major city anywhere in our region is as diverse with culture and language and first degree connections as Sydney, and of course the other major Australian centres are also substantial.
So stop accepting the criticism. Tell the world how great we are in Australia and encourage a mass intellectual ‘innovation migration’ of scientists, rational creators, inquiring minds, engineers and more.
Boomerangs, the returning Aussies, are crucial of course, but even more so are the true intellectual elite who have never been or seen but will thrive here.
Unlock Founder Time
One of the most insidious taxes on our innovation is red tape. Remembering many of the great founders in the US wave of innovation were new citizens, imagine learning a new industry, new country, new culture and then the weird crap we throw at them with three levels of government, 50 logins, bizarre rules, and thousands of pages of tax and compliance.
A SME/SMB/Startup Commissioner at each level of government with national watertight responsibilities and co-ordination with REAL teeth that can challenge existing and new processes is vital.
I have sat on Consultation panels in recent years more than once where the majority of the people deciding new rules were not founders. Instead they tend to be lobbyists, telcos, lawyers, public servants. All had a seat at the table and a complicated opinion by protecting their interests. But very few are actually helping the founders – and without the founders we don’t get value creation or social impact.
How about ASIC and ATO develop pre-approved pro-forma docs rather than just expectations and rules. We must help our founders save time and help them comply, without legal /accounting/adviser costs and time and risk.
Every hour spent on bureaucratic stuff (finding, understanding, funding, managing, reviewing and then worrying about it afterwards) is time taken away from creating jobs, wealth and social impact.
Now Its Over To You
Startups often get accused of screaming for more funding from government. Most of the suggestions above don’t cost a cent. Existing resources or existing pools or talent and funding can be used. The rest are cheap in the scheme of things.
So Federal and State government, what is your excuse now you have a clear year or more to act? Grab this opportunity for today and tomorrow.
We need to compete globally – our kids deserve it – and we can do it. Tech startups with global product are one key plank in our post-resources future led by innovation.