The PwC report on ‘The Startup Economy‘ that has been floating around the innovation sector is a cracking read. It is slightly crazy in its heroic assumptions and tales of future derring-do, but regardless provides a great starting point for a conversation about advancing this sector.
It has taken me a while to write about this report, which was commissioned by Google Australia, released in March, and carries the subtitle ‘How to support tech startups and accelerate Australian innovation.’
The report sets a kind of target for the startup sector in Australia to contribute 4 per cent of GDP to the Australian economy by 2033. That’s $109 billion and 540,000 employees. In 20 years.
PwC works backwards from that target, making heroic assumptions along the way in order to frame a broad mechanism for meeting its goal. And there is a lot of good stuff, a laundry list of the usual important stuff you’ll find in generic reports looking at innovation ecosystems.
But it doesn’t put forward a game changing development or point of difference that will make these heroic ambitions achievable. And it doesn’t pay enough attention to the particular differences of the Australian experience.
I have a theory about this.
The game-changer for the Australian startup sector – and this is where I am sure I depart company with Google Inc – will be an aggressive engagement with China (and to a lesser extent with India, and with Indonesia.) This is where a very, very big stake in our future lies.
The well-worn path of our entrepreneurs to Silicon Valley will not be so well-worn in future. It is as simple as that.
To meet the kind of goals that this report pitches to us, we will source much more of our capital from China, we will look more often to China for strategic collaboration, and we will increasingly have Chinese consumers in mind when we dream of new products.
And India. And Indonesia.
Which is not to say we won’t rely on a whole heap of VC and startup talent from SIlicon Valley, or that the US model of innovation and ingenuity won’t remain a cornerstone influence.
But we are not the US. And not being the US is one of the things that makes us attractive (in a same-but-different kind of way.)
I am going to be writing a lot in the coming months on China engagement issues for the ICT sector – and with Asia more generally.
There is already a huge pipeline of Chinese capital about to land in Australia, and the tech sector is poorly prepared to receive it. In ICT, we simply don’t have experience with China, or Chinese investors.
And for all the great stuff that PwC put forward, it is amazing to me that China is ignored.
PwC lifts lots of experience and learnings from the US, and steps through a laundry list of the usual stuff – skills, tertiary education priorities, STEM graduates, tax treatment of sweat, government procurement, better access to early stage VC, etc etc etc.
And its all good, with lots of ideas and arguments that have been floating around the industry for some time. It points to a need for some fairly dramatic public policy intervention, while at the same time arguing for government to get out of the way.
It turns out that Australia already has a pretty great regulatory environment in which startups can grow. From a public policy perspective, there are some policy levers that can be adjusted around the edges in superannuation, tax and skills, but a lot of what is called for in the report are cultural – issues of business culture and risk culture.
This PwC report is a dizzy read, because the numbers are so big. The target contribution to GDP number is BIG. The required compound annual growth rate for the sector to reach this target is BIG. The number of companies that need to succeed spectacularly to meet the CAGR requirement is BIG.
Yes it’s just a bit heroic, but what the hell, let’s be heroes. But lets not simply use the generic, plug-it-in-anywhere playbook. Let’s think a bit different.