One of Australia’s most successful young companies was famously born when its University age founder left his bedroom light on each night, working around the clock on his fledgling startup.
Looking out the window, his neighbour, an investor and entrepreneur, was so impressed by this industrious activity he asked a few questions and a powerful co-founder relationship was born.
Just a few years on, that business is now worth more than a billion dollars, is listed on the ASX, and employs more than 200 Australians. Few might have guessed, glancing in the direction of a 20 year-old’s bedroom, that this young man would start Afterpay, and go on to employ hundreds of Australians.
This is the most effective job creation mechanism available to us. Thanks to the internet, high-growth technology companies are able to start and grow faster than ever before.
Across the developed world, young companies are creating almost all the new jobs – including 1.6 million new jobs in Australia between 2003 and 2014. The jobs they create are high-paying and high value, and align with our world-class education system.
Any sensible job creation strategy would be bonkers not to focus on these sorts of firms.
Last week, the NSW government agency tasked with leading the State’s job creation efforts, Jobs for NSW, came under fire for failing to directly create new jobs with the $190 million funding pool it is deploying.
This sort of criticism shows a fundamental misunderstanding of the role of a job-creation agency. The funding pool is not for direct job creation, which would do nothing other than inflate employment figures.
Instead, the intent is to build support mechanisms to allow the private sector to thrive and create real, sustainable jobs in the process.
It’s about investing the the infrastructure necessary for large-scale job creation in the medium term.
Jobs for NSW has been focused on exactly that. Take the Sydney Startup Hub, for example
The space, which Jobs partly funded and which formally opened earlier this year, is the largest startup hub in the Southern Hemisphere. Some 1800 people now call it their office, with another 700 expected.
This has generated one of the most important features for a technology sector – density.
The best international research shows that density is critical for allowing startups to flourish and grow, and for a long time it was a key missing component of the landscape in Sydney.
At the startup hub, entrepreneurs share knowledge, skills, opportunities, experience. They are more closely connected to corporate customers, government support and investors.
The hub improves their access to world-class facilities and attract high calibre talent.
Thanks in part to the startup hub, many of its 2500 resident entrepreneurs will grow their businesses rapidly, creating tens or even hundreds of thousands of new jobs in the medium term.
Those businesses may in turn be responsible for creating a huge number of jobs outside their firm. In the US, Apple’s 80,000 employees are responsible for an additional 2 million American jobs indirectly.
Investing in infrastructure to support job creation by young, high growth firms is a smart play. That’s exactly what Jobs for NSW has been trying to do. It’s the sort of thing governments all over the country are trying to do.
Above and below the border, Advance Queensland and LaunchVic are deploying large pools of capital investing in exactly the same sorts of projects.
Advanced economies around the world are racing to do the same, because they know their continued prosperity depends on it.
Jobs for NSW created the Sydney Startup Hub in 18 months, from conception to operation.
Now it’s up to its resident startups and high growth businesses to take advantage of the support, and produce jobs for the local economy.
That will take a little longer, but it will last a lot longer, too.