A watershed moment for Perth tech startups

Dr Marcus Tan addressing the ‘Digital Disruption in Health’ YOLK event, last week

This week it was revealed that local tech business, HealthEngine, had raised $26 million from global venture capitalist Sequoia Capital.

This is notable for a few reasons:

  • it’s the largest private sector investment in a local tech startup
  • the first such investment from this Silicon Valley VC in Western Australia, and their second in Australia (after investing in Melbourne-originated LIFX)
  • the same VC that has invested in such global successes as Google, Apple, Whatsapp, Stripe and AirBnB
  • the business is headquartered and will remain (as far as we know) in Perth
  • the investment reduces the need for the company to do an IPO & keeps the business private

On so many levels, this is a knock-it-out-of-the-park deal, made all the the more notable in that the co-founder and CEO, Marcus Tan, has been a fixture on the local startup scene for 7 years or so.

I remember first meeting Marcus when he was a fellow mentor on Perth’s first Startup Weekend in September 2012. The 10th such event will be held next month. The more I got to know Marcus, the more impressed I was.

Not only a cofounder and CEO (he’d put together the HealthEngine startup in 2006, developing it from his lounge room), he was also an angel investor himself, and a philanthropist (being behind the Global Meridian fund raiser for local worthy causes). He was one of those who set up Perth’s second co-working space for techies, Sync Labs (now run by Spacecubed). He has been basically everywhere in and around the sector in the past decade, as well as a practising GP. Is there nothing he can’t do?

A week last Friday I moderated a session down at the Old Swan Brewery (see photo above), on the topic of digital disruption in health, and he was quite brilliant on the panel. His deep intelligence and soft spoken authority came across (as always), and anyone that met him and heard him cannot but be impressed.

A few years ago I invited him to be a guest speaker in my eBusiness MBA class. Along with many gems of advice, I remember him saying that that Australia is of a certain size that one online business can totally dominate a sector. Realestate.com.au (REA Group) has done this in real estate, and is one of the most profitable online real estate businesses globally. A larger country, such as the States, he argued, is almost too large to have one business dominate. It was clear he was out to dominate Australia, and this week’s funding probably allows him to complete that mission, while looking out for regional and global market expansions.

It could not happen to a better person, and I wish him and HealthEngine all the best.

What this also does is demonstrate to other local tech startup aspirants that a good tech idea, well executed, can be built from Perth. Apart from traditional ICT businesses like Amcom and iiNet, we’ve not seen evidence of this being done. You can also bet Sequoia and others will be looking at Australia, and maybe even Perth. To Atlassian and Canva (Perth originated, but now Sydney based), HealthEngine is now added as the next possible Aussie ‘unicorn’.

Be inspired Perth tech startups up, for you could join the list sometime soon…

Let them eat cake

Asking for startup money

Legend has it the wife of King Louis XVI of France, Marie Antionette, uttered the words “let them eat cake” on hearing the starving peasants were in revolt against bread shortages. We’re talking late 18th century, and although the Queen would have probably said the words in French (something like ‘Qu’ils mangent de la brioche‘) there’s no evidence that she actually said this at all. The saying actually predates her birth.

But the attribution persists, and has been used to show how out of touch the nobility were at the time, resulting in the French Revolution, and King Louis losing his head.

The words rung in my head this week as I indulged in a discussion I’d had many times before, relating to Perth’s burgeoning startup sector. The weight of opinion agreed that there’s not enough early stage funding deals going on. As to why, there was a distinct divergence of views.

I’d like to explode a few myths if I can …

Myth 1 – If they were good deals, they’d get funded

I hear this one a lot. If they were good deals, the argument goes, then eventually (or even swiftly) they would get funded, as an investor would see the opportunity was too good to miss. Some may pass, but eventually a good startup business would attract money.

However, this argument rests on the Perth market for startup funding acting perfectly, which (let an old economist like me remind you) only exists where there are a large number of buyers and sellers, such that no one buyer or seller can influence price. Perfect markets also rely on a perfect spread of information, freely available to all, and homogeneous (exactly the same) products.

Perth’s startup sector is no perfect market. While there are a good number of startups to choose from (300 at last count?), there are a very limited number of private investors willing to back them. There is one VC fund (and that’s already fully invested, 2/3rds in biotech) and one angel group which meets 4 times a year and maybe does 5 or 6 deals annually. Meanwhile, there are plenty of potential investors dripping with (business, mining or property) money removed from startupland.

Neither is there a perfect spread of information, with only a privileged few getting in front of the investors, and as they are all very different, each startup investment opportunity needs to be considered individually, one by one, a bit like buying an investment property. It’s time consuming, uneven and sporadic, at best.

I have no idea what makes a good startup investment (well, I have some idea, but I am not arrogant enough to say I know which one will be a unicorn and which will fade to nothing), but I believe there are many more out there worth a $25,000 or $50,000 investment that are currently being funded. I am seeing too many move away from Perth for funding (and securing funds) and too little getting funded here; and yet, Perth has far more high net worth individuals per capita than anywhere in Australia, and is one of the top places in the world for multi-millionaires.

There is a distinct disconnect between those that might have spare money to invest and those that could do with a decent little early stage investment that could give them 6 to 9 months of road, get them to market and revenues to see if there is something viable there.

Myth 2 – They shouldn’t be raising money anyway

This argument goes that startups should forget about raising money anyway (far too many think the capital raise IS the end game, clearly it is not) and should start pitching to customers instead. Get to minimum viable product (MVP), get early clients on board, earn revenues, and maybe they’ll find that they won’t even need investors at all, or if they do, they’d secure a better price, be able to raise more money and give away less equity in the bargain.

Bingo – I agree 100%.

However, most startups are either doing exactly that (out of necessity) or cannot get any further without something else investing upfront. They’ve piled in their own cash, savings, credit card debt, taken money from family and friends, spent months on the idea, with no pay back, giving it their all. They have got somewhere, and now are looking for some extra help.

Some ideas just need money to get off the ground. You have to spend something to build it, you have to get out there to see if it works, and this may take $50k or more beyond the funds available to the founders.

Most successful startups have had early stage money. Very few are profitable or cash flow positive from day one (or after the family and friends money has gone). Often there are dead ends, false starts, wasted attempts, and this is all the cost of learning. If you’re doing something very new, disruptive and game changing (surely what the investors want to see?) then it simply takes some funds upfront. Like buying the investment property.

It also takes time. The successful ones will tell you it took 5 or more years to make money. It certainly took my startup this length of time, and others like realestate.com.au, carsales.com.au and others took 7 or 8 before profits appeared.

Mel and Cliff from Canva understood this. There they are today, smiling out at us from the front page of the local weekend paper. They’ve raised millions and millions of funds  – are they profitable, or cash flow positive yet? They were helped off with a cool $3 million raise a few years ago, which took them away from Perth to Sydney, and have since raised many millions more. Nick and Al from Simply Wall Street could not raise money in Perth, but have successfully raised $750k from angel investors, also in Sydney (why not in Perth?). Talking to their lead angel at a lunch function a few months ago, he told me that in their case, they had an idea so disruptive, “you just had to give it a go to see if it worked.”

Exactly.

Not all startups deserve money, some may not be at the right stage, but somewhere along the line, many do, and the vast majority of these simply aren’t getting the funds they need, despite there being ample in our city. Water water everywhere, nor any drop to drink.

Myth 3 – The entrepreneurs are unrealistic 

Sure, owners of anything are unrealistic about their valuation. I think my property is worth more than it is, and also my car. The price is determined only when someone is willing to pay for it what I am willing to sell it for.

But with a limited number of genuine local startup investors the power is weighted heavily on the buy side, such that in some cases the negotiation is more like staged bullying (running down the efforts of the down trodden entrepreneur, and finding all sorts of reasons not to invest). Meanwhile, the poor startup trudges back to their lean canvas to see if they can eke out another month or two.

Perth investors have grown fat on the ability to exit their investment through an ASX-listed entity. We have seen 60 ‘back door’ listings announced over the last 2 years, as the mining downturn takes hold and now empty shell companies look to evolve into a tech company. This is a highly expensive and dangerous way for a genuine startup to raise funds. While potentially fine for a commercialised organisation with revenues and a clear growth path, it is clearly not suitable for the early stage venture (or only in very rare cases – FMG was in fact a back door listing, but I wouldn’t classify that as a tech startup.)

Sure entrepreneurs are unrealistic, but so are investors. You can’t have it both ways, you can’t have your cake (or bread) and eat it. It’s a punt. It’s a riverboat gamble. It’s like betting on the horses. You will probably not see that money again. Yes, it’s probably illiquid, for years. But if you win, you win big, so it’s best to make a few bets, to cover yourself. The more you make, the more you spread your risk. You may say ‘no’ to 20 before saying ‘yes’ to your first. But you might do 2 or 3 a year.

Myth 4 – It’s good they get money elsewhere & leave

The argument goes that we should not worry about our best and brightest startup ideas leaving our shores to get funded elsewhere. Sometimes they just need to spread their wings, bless them, and once they make their money they will return and help our ecosystem back here.

OK, maybe. But why can perfectly good Perth ideas get funded in Sydney, Singapore or San Francisco and not here? Why should they have to leave to get funded when we have so much money in the hands of private individuals in our fair city (and come July a nice little tax deduction too)? Why should they have to leave our great lifestyle, family and friends… unless they really want to?

To me, this argument is lazy. While it’s perfectly fine for businesses to go wherever they want (fly my darlings fly), it is not fine to have so few early stage funding deals that jobs and income that could have been created here (and stayed here) are exported to other cities or countries. We are competing in a global marketplace, the gloves are off, it’s either get nimble and innovative, disrupt your own market or someone else will do it for you. Where is the post mining diversification we so badly crave? Even during the boom, people were worried about us becoming a one trick pony. Now that pony has well and truly run its race, where are the up and coming industries? They need to be backed. We have no idea what great businesses might flourish and grow unless we give them a helping hand.

~~

Startup investment is not for the faint hearted. It’s not a slam dunk. It’s not for your nest egg, it’s play money. Many thousands of high net worths in Perth could make two or three $25k to $50k investments a year, and not even notice it. Conservatively, that’s $250 to $500 million of available funds a year, that would make a tiny fraction of a dent in the portfolios of many, yet revolutionise our local economy.

Perth could become a regional tech startup sector, offering a great lifestyle, climate and investment funds to plucky entrepreneurs who want to cash in on a place that just happens to sit in the same time zone as 60% of the world’s population.

It would be almost criminal (and certainly negligible) if we don’t do this.

Why a tech startup? Because the best ones have highly scalable business models. Those guys and gals down at Spacecubed hammering away at their idea on a laptop could have $100 million businesses in a few years (just as Canva does today after a relatively short 4 year journey). This type of growth is hard to do with traditional bricks and mortar businesses.

It’s the most speculative investment these investors will make, but for many of them, it’s the best fun they can have. They can add some value to the startup (sharing hard won advice on commercialisation, open some doors) and it can give them plenty of dinner party conversation.

If we can throw enough darts at the dart board here in Perth, we will hit some bulls eyes. It’s a numbers game. It’s a funders’ game.

So, let them eat bread. Cake will come later. Perhaps.

Photo Credit: Flickr.com, Heather Katsoulis

It’s Startup Week!

{ View from the panel at Techboard's inaugural meeting: How to get Publicity for your Startup }

{ View from the panel at Techboard’s inaugural meeting: How to get Publicity for your Startup }

We’re in the middle of ‘startup week’ in Perth, with an incredible array of start up events, conferences, hackathons, demo days, meetups and even reports being published (one is already out.) The media, MPs and Ministers are all over it. There’s a bit of ‘bandwagon jumping’ going on, but that’s OK, as long as something now happens to solve the problems inherent in the sector, which have prevented many startups being funded and scaling up.

Perhaps for the first time, you can sense a growing appetite and attention for the sector.

It all kicked off on Thursday night at PwC in the city, where Techboard (the local startup ranking site which, of course , is itself a startup) held its first ever meeting (see photo above), attended by 100+ people listening to a panel of startup folks talking about publicity and promotion. I spied local MP Peter Tinley plus our wonderful Chief Scientist Prof Peter Klinken in attendance, the latter getting up to say “What an amazing sense of relief has come over the country recently… (since our change in Prime Minister)… now everyone is talking innovation”.

Friday night was a get together of the recent Startup Weekend crew, and tonight it’s the pre-OzAPP/West Tech party down in Nedlands at Larry Lopez’s house.

Monday is the full day, of West Tech conference incorporating the OzAPP Awards. Silicon Valley types who love to kite surf have winged their way to Perth and brought with them a bit of Californian fairy dust and cool, with various panels and keynotes on stage at the Perth Town Hall. The ever effervescent US Ambassador (who famously  welcomed people last year at the historic building with a cheerful ‘Welcome to Hogwarts!’ line) will be taking centre stage again this year with a whole morning session entitled ‘The Ambassador’s Innovation Roundtable’. In the afternoon the final 5 in the Asia-Pacific wide OzApps comp will pitch to the judges (including me) and a winner will be announced at the after party that evening.

As if that is not enough, Tuesday heralds a Unearthed demo day showcasing great ideas for the mining industry, which the WA Premier Colin Barnett will be attending and that night is the mass gathering (350 are expected) at the West Tech Assemblage at Government House ballroom, which brings together (for the first time) eGroup, WAITTA, Australian Computer Society and OzApps. I’m privileged to be MC’g this event, with Liberal State Attorney General and Minister for Commerce Michael Mischin addressing the throng, as well Opposition leader Mark McGowan, Chief Scientist Peter Klinken and others. That very night, there is also an Innovation Bay pitch night and dinner taking place.

It’s still not over, because on Weds, Startup WA will officially publish their new report into WA’s startup scene, which will update the excellent report produced by Boundlss (who are also producing this one) in 2013.

And after a week of events, Startup WA have the Assistant federal Minister for Innovation Wyatt Roy over in Perth on 15th December for a Q&A session with Senator Linda Reynolds and Matt Taylor. Wyatt Roy is not just a seriously cool name for a politician, but he is also the youngest ever MP, having won election in 2010 when he was just 20. The ‘baby of the House’ is seriously interested in tech startups, and it’s good to have someone like him so close to power at the top levels in this land.

You can sense that startups and tech and innovation are the flavour of the month, and one wonders if politicians and leaders can grab this opportunity. Will the drastic shortage in funding for the sector be significantly eased? Will we see some tech success stories emanating from Perth? Will would-be angels and investors take the sector seriously and start loosening their pockets?

Can we create a place where people flock from around the world (tick), get funded (errr…) and then see us develop a regional centre of excellence for tech and innovative companies? Maybe this week will be an important step in the road… let’s hope so.

Bootstrap yes, but don’t skimp on a good lawyer or accountant

Google don't like lawyers

Google “I like lawyers” and the top results are articles such as “Why do people hate lawyers so much?” and “People like lawyers less than you think”.

Even Google can’t find a positive result.

It might be easy to knock them, but finding a good lawyer or accountant is critical to the success of any business. I wonder why they get such a bad rap? Perhaps its the legalese and financialese that some find perplexing, or the $100’s per hour fees charged in 6-minute blocks that wrangle.

While it’s important to conserve cash when starting (and running) a business, as my wise business professor used to say: “Never skimp on a good lawyer or accountant; doing so will be a false economy. Find a good one, and these people will save you tens of thousands of dollars in the end.”

I can certainly attest to that…

When our fledgling online business was still in ‘bare survival mode’ in the early 2000s, I became aware of a relatively new government scheme called the ‘R&D Tax Rebate*’ (or ‘R&D Tax Incentive‘ as it’s now known). I remember asking our existing accountant (twice) whether we qualified, and being told unequivocably that we did not. At the networking function around this time, I got talking to a city accountant who had been at the same uni as me, and he mentioned that we would definitely qualify. I followed up with him, and not only did he manage to get us over $50,000 cash back that year, he backdated the process (as we’d missed out in its first year of operation, the year before) so we duly won two years worth of rebate, over $100,000 in cash. At the time, this was the difference between sink or swim.

We changed our accountant.

[* The scheme allows businesses investing heavily in R&D to convert a portion of their losses into cash back from the ATO. Once profitable, you can use it to minimise tax. I would estimate this scheme returned us half a million dollar benefit over the course of the subsequent 7 years.] 

Also around this time, we were made aware that a rival website was taking data from our site, and displaying it as if it was theirs. I became perplexed as to how this could be legal, but various lawyers I spoke to did not seem to know if we even had a case. Until I met a brilliant IP lawyer, who had used our site before (so he was a fan, which was nice), and seemed confident that we were in the right, and they were in the wrong. The upshot of his work was that other site shut themselves down.  You can read the ensuing media coverage of this case here.

I have used this same IP lawyer ever since.

I can tell you that both the accountant and lawyer mentioned above were extremely reasonable with their charges, and sensitive to the fact that we were but a small startup with limited funds. It felt good to have some experts on your side, and to get good outcomes as a result. I could not have done any of this alone.

So, do not skimp on a good accountant or lawyer. But bootstrap your startup. It sounds paradoxical, but it’s probably the best advice I can give you.

So many flearnings (my startup journey)!

flearning

Last week I did a talk to BloomLab, the university based co-working space for student startup folk here in Perth, WA. My slides are visible above (and also here).

Here is my 10 “flearnings” (learning from failures) – hard won advice from making the wrong decisions (many times), but learning from them.

  1. Startups are easy

Wrong, well actually, right – startups ARE easy, initially; as what you are mostly doing at the outset is “buying things”, and, as a board member once told me, “any fool can go out and buy something”. You raise some money, or maybe invest your own (along with friends, fools and family), and/or max out your credit card(s), and then go on a buying spree … buying programmers, office space, cool marketing campaigns, staff, …. It’s a buzz of excitement, and you’re wearing cool clothes, have ditched the jacket and tie, and are in a startup.

Wrong!

Businesses only survive if they are SELLING things, that is, collecting revenue. And that means someone ELSE is doing the buying, from you. Unless you are creating value by solving a problem for them (your clients), they will not buy from you. If they don’t, you ain’t got a business. Startups are hard. Selling is hard work. Not many startups are cut out for it. But everyone should be sales, including (and especially including) the fancy pancy founders and CEO.

  2. Build it, and they will come

Wrong! Although ultimately the service should sell itself, very few will do this from the get go.

Also, don’t fall into trap that the next release, the latest new functionality, will solve all your problems. ‘Once we add this feature we’ll be home and hosed’. Nope.

Having a great product is very important (as long as it solves a problem that people will pay to remove), but it’s a necessary, not sufficient, factor in your startup succeeding.

3. We’ve got a great product!

A related fallacy to #2 above. The worst sales person falls in love with their  product. The best fall in love with their clients’ problems.

We thought we were building the greatest map-based property web site (even if we were that was irrelevant). We thought we were solving home searching and making it easier. Well, yes we may have been, but they weren’t our clients. They were our users. Our clients were real estate agents, and paying a monthly subscription. We had to solve their problems. What was their problem? NOt selling properties. Properties sell. Buyers seek them out (buyers like to buy, remember? espeically property, especially in Australia.)

‘Getting listings’ is the real estate problem. Good listings. Ones that will sell. Ones that have nice owners. As soon as we realised this, we developed more and more features (including web development and even a magazine) that helped them get listings. ‘List and last’.

Who is paying you? They are your clients. Solve their problems. Full stop.

4. Spend loads of money on ads

If we’d had a bucket load of money for ads, we would have just used it. (There’s that buying itch again!) So what? We might have felt good watching our TV ads, hearing the radio commercials or watching the bus ads zoom by. So may our staff and investors. Would it have brought us revenue? Probably not. So many dotcoms spent huge amounts on advertising (or ‘brand’ as they euphemistically put it), so more people would come to the site, have a ‘meh’ experience, which meant you had to raise more money to get a different set of people to the site. And so on.

Have you ever seen an ad for Google? [Well, OK, I did see this one, and it was great, but it was not a traditional ad in any sense.] Promote the site through making it easy to spread, make it sticky (people stay on), make it elastic (draws people back). This could be about design, in built devices (such as Dropbox offering extra storage if you referred customers), encourage content sharing, etc. Use the free media; journo needs stories. Treat journos & influential bloggers as clients. Take them out for coffee. Don’t just do mass press releases; tailor your media approaches and provide exclusives.

5. Do regular, massive big upgrades

No; keep innovating, but not in a wholus bolus way, as that will ruin things for your users. Changing how the whole site works really annoys your loyal fans. Keep improving things, based on testing and feedback, in an iterative manner. Be fluid, add features, yes, but also think of ways to keeping it simple. UX (user experience) is all important these days. It’s a refined skill, and you will inch (not blast) your way there.

6. There’s either a tech solution or there isn’t

It’s not that cut and dried. The times I was told something was impossible, then the programmers would wander in all sheepishly and show me how they’d solved it (bless their little cotton socks). You get to learn what’s hard and what’s easy. I’ve found a simple truth in all this – it’s never the technology, it’s the people.

7. You’re on your own

Not true! There are multitudes of people out there, probably hammering away at similar type businesses solving similar problems, every day. Network, go to startup events, find people, ask questions, provide value yourself (give and it shall be returned). Years before Spacecubed, Perth Morning Startup, Startup Weekends and the rest, a few internet enterpreneurs still going in the mid 2000s formed ‘eGroup’, as much for the emotional support as anything.

There are now over 30 places and programs you can visit in Perth alone to find alike minded people and support…

Perth-Startup-Network-Sep15

View a full list here

8. SEO is a black art & expensive

I learned much of what I know by trial and error, but the importance of ‘title tags’ and ‘H1’ headings were not lost on me. Get these right and 80% of your search engine optimisation is done. Also, hire someone local who knows that they’re doing. (Direct message me if you want to be introduced to Perth people I have used and recommend.)

The SEO and SEM (search engine marketing) ‘industry’, along with social media and web/app development, is not a regulated so anyone can hang up a shingle and claim they have knowledge. Beware of stupid ‘I can put you on the 1st page of Google’ claims, because no one can guarantee that (well, not before knowing what search phrase is important, and how competitive that is, and how your site is written/updated).

And don’t try to cheat the system. Do not engage in ‘black  hat’ tactics (hiding white text on white backgrounds, keyword stuffing, content automation and the like) to get a higher ranking. Anything that looks like a shortcut is a shortcut, and could get you blacklisted (removed) from search results. It’s hard work, done over time. It’s cumulative. Google is only trying to find the most appropriate site for the search terms entered, so be that site. Have interesting, fresh content. Change it up and keep posting.

9. Social media is all nonsense / waste of time

Really? How do you view the telephone, email or web sites in general?

Social media is just a communications tool. Use some or all of Facebook, Twitter, Instagram … to engage with your audience, build your brand, learn about your market/competitors and all the other things it can do. Use them as part of your overall strategy. You can’t do everything, so decide what makes sense for you and what you can execute on well. And keep doing it, and keep learning.

Allocate time for it, and who is going to do what. Best case is everyone does some of it, and lends a hand to some degree, in the same way everyone probably uses email or the phone to some degree. Don’t allow it to be addictive. Have a plan, train your staff, measure what you do, keep what works and ditch what doesn’t.

In promotional campaigns, mix traditional advertising and social, and watch the impact of your promotions make a larger impact and last longer.

Do not buy links, likes or followers. Build your social media presence organically (the occasional Facebook promoted post, OK), and watch your Klout score to gauge which activities work the best.

10. I will build for a PC 

Think mobile first, because that is now becoming the largest environment online. Build for mobile, and then PC. With a mobile responsive site, you can pretty much have your cake and eat it. 40% of Australian traffic is now on mobile during weekdays, and more than 50% in the evenings and at weekends.

~~

So there you go, 10 flearnings, from 10 failed mistakes I have made (some of many, many more I could bore you with). Despite making loads of these errors, and learning the hard way, we did survive 10+ years, so we did OK…

All the best with your startup!

SLIDES AVAILABLE HERE >> http://www.slideshare.net/CharlieGunningham/so-many-flearnings-my-startup-journey

Ecosystem done. What Perth startups need now are success stories

Startup Weekend

Almost exactly three years ago I attended the first Startup Weekend in Perth. 100 plucky individuals bought tickets to attend. 40 or so got up on Friday night to make a 1-minute pitch (if they went one second over, they were stopped in their tracks). From these 40 pitches 15 or so teams formed by 9pm that night, and they were off and running.

By Sunday evening the teams had to pitch their ‘completed’ ideas to some judges. Some had almost complete products out on the web, or in the Google play store. They had branding, cool designs, working products, had engaged in customer validation and had learnt a tremendous amount. Perhaps 6 or more months of learning had been crammed into a frenetic 48 hours. Most would wake up a little bleary Monday morning and return to their day jobs.

I was one of the mentors on that first weekend, and I remember the ‘Breakeven app’ who I worked with ended up in 2nd place. The leader of the team had attended two Startup Weekends in New York previously and thought Perth’s one was better. Better in terms of the quality of the attendees, mentors, judges and ideas.

Wind on three years and there have been 5 startup weekends. There are now 5 tech accelerators in Perth (a year ago, there were none). There have been 3 iterations of Founders Institute. There are half a dozen co working spaces. The Perth morning startup meetup has 1500+ members. I have accumulated a list of 250+ startups that I know of (there are probably way more, and I am finding out about new ones every week).

The ecosystem is full and vibrant. None of this existed 3 or more years ago.

A well known Perth-based VC Matt Macfarlane told me once, “first comes the ecosystem, then the success stories, then the investors.”

We’ve got the ecosystem, now we need some success stories.

Perth’s startup scene

start ups in perth I’ve met a few people this year interested in getting into Perth’s startup scene… so here’s a humble overview as I see it. Go to a few of the events below, meet some of the folks and quite quickly you’ll be at the centre of the action. Why not help out and get involved?

Perth Morning Startup (meet up)
http://www.meetup.com/Morning-Startup-Perth/
– run by Justin Strharsky (@JustinStrharsky) and Stef Pienaar (@sfpienaar)
– set up 4 years ago, a free fortnightly meetup held at Spacecubed, Weds 7.30am-9am, now with over 1000 members. The beating heart of Perth’s startup community. Many sessions have been video’d.

Spacecubed (co-working space)
– founder Brodie McCulloch (@brodiemcculloch) http://spacecubed.com/
– the first, and largest co-working space in Perth, now on two floors at 45 St George’s Terrace in the city
– the place where entrepreneurs and coders meet, hire deskspace; and where most startup events take place. Head down here to get right into Perth’s startup community.

Startup Weekend (event/hackathon)
http://spacecubed.com/2014/08/26/startup-weekend-perth-announcement/
– held 2x a year, leader is Sam Birmingham (@sambirmingham)
– the essence of startupland; 100 attendees, 40 one-minute pitches on a Friday night begets 15 or so teams with products (and even revenue) by Sunday afternoon. Triplify, Simply Wall St and others have been born at one of the 5 weekends held so far.

Founder Institute (course)
http://www.fi.co
– intensive silicon valley startup course in Perth, with Claire McGregor (@clairesayshi) as Director
– in 2013 and 2014 eight companies were formed (from 20 that started each year); not for the faint hearted, it provides 2 years of learning crammed into 13 weeks. Will it run a course in 2015?

Venture Capital (money)
– Yuuwa Capital http://yuuwa.com.au/
– run by Matt McFarlane (@nullarki) and others
– there are other investors around, but at $40m this fund has been the largest and most active with investments in iCetana, Discovr and Agworld among others. Awaiting its first significant exit, the fund is fully committed mixing IT and health/biotech investments.

eGroup (forum) http://www.egroup.org.au
– internet entrepreneurs club (small fee), Evan Cunningham-Dunlop (@EvanCunninghamD), Rob Nathan, Greg Riebe are some of the current organisers
– been going the longest (since 2003, and in 2010 formally became incorporated as a not for profit association), a unique feature is its ‘what’s said in the room stays in the room‘ forum.
– meets at law firm Wrays in West Perth, first Tuesday of the month 6-8pm.

Atomic Sky / Tech Hub (incubator, investor / space)
– Andy Lamb (@andymlamb) http://atomicsky.com.au/
– part co working space, part incubator and investor, and also event space for startup launches. pitch nights (“Snap”) and gatherings, a funky new building (http://www.techhub.io) on the aptly named Money Street in Northbridge.

WA Angels Association (money)
– Greg Riebe http://www.waai.net.au/
– quarterly pitch nights are held at the BDO offices in Subiaco (invitation only) where startups go for money in front of high net worth individuals interested in investing in new businesses. No shark tank this, it’s a wholly supportive environment, and deals usually do happen.

Sync Labs (co-working)
– Leederville version of Spacecubed, mainly for techies http://synclabs.com.au/
– established by Marcus Tan (@drmarcustan) of Health Engine fame, and others

Silicon Beach (meet up)
– free techie meetup, Friday nights at Synch Labs http://www.meetup.com/Silicon-Beach-Perth/ – bring some beers

Sixty27 (co-working)
– Joondalup version of Spacecubed, although much smaller http://www.sixty27.com.au/
– run by Phil Kemp’s Business Foundations, and supported by the City of Joondalup 

//Startupnews.com.au (media)
http://www.startupnews.com.au/
– central blog, news and events site that maps the startup scene, run by Patrick Green and Marcus Holmes (@GentlemanTech),
– itself a startup, was launched just over a year ago and keeps everyone up to date with goings on.

Business News (media) http://www.businessnews.com.au/list/startups
– independent business media (disclaimer: I work here so this is a shameless plug!) that tries to cover tech sector regularly with an ‘app/tech business of the week’, a Startups List and regular startup/tech stories.

Universities

~ UWA : Tim Mazzarol (https://theconversation.com/profiles/tim-mazzarol-1526) professor at UWA Business School, leader in research and teaching in innovation and new ventures
~ Curtin : annual ‘Ignition’ week, intensive course, not to be confused with a 10-week incubator course (‘Incubate’, now called ‘Accelerate’) run by Jeremy Lu (@lu_jeremy)

Schools
~ CoderDoJo
: a wonderful innovation, bringing coding to school children, free of charge, supported by the Fogarty Foundation (https://zen.coderdojo.com/dojo/412)
~ Just StartIT
:  established in 2014, a dozen schools formed startup teams, have mentors and then pitch to a judging panel after a few months’ hard work in their own time. Run by Curtin’s School of Information Studies Lainey Weiser and others.  (http://juststartit.com.au/)

Award Programs
~ OzApps
: Feb every year, $100k up for grabs, includes apps from around Australia, Hong Kong and Singapore. Perth has had finalists in each of past 3 years. West Tech Festival. http://ozapp.com.au/ – there are a few other awards programs that feature emerging businesses or IT, such as Incite (WAITTA Awards), Rising Stars, Pinnacle Awards and others.

Tech Accelerators
~ RAC Seedspark : established in late 2014, 3 startups were selected to share in $50k in non equity money, and have access to mentors
~ KPMG Energise : announced Feb 2015, a free tech accelerator focusing on the resources industry, with no equity commitment, but access to mentors
~ Unearthed (RIIT) : announced late in 2014 a resource focused tech accelerator with ambitions to hold events around Australia and deliver over 50 funded startups over the next few years (http://unearthed.solutions)
~ Amcom Upstart : announced Feb 10th 2015, this looks like being Perth’s first pure tech accelerator, with $40k seed money in 8 successful startup applicants in return for a small equity stake, and access to a 3-month mentoring program starting 1st June 2015.
(http://www.amcomupstart.com.au)

An Overview of Perth’s Startup scene (Report)
In late 2013 there was a report done into Perth’s startup scene – some of the info is now out of date, but it is still interesting reading > http://www.boundlss.com/blog/perth-startup-ecosystem-report and full report here> https://48yo.files.wordpress.com/2015/02/5b756-perthstartupecosystem2013-infographic.pdf

There are many other meetups, some more active than others, some more techie than others, and various events. So I’m not trying to claim the above is an exhaustive list – however I can vouch for all the above, having been personally involved or having attended every one of them, and I know the people doing all the work. I don’t believe the community needs more events, but it needs more volunteers to help ‘do the heavy lifting‘. The ecosystem is alive and flourishing, but funding for startups is still hard to come by. Maybe 2015 will be a watershed year for deals?

The Night we dined with Dame Edna

{ Lisa and I with the Grand Dame, on stage, March 1999 }

{ Lisa and I with the Grand Dame, on stage, March 1999 }

Fifteen years ago, Lisa and I attended an unforgettable ‘Night with Barry Humphries‘ at the Regal Theatre with a few friends. Having just graduated with my MBA I was back teaching full time and for some reason I was not enjoying it anymore. I didn’t know why, but I was getting around to the notion that a career change might be in order. A night out with Dame Edna and other characters would be the levity I needed.

As we took our seats (in the second row) a sinking feeling came upon me. Known for ripping into his audience and making them part of the ‘entertainment’, I was not sure I was in the mood for public humiliation. The first half proceeded without incident, although I do remember that Mr Humphries was looking in my direction every now and again – sizing up his prey no doubt for the second half?

My worst fears were realised as Dame Edna bounded out to the second half with the lights going UP on the first rows of the audience. We suddenly felt very exposed, and increasingly, warm. A few minutes in, the Dame went along our row asking whether we’d had anything for dinner. As it got to me I blurted out something or other and for some reason this got a laugh. Edna rounded on me, inviting me to give more details, and wondering aloud if we might still be hungry. “Oh, they really are a lovely couple, ladies and gentlemen, shall we order them a meal?”. This he promptly did, live on stage. A gold plated telephone was produced on a silver platter: “Oh hello? Is this the Subi hotel? Agh yes, this is Dame Edna Everidge here, and I would like to order a chicken pasta, with a nice bottle of white, and a salad for this charming couple …”.

‘You’re in for it now‘ my friends whispered. We sunk lower in our chairs. Dame Edna continued her routine. About 20 minutes later the meal arrived and was set up on a table to the right hand side of the stage, red and white checked table cloth and all. “Agh where’s the lovely couple?” asked the Dame, and we were enticed up onto the stage.

Now I was quite used to performing, and ‘sort of OK’ with this, but I was more worried about Lisa, who I knew might not be relishing what was about to happen. The old pro in Barry Humphries instinctively sensed this planting a huge lipstick kiss on her cheek (see photo) and making us both feel very much at home. He sat down with us at the table on stage, carried on with his act, and kept what I can only describe as a ‘motherly interest’ in how our meal was going over the next 40 minutes (I was too nervous to eat, but I enjoyed a few glasses of wine) .

We had the best seats in the house – on stage! He was masterful in his performance, and seeing it up close like this was a special treat. I don’t think Lisa or I will ever forget it.

What a pro.

What was even weirder was later that night, on returning home I listened to a message on the phone. It was Nick, someone I’d got to know on the MBA, who had had a business idea for an online map-based real estate business. “It’s a great idea Charlie“, the message went on, “you and I have gotta do it“.

Yes, the same night as being hauled on stage with Dame Edna, the ‘aussiehome.com’ idea was born. I was ready for the change, and as the Dame was used to saying, “That’s spooky darling”. Sometimes things just happen, and in the strangest ways.

Naming your startup

On Thursday night I gave a presentation on ‘Naming your Startup‘, (see slides here, or above) to the Perth Founder Institute.

In many ways, the name of your company can mean everything, and nothing. You could name it “Blaghhh” or “Twitter” or “Google” or “Snapchat” or some such invented name, (err… not the last 3, they exist, but before they did exist, they each sounded equally silly.)

I remember naming ‘aussiehome.com’. It was not our first choice. It was ‘realsimple.com’, as we wanted to make real estate simple, making it easier for the home seeker and the agent alike. But the domain was taken by a Californian IT consulting business (it now seems to belong to someone else). Second choice was Perth Home, but should that be perthhome.com or perthome.com? – both looked wrong. So we plumped for ‘aussiehome.com’, and were amazed to find the domain was available. We jumped on it, and that day also went to ASIC to set up ‘aussiehome.com Pty Ltd’.

We had a few issues with the ‘aussiehome.com’ name; not from Aussie Home Loans (we went to see them early on in fact), but with the misspelling of the name, such that people would introduce us as ‘aussiehomes.com’ (it happened on Thursday night!). A few early clients over the years ended up going to the wrong URL as a result. We always emphasised the whole ‘aussiehome.com’ and never called ourselves ‘aussiehome’, so as to stress the point. I don’t think this closeness to the mortgage broker Aussie Home Loans really did us much harm (or good) over the years. It was just a slight annoyance for me, as I am fairly brand sensitive. If we’d known about the possible confusion, we may have gone for another name, but I’m not sure it really made any difference.

Names and brands are important, to be sure. Ideally you want a clear distinction around your brand. You want it be so strong that people just have to see the colours or shapes to know who you are.

A final thing on brands.  Your brand is whatever your customers comes to mind when they think about you, see your logo or experience your product or service. It is out of your hands – whatever they think or emote is what your brand is to them. Yes you can influence this, but ultimately, your customers own your brand, not you.

Goodbye Commercialisation Australia. Though I never knew you at all…

CA is no more
Last week’s federal budget axed the Commercialisation Australia (CA) program (and a few others), saving $847 million from the public purse. It is to be replaced with a new $484 million scheme, the Entrepreneur’s Infrastructure Program (EIP), of which there is scant detail.

Hundreds of Aussie companies will be affected by the closure of Commercialisation Australia. (Over 500 have received funding over the past few years.) Not only will this stall their innovation & businesses, it will mean that less private funding will result. Over the last few years, most CA funding has attracted at least a dollar for dollar matching investment from angel or VC funds (often two dollars). While not for everyone, CA provided a platform for businesses to get going, and much needed advice (each business received an appointed AusIndustry officer).

When I ran my own startup I did not go for CA funding – there were too many hoops to jump through, and it took too much time to do all the admin. I had to get going quickly to take advantage of the emerging opportunities. But I know of many companies that have used the CA grant money as a lifeline for their fledgling business, and it’s sad to see it go. I spoke to one such business today and they were well into the process, and thought the whole thing had been a “complete disgrace”. It’s basically wasted almost a year of their time.

All this is strangely familiar. When Rudd’s Labor party came to power in 2007, they axed the previous system (Commercial Ready) and introduced Commercialisation Australia. Now the new mob have axed that and are bringing in their new thing, EIP.

I thus got to penning a short ditty in honour of CA’s passing… to be hummed along, and with humble apology to,  Elton John’s Candle in the Wind…

Goodbye CA
Though I never knew you at all
You were important to many businesses
Who were just learning to crawl

They crawled out of the woodwork
And they whispered into your brain
You set them on the treadmill
And many changed their name

And it seems to me you lived your life
Like a candle in the wind
Never knowing who to cling to
Til  the next party blew in

And many got to know you
Though their businesses were kids
Your candle burned out long before
Your legend ever did