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We’re all just making it up as we go along, and other startup lessons from Sydstart

9:06AM | Wednesday, 3 September

If the Australian startup ecosystem was to have a family reunion, SydStart might be it.   Over 1000 startup founders, budding entrepreneurs and investors gathered at the Hilton in Sydney yesterday for SydStart 2014.   Among them were Australia’s best and brightest entrepreneurs, Atlassian co-founder Mike Cannon-Brookes, Freelancer chief executive officer and chairman Matt Barrie, Startmate founder and investor Niki Scevak, Canva co-founder Melanie Perkins and many more.   It was Mike Cannon-Brookes, perhaps the most uncomfortable with his position as one of the key figures the Australian industry looks to for advice and guidance, who drew the most interest.   He spoke of feeling like a fraud when meeting other prominent startup founders from around the world and being pleasantly surprised by the fact that they felt the same way. And he had a lesson for founders: entrepreneurs are all the same.   “You move up this weird totem pole of entrepreneurs, where you get to meet more and more interesting people and you to these weird points where you’re so excited to meet them, and you think to yourself ‘Wow, I’ve read about this person 40 times, just to get a half hour coffee is amazing’,” he says.   “And then they turn up and they feel the same way and it’s like ‘wow, this is weird’.   “You realise all these other super successful entrepreneurs are in exactly the same boat and that never goes away. They’re all doing it for the first time, they’re all making it up as it goes on, they’re basically making smart judgment calls and getting 80% of the decisions right. Ploughing ahead and continuing to be bold. They don’t get timid as the stakes get higher.”   That point – all entrepreneurs are the same, all are learning on the job, all are “making it up as it goes on”, permeated the entire conference. Throughout the day, it was impossible to miss the many conversations going on between founders after advice and investors, or the successful entrepreneurs taking time to give it to them, regardless of who they were.   It was a point Niki Scevak later picked up on.   “If you look around the investment landscape you have all these people that believe in cliches that aren’t true,” he says.   “They want to invest in proven founders, with a great management team, in this really, really big market, as if any of those are knowable at the time you get to invest.   “All of these great success stories that Australia has been home to, they were started by, no offence, people with very little experience who had just finished university, no business experience, they looked like complete jokes and not only that they were entering into markets that were incredibly crowded.   “You’re actually looking for first time founders that look like a joke, it sounds a bit silly, but founders know that. Founders know it’s a complete mess at the start. It’s not actually about that, it’s a couple of levels deeper and what unique insight do you have.”   As Fishburners general manager Murray Hurps pointed out as the conference closed, when he began his startup 16 years ago, there was nobody to help out with that mess.   That’s since changed thanks to the many co-working spaces and community leaders like SydStart conference coordinator Pete Cooper, as some of the many founders in attendance pointed out.   SimpleNutrution.me founder Nathan Murphy spoke of the value of SydStart to people like himself.   “SydStart is like a big family reunion every year where you get to see old faces, share war stories and hopes for the years ahead,” he says.   “You gather around the elders and listen attentively to their advice for finding success.”   For Play2Lead founder Theresa Lim, SydStart was not just about advice but also a place to recruit her team.   “I was only expecting to potentially (meet) developers who I might add to my team or investors who might be interested,” she says.   “No only did I achieve that goal, but I made several customer leads from enterprise as well.   “I’ve had so many doors open to key customers through this (Fishburners and SydStart) community. Everyone is driven and helpful – the event itself inspires me to just keep going! Pete Cooper and Murray Hurps are tirelessly dedicated to making our startup community thrive.”

A new name and fewer neck-beards for growing SydStart

8:53AM | Wednesday, 27 August

Australian startup conference SydStart is considering a name change, in order to reflect its growing prominence as a national startup event.   Founder and event coordinator Pete Cooper says the event’s reach encompasses far more than just the Sydney area, with international and interstate representation growing each year.   SydStart 2014 will be held at the Hilton in Sydney on Tuesday September 2 and features 120 exhibitors, and over 50 speakers and panellists, including the likes of Freelancer CEO and chairman Matt Barrie, and Atlassian co-founder Mike Cannon-Brookes.   “It’s easy to get the headline numbers growth, but the hard part is to get the sheer range,” he says.   “We’ve got everything from IoT (Internet of Things) in the home, to bespoke fashion and high volume, high capacity cloud services.   “We’ve got a huge percentage of women entrepreneurs this year, which has been part of a steady trend. My teenage daughter has been a big motivator for me to get away from the neck beards, they’ll be there and they are still some of the nicest and smartest guys, but the sheer range is great.”   220 startups applied for SydStart’s pitch event. These were narrowed down to 30 finalists. The Top 10 will pitch on the main stage at SydStart in front of a host of potential investors, while the next 20 finalists will get the chance to pitch on the expo stage to help them build awareness.   The Top 10 finalists include:   BLRT - Communication   Go Far - Driving optimisation   You Chews - Catering marketplace   Thinkable - Research marketplace   Coalfacer - Research marketplace   UrbanOutsource - Home services marketplace   Stockspot - Financial advice   Rbutr - Crowdsourced rebuttal   Next For Sale - Property pre-marketplace   Touch Payments - Mobile payments   Cooper says he was unsurprised the Top 10 was dominated by marketplace startups.   “I’ve seen this trend coming for years,” he says.   “I think it’s a combination of the Australian education system, we’re not narrowly educated so marketplaces are a natural thing. So Australia is well placed because of the diversity in our education, our history of good commerce and the force of law.   “Australia is a natural place to build great marketplaces, look at Design Crowd, 99 Designs and Freelancer.”   Over 1000 people are expected to attend this year’s event, which Cooper describes as “the hobby that ate my life”.   “It was supposed to be a part time thing I do a few weeks a year, but it’s become enormous,” he says with a laugh.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Australia’s listed technology sector is about to boom

8:02AM | Wednesday, 13 August

In my last article I responded to an interview in Vox with Marc Andreessen. Andreessen lamented that, in spite of a historic gold rush in technology companies, the IPO is dying in the United States due to zealous over regulation in the form of Sarbanes–Oxley, for example.   As a result, the general public is missing out on the incredible gains that were experienced in the listed US technology companies of yesteryear.   Yes, the regulators have gone too far and it is creating serious friction in the IPO pipeline. However I argued that perhaps the real reason that technology companies appear to Marc to be listing later and later is because, not surprisingly, the top venture capitalists are keeping these returns all for themselves.   It's been a relatively recent phenomenon that US technology companies have been waiting longer and longer to go public. In the US, technology IPOs of yesteryear companies went public much earlier, with market capitalisations in the hundreds of millions of dollars instead of the tens of billions.   As a result, the general public had the ability to share in the spectacular returns that technology companies can generate over time as software eats the world and industry after industry is being wholesale remapped and reshaped, with revenue growth at a speed unprecedented in history.   Even though eBay's share price went up a spectacular 163% on opening day, if you bought shares on market after this rise and held on until today you'd have made over 3500%. If you bought Amazon the day after it listed, you'd be up over 27,000%. If you'd bought Microsoft at IPO in 1986, you'd be up 66,500% today and 3000% in the first eight years alone.   Unfortunately for investors in the US, the general public is missing out. You only have to look at Facebook listing at $104 billion and Twitter listing at $24 billion to get a feeling for just how late these companies are going to market.   So who is making all the money as the stocks go from the tens of millions of dollars in market capitalisation to the tens of billions? The answer, not surprisingly, are the venture capitalists. You can't blame them for doing so, because of course their business model is to make as much money as possible for their limited partners.   There is another stock market, however, outside the US that is not subject to Sarbanes–Oxley and where technology listings are about to boom. This market is already quite a large market for equity capital issuances. In fact, as much money was raised there in the last five years as NASDAQ. The only problem from a technology company perspective is that most of the money raised there has been for resources companies.   I am, of course, talking about the Australian Securities Exchange.   Now let me tell you how this has all come about, and why now.   There is a disaster in venture capital in Australia with only around $30 million per annum for the whole of seed stage investments, $40 million in early stage and $20m in late stage. AVCAL reports there were 16 "investments" done with this grand sum of $20 million in late stage venture capital in 2013.   I am quite perplexed about how they defined "late stage" here, because the very definition of a late stage round size is usually greater than $20 million in one single investment, let alone 16. The only conclusion I can make is that these investments were triaged into bleeding zombie companies – hardly a sign of a successful late stage industry. Either that, or AVCAL has now taken up reporting of late stage investments to include lemonade stands.   Atlassian, one of Australia's most successful technology companies, just raised $US150 million in a late stage round. The entire Australian venture capital industry simply isn't big enough to fund that single round.   In addition to the lack of venture financing, a major terraforming of the economy is needed. Although we have $1.5 trillion dollars in the fourth largest pool of retirement funds (superannuation) in the world, these funds don't invest very much in Australian venture capital because none of the VCs to date have demonstrated that they can generate a return.   It's hard to claim that venture capital is even an asset class in this country, as it's missed every single major technology success story this country has produced all the way back from Radiata: Atlassian, Kogan, Big Commerce, RetailMeNot, Campaign Monitor, OzForex. The list goes on and on. For the life of me, I can't think of one they actually invested in.   The funds being invested into Australian VC come roughly equally from corporates, government and high net worth individuals. Corporate investment in VC in Australia is in decline, and with the government recently turning its tap off with the cancellation of the IIF program, I don't see a path to resurrecting a domestic venture capital industry any time within the next decade or two without a serious change in philosophy, which is not going to come from either of the two major political parties.   The incumbent Liberal party is currently implementing a program of austerity, and the previous Labor government was, at best, only interested in trying to win union votes from bailing out the inefficient and dying local manufacturing sectors. The biggest impact Labor had on the sector during their tenure was to change the laws on the taxation of option schemes, which wiped out the primary incentivisation mechanism for the technology industry (and, ironically, the primary means by which wealth is redistributed from owners to workers).   While I personally was not sorry to see the IIF go, I was hopeful that the axing of the program would be replaced with something more effective for financing technology companies down under. A better way would be through taxation reform for investors in qualifying risky technology ventures –front-end relief in the form of tax credits or a reduced rate of tax and back-end relief in the form of capital gains tax reductions or exemptions like the UK's Enterprise and Seed Enterprise Investment Schemes.   At the end of the day, the Australian government only provided $25 million a year into the IIF program, which is paltry when you consider Singapore, with a population of 5.4 million, has committed $SG16 billion ($US12.8 billion) into scientific research and development over a four year period from 2011 to 2015.   So how are Australian companies getting financed? Whilst the big US VC brands like Accel, Sequoia, Spectrum and Insight are actively prospecting down here, they are mostly just looking for cheap deals by value investing in late stage companies outside the hot money Silicon Valley market.   The investments that they have made to date, and which have been trumpeted in the media, have for the most part been majority buyouts or exits (Campaign Monitor, 99designs, RetailMeNot, etc).   A notable exception to this has been Accel's investment in Atlassian.   However, the lack of funding has not deterred Australia's entrepreneurs from building world class technology companies. Instead, they have focused on raising funds from the best source possible: selling something valuable to their customers.   This story continues on page 2. Please click below.  Almost all of Australia's best technology companies have bootstrapped all the way through. Those that did take outside funding, for the most part, didn't take it until they reached quite a late stage. As a result, we have some very well run technology companies, and some world class companies in the making.   Although I am pretty active in the startup community, every second week I am shocked to discover yet another Australian technology company that I have never heard of generating $10 million, $20 million, $50 million or more in revenue per annum. Until recently, I had never heard of companies like RedBubble, Nitro, and Pepperstone. The latter of which has, in just three years, become the 11th biggest forex broker in the world, turning over $70 billion a month through their online platform).   Because the Australian technology industry is mostly bootstrapped, it took longer to get here, but coming down the pipeline are an incredible number of great technology companies.   So if the Australian VC industry is dead, then how are these great companies going to raise funds when they need them? Well, I believe the answer is staring them right in the face. It's called the Australian Securities Exchange (ASX).   After all, what better way to fund a company than by crowdsourcing it? This is what the resources industry already does today, via the ASX. If you have an early stage speculative mining company, you don't go begging down Coal Hill Road pitching to mining VCs and spending six months negotiating a telephone directory thick preferred stock structure. No, you write a prospectus detailing what you're going to do with the money and list it on the ASX.   Likewise if you're BHP or Rio Tinto, you can go to the ASX and the market is deep enough to raise billions. Crowd sourcing equity from the public has been done successfully for decades in resources. The ASX is in the top five globally for the total amount of money raised for equity issuances from 2009-13. There is no Sarbanes–Oxley in Australia, and listing costs are quite low. (In Freelancer's IPO, the underwriting fees were $450,000, legal fees were around $100,000, and investigating accountants cost about $50,000.)   Why go to a venture capital middleman unless they are a rockstar with solid operating experience that can add demonstrable value in some way?   I believe that Malcolm Turnbull will bring in legislation to allow the general public to crowdfund early stage ventures without a registered offering document, as is starting to happen elsewhere around the world. This will generate further interest and appetite in investing in technology companies from the general public which already actively takes a punt on speculative, early-stage mining companies (not to mention the Melbourne Cup).   At the moment, to invest in companies without a registered offering document you need to be a "sophisticated investor", which is curiously defined as a person having income of $250,000 per annum in each of the last two years, or net assets of $2.5 million.   I don't know why being rich makes you automatically sophisticated, and being poor means you’re incompetent with your money, but I'm sure that something sensible will happen here. If, by miracle, we see some taxation relief for technology investments, then this will be accelerated.   But I'm not holding my breath, even though the Australian government used to provide some form of taxation relief for investors in the mining industry.   When we were considering listing Freelancer on the ASX, many people gave us the usual regurgitated responses as to why it wouldn't work; investors here don't understand technology and that we would trade at a discount compared to US markets.   Professor George Foster from Stanford Graduate School of Business showed some time ago that country specific factors were a lot less important than company-specific financial statement-based information in explaining valuation multiples in an international setting.   Markets are increasingly globalised. It's almost as easy for a US investor to buy Australian shares as US ones. Money flows to where it gets the greatest return for a given risk profile; basically if arbitrage exists, someone will take it. Our stock going to $2.50 from a 50 cent issue price in the biggest opening in the last 14 years and third biggest opening ever on the ASX for an issuance larger than seed size is testament to the amount of pent up interest amongst the general public to invest in technology.   We took a calculated risk – nobody wants to be the first to try something new. But so far it has paid off.   It’s great to see the sector now heating up with recent listings from companies like Ozforex, iSelect, iBuy and MigMe (up 95% yesterday on their IPO, and like I did, broke the bell), and with WiseTech Global, Vista Group, 1-page, Covata, BPS Technology, Grays Australia imminently coming down the pipeline.   I suspect Ruslan Kogan will also be considering his options given the tremendous effort he has done bootstrapping Kogan to date. What surprised me is that the process was significantly easier, quicker and resulted in a more equitable and transparent capital structure than what I have experienced in any of the dozen venture capital financings I have been involved with in the past.   Projecting forward, I think that the ASX will be the primary way in which technology companies raise equity in this country in the future. The ASX realises this as well, and is moving to position itself as a regional hub for the Asian technology sector.   If it is successful—and I think there is a good chance it will be—it will cover a massive market. There are significantly more people in Asia (with dramatically rising incomes), significantly more micro, small, and medium enterprises (MSMEs). It’s a much bigger market for many industries, and there are a lot more mobile phones than the US, to draw comparison to just a few metrics.   The ASX is in a fantastic position to capture this opportunity. In the second half of 2013 a total of 14 technology companies listed on the ASX. Since January 2014 there has been 55. In the entirety of 2013, a total of 59 companies were financed by Australian venture capital.   This is the future for financing technology companies in Australia.   Matt Barrie is chief executive at Freelancer.com

BRW Rich List revealed: tech entrepreneurs fresh faces among the usual crowd

6:04PM | Sunday, 29 June

Miners and property developers are among Australia’s wealthiest people, but young technology entrepreneurs are snapping at their heels, according to the 31st BRW Rich 200 released Friday.   Gina Rinehart once again topped the BRW Rich List with an estimated worth of $20.01 billion, down from $22.02 billion the previous year.   Anthony Pratt, chairman and chief executive of paper and packaging company Visy Industries, came in at number two and is Australia’s richest man, with a net worth of $7.64 billion. James Packer came in at third place with $7.19 billion.   Despite the usual pack of miners, property investors and those born into wealthy families dominating the list, people who have made their fortunes from striking it out alone in the IT industry are quick on their heels.   Former Smart50 winners and Atlassian founders Mike Cannon-Brookes and Scott Farquhar have surged ahead in this year’s rankings, coming in at number 35 and 36 respectively. Between them, the pair is worth $2.14 billion. Last year the entrepreneurs were worth $250 million each.   Atlassian, a software development company founded in 2002, has averaged 40% on year growth for the last five years.   Cannon-Brooks and Farquhar have been hailed as examples of how Australian tech companies can thrive on the international stage. However, the pair also has their priorities set on other things besides profit.   In April, they pledged $35 million to community-building after setting aside 1% of the company’s equity to charity when starting the business. Farquhar told SmartCompany Atlassian has a passion for investing in charity for the long-term, especially when it comes to giving people the skills to help others.   “It’s really about education,” he said. “Ideally in 50 years’ time we want to say we have really achieved fixing something rather than just patching over something.”   Another entrepreneur, Ruslan Kogan, also fared well and came in at number 162 – his first time making it onto the list with a net worth of $320 million. Kogan’s business is going from strength to strength, and launched in New Zealand in March.   “Our goal is to deliver the latest technology at market leading prices,” he toldSmartCompany. “Whether it is manufacturing our own Kogan products, or sourcing the world’s biggest brands, we can cut out all the middlemen to guarantee the best prices.”   Mining magnate turned politician Clive Palmer didn’t fare too well in comparison to previous years, falling a massive $980 million in comparison to last year. However, fellow miner Andrew Forrest had the opposite fate – his wealth jumping from $3.66 billion to $5.86 billion this year.   The average age of those on the BRW Rich 200 is 64, and of the 200 people on the list 39 of them are billionaires. Only 7% of the rich-listers are women.   The richest people in Australia: 1. Gina Rinehart - $20.01 billion 2. Anthony Pratt & family - $7.64 billion 3. James Packer - $7.19 billion 4. Frank Lowy - $7.16 billion 5. Ivan Glasenberg - $6.63 billion 6. Hui Wing Mau - $6.35 billion 7. Andrew Forrest - $5.86 billion 8. Harry Triguboff - $5.5 billion 9. John Gandel - $4.08 billion 10. Kerr Neilson - $3.35 billion   This article originally appeared on SmartCompany.

Google partners with Fishburners to roll out its entrepreneurs program

6:55PM | Monday, 16 June

Google has partnered with incubator Fishburners, in a six figure deal, to implement its startup outreach program Google for Entrepreneurs to help facilitate the growth of the startup community.   The partnership will see Fishburners become part of the global network of Google’s 30 startup hubs, allow companies based at Fishburners access to the Google framework for startups, as well as international innovation programs.   It will also be renovating and doubling its space, including a ‘physical’ Google Hangout.   Fishburners chief Daniel Noble says that the partnership was a good fit based on the fact that Fishburners acts as a not-for-profit and does not take equity or invest directly in startups accepted to its programs.   Startups apply for space at Fishburners and commit to a 20-month program until they are ready to move on. Successful applicants pay for their time there with desks being charged at $400 a month.   “We’re about equipping startups to be better formed companies when they go to market, or seek investment,” Noble says. “Too often companies try and do things much too early.”   Part of the Google deal will also be a push to encourage more female entrepreneurs.   In a blog post announcing the deal, Google says:   “From the Cochlear bionic ear to Wi-Fi, Australia has a long history of innovation. Local-born innovations and startups like Atlassian, Freelancer, 99Designs, and Shoes of Prey are flourishing in global markets with the help of the web.   While we’ve seen the growth of the startup community in recent years, we know there’s still a long way to go.”   One of the first programs on offer is BlackBox Connect, a two-week immersion program in Silicon Valley. A Fishburners’ based startup will be selected to spend a week on Mountain View and have access to Google’s network of experts.   “Supporting local tech startups is vital to Australia's future economy. We know the talent, drive and potential for innovation is all here; we hope to help realise the full potential of Aussie entrepreneurs,” concludes the blog post.

Dropbox opens Sydney office, amidst criticisms over Heartbleed bug silence

4:12AM | Wednesday, 16 April

United States online storage business Dropbox has announced it’s opening its first Australian office, with the business opening in Sydney to better support users in this geographical region.   But the announcement of the new move has been overshadowed by reports Dropbox buried an announcement about being affected by the Heartbleed bug in a user forum.   The Australianreports Dropbox executives admitted to only posting a blog post about the vulnerability.   Heartbleed is a web encryption flaw which makes it easier for hackers to steal users’ passwords and personal information.   According to the Dropbox blog post the company has patched all its public-facing systems running OpenSSL and re-keyed and re-issued SSL certificates for all Dropbox domains and services in response to the Heartbleed bug. It also urged users to change their passwords regularly.   Most forum commenters were thankful for the information, but others indicated official communication via email would have been more helpful and some expressed frustration with how long it took Dropbox to post about Heartbleed.   Dropbox’s services are used by major Australian companies such as Macquarie Group, Mirvac and Atlassian and the company said yesterday it believes opening an office in Australia is the right move for the business.   Dropbox’s new Sydney office will be the first for the business in the Australia Pacific region and indicates its intention to attract more local businesses.   “By opening our first APAC office in Sydney we gain access to Australia’s great pool of talent, and can serve more local users and businesses as we continue to grow,” Dropbox chief executive Dennis Woodside said in a statement.   However, as well as copping criticisms over its handling of the Heartbleed bug, the company has also recently angered some users by appointing Condoleezza Rice to its board of directors.   Dropbox is currently used by more than 275 million people and in over 4 million businesses. Each day more than 1 billion files are saved using Dropbox.   The business currently has offices in San Francisco, Dublin, Austin and New York.   New South Wales deputy premier and minister for trade and investment Andrew Stoner said in a statement Sydney was a “natural home” for Dropbox.   “Sydney is quickly building a reputation as the hub for many of the world’s most advanced and innovative companies, illustrated by the arrival of another top US company like Dropbox,” he said.   “Sydney is a natural home for Dropbox and our talented workforce will play a major part in the expanding Dropbox story as the company continues to build its international presence.”   This story first appeared on SmartCompany.

The long-term view is the secret to Atlassian’s success

4:04AM | Thursday, 10 April

Atlassian’s $US150 million ($A159m) share sale announced yesterday has rocketed co-founders Scott Farquhar and Mike Cannon-Brookes into Australia’s billionaire rankings.   Farquhar talked to SmartCompany from Los Angeles last night as news broke of the deal which values Atlassian at $US3.3 billion.   Farquhar and Cannon-Brookes are each believed to own close to 40% of the share capital and neither is selling down their stake as part of this sale, which leaves them with paper wealth of $1.4 billion each.   Farquhar says the deal was brokered by “inviting bids from a small number of select parties” and will assist Atlassian’s future growth through an injection of both capital and expertise.   “We have always been about thinking long term so the investors we get on board, like Accel Partners, help us set up the company for the next stage of growth,” he says.   “As we head towards an initial public offering we’ve now got one of the largest tech investors in the US on board and with their public market experience they will really help us set up.”   “It also allows our employees, some of whom have been around for 10 years to realise the value of their Atlassian stock.”   Farquhar would not be drawn on the timing of an IPO for Atlassian but it is “not in the next few months”.   The share sale is the latest move in a trajectory which has seen Atlassian soar to global prominence. In 2013, the business booked revenue of $US149 million up from $US111 million in 2012.   Farquhar says revenue is on track to be “north of” $US 200 million for this year. He attributes Atlassian’s success to “taking a long term view of everything we do”.   “At Atlassian, we want to be around in 50 years’ time,” he says.   Farquhar plans to grow the business further by expanding into multiple markets.   “As software development becomes an increasing part of every single business, our products actually become quite critical to every business,” he says. “That’s the area for growth of us.”   Atlassian plans to achieve this growth without hiring a single salesperson.   “We are not anti-sales; we are pro automation,” Farquhar says.   “We take an engineer’s philosophy to everything that we do. We are really about scaling the business.”   Although Farquhar concedes eventually Atlassian may have to follow a more traditional sales path if it wants to sell into large businesses at the top instead of going through the business’ developers.   “In the future we may have sales situations where we need to speak their language,” he says.   The biggest challenge at the moment for Atlassian is its stellar growth according to Farquhar.   The business has averaged 40% year on year growth for the last five years.   “We are growing fast. With that comes the inevitable issue of scaling, it sounds mundane but finding office space when you double in size every two years is hard.”   Atlassian’s move earlier this year to shift its domicile from Australia to the United Kingdom caused some soul searching in Australia’s tech scene but Farquhar insists Atlassian is still an Australian company “through and through”.   “We still collect all our revenue globally through Australia and the large number of people we are hiring are through Australia,” he says.   Farquhar says the move followed a global search to find the best place for Atlassian to be based “for the best interests of the company”.   Atlassian’s “back office people” analysed where Atlassian’s customers were, where the team wanted to live and settled on the United Kingdom.   “We looked at Singapore but the UK made sense because of the treaties between Australia and the UK it is easier and the global investor base is more used to investing in a UK company.”   But Farquhar does say the talent pool in Australia is limited.   “We don’t graduate enough computer science graduates from university,” he says. “That is the biggest constraint on our growth.”   “We have a unique company culture so we spend a lot of time on hiring for promotion and continuing that culture. I think half our staff have been here less than one year and four months.”   Atlassian has previously criticised the government for its approach to 457 visas for skilled employees and Farquhar says the program is essential because the Australian technology environment has more jobs than people to do them.   “Arrogance and lack of a strong industry in Australia meant we didn’t have mentors for a long time,” he says.   “Our argument with the government on these visas is that a lot of the people who could train us are highly qualified people we need to import from Silicon Valley.”   “Now we have mentors in our business and also on our board.”   This article first appeared on SmartCompany.

SA Angels arranges special presentation from Swisscom Ventures and Acumen Ventures

4:48PM | Thursday, 3 April

Last month, Piper Alderman hosted angel investment group SA Angels for a special invitation only event featuring Stefan Kuentz of Swisscom Ventures and Shane Cheek from Acumen Ventures.   Kuentz and Cheek gave an update of the venture and investment market from a Swiss/global and the Australian/south-east Asian perspective. The event was well attended by a group of key players in the Adelaide commercialisation and investment community.   Stefan Kuentz’s presentation started with an outline of the reasons why Switzerland had to focus on innovation and looked at Swisscom’s commercial rationale for establishing Swisscom ventures. He touched on the types of industries that Swisscom Ventures will be interested in for 2014: network optimisation, security and identity management, CRM, internet of things and related clusters such as e-health. He also engaged in some lively discussion with the audience of his personal experiences and war stories about the investments that Swisscom Ventures had made.   Drawing on his years in Silicon Valley, Kuentz said that it was very important for companies to have some experience there:   “For companies who truly wish to be global, I would strongly recommend that they have some exposure to the Silicon Valley. For example, all the major telco companies have a presence there, and are all located within a short distance from each other. The VCs are also just around the corner, and all of the ingredients for a vibrant market place are located in one place. It really is like a market place for innovation.”   “We were very lucky to have someone of Stefan’s experience come to share his knowledge and experience with us,” Michael Dilettoso, chair of the SA Angels said of the event.   “It was also great to see the event supported by many members of the Adelaide angel investment community, some of whom have already made a number of investments not just in Adelaide-based companies, but Silicon Valley based investments as well.”   Shane Cheek from Acumen Ventures gave some valuable insights and data from the VC industry in Australia and SE Asia. Cheek is currently aiming to close out his $30m fund focusing on enterprise, B2B and e-commerce ventures in Australia, New Zealand and South East Asia.   “The Australian technology sector has reached an amazing inflection point, driven by a wave of successful companies such as Atlassian, Freelancer and Bigcommerce, and a new generation of startups that take an aggressive approach to regional growth,” Cheek said.   “They recognise they are a part of south-east Asia with a population approaching 650 million, an insatiable appetite for all things digital and annual GDP growth of 8%. The next generation of category defining companies will emerge from this region and Acumen Ventures is excited to be funding them.”   It is the comment on “market place” that resonates strongly for supporters of Adelaide’s startup and innovation ecosystem.   The Adelaide market has been aware that in order for innovation to flourish in the city, all of the various parts of the community need to exist. We already have a vibrant start-up community supported by a number of co-working spaces and accelerator programs. We also have some active angel investors, early stage VCs, as well as experienced advisors, all within close proximity of each other. It will be great to see Adelaide mature into that crucial “market” concept.   Dilettoso said the event was a great success and one that could be repeated again soon.   “The event was a success, as it gave an opportunity for the investment community to engage with each other and swap notes on what has been happening over the last few months. It is certainly something the SA Angels will try to organise again,” Dilettoso said.

Google launches e-book celebrating the stories of Australia’s rising startup sector

4:46PM | Tuesday, 1 April

Google Australia has launched a campaign, armed with an e-book and video, to encourage Australians to take up coding.   Written by Fran Molloy, Start with Code shares the stories of the rising startup ecosystem, including startup founders including Noller, Peter Bradd, Marita Cheng and Mitchell Harper.   In the foreword, Communications Minister Malcolm Turnbull writes about the profound changes the internet and technology have wrought on the world.   “We need to improve the way we teach our kids; we need to inspire a generation of digital natives who are already avid consumers of technology to embark on careers as entrepreneurs and coders, in e-commerce and as engineers.”   The need to overhaul the education system to equip Australia with coding skills is something Atlassian cofounder Mike Cannon-Brookes also argues for in the book.   “At Atlassian, we know in the next 20 years we are going to have to hire a truck load of computer science people. We’ve got to start breeding them way earlier. We need to train them, at school, now.”   The investment in tech skills and the startup community, both key themes in the book, are argued for by accelerator founder and investor Niki Scevak.   “People call it a brain drain, I call it a brain boomerang, where they’re flying over but they’re coming back a few years later and bringing all that skills and knowledge they’ve had in Silicon Valley back to Australia.”   Google has also launched a video with the book, which celebrates Australian innovation so far and suggests learning to code is a fundamental step for any aspiring inventor today.   Check out the Australian inventions such as boomerangs, notepads, utes, wine casks and Wi-Fi in the video below.   {qtube vid:=THEpcW7vFkc}

Getting infrastructure right: How can startups build a scalable operational model?

3:54AM | Friday, 28 March

Growth can be a mixed blessing for startups. It’s great to have new customers knocking at the door, but only if your cost base and cash flow are up to the task of serving them. Otherwise, growth could actually be your downfall.   It’s therefore important for startups to build a scalable business model – i.e. where revenue growth can outstrip growth in costs.   Scalability is partly a question of what products you sell. But it’s also about having a scalable operational model: your sales, IT and workplace arrangements must permit growth with minimal upfront costs and delays. And, preferably, not require you to work 24/7. At Regus we’ve seen hundreds of our SME customers scale up their businesses in Australia, and here are a few of the lessons we’ve learnt from them over the years.   Sales   Sales arrangements that rely on the contacts and skills of a key individual can only take you so far. Instead, you need to develop sales processes as well as talent. For example,   Use CRM software to track sales activity and share information with colleagues.   Make sure no information goes to waste. Social media, website analytics and sales data are invaluable for tracking interest and conversion rates, helping you target marketing activity more efficiently.   Develop training materials to help new sales staff generate revenues more quickly.   Think differently. For example, Australian software giant Atlassian used transparent pricing on its website – not something usually associated with enterprise software – to drive sales, rather than employing a large salesforce.   IT   The major difference between starting a business now and doing it a couple of decades ago is technology. Cloud applications, open source software and ready-made e-commerce templates have facilitated both starting up and scaling up.   There’s no need to invest in expensive software like CRM packages from day one – there are plenty of free or low-cost options available. But you do need to think about IT solutions from day one – don’t just launch a business and then try to patch on IT solutions afterwards.   Workplace   Traditional office arrangements and leases often lock small businesses into too-small premises and prevent them from expanding when they need to.   In contrast, flexible workplace arrangements provide scalability. They allow businesses to take on new space without upfront capital investment; they also allow them the flexibility to grow rapidly, or if growth falters, to contract.   In addition, the global network of a flexible workplace provider like Regus enables businesses to open virtual or physical offices wherever they see an opportunity for growth – without upfront investment or a fixed lease required.   HR   Finally, a scalable business must be able to hire exactly the talent it needs as soon as it needs it. But finding the right personality is just as important as finding the right skills. As small businesses rapidly grow, being able to maintain that company culture is essential to finding success. When Regus helped Google set up it’s first Portuguese office in one of our Lisbon centres, we sourced a foosball table and helped identify the right local providers to provide the renowned Google catering for their employees. In the US, Netflix allow employees to choose their own holidays, with no cap on how much leave people take.   These flexible HR practices, such as letting staff choose where they work can help attract the right talent for your organisation- while keeping them engaged.

Do you remember your first time? Twitter launches tool to help find your first tweet

3:45AM | Friday, 21 March

In celebration of its 8th birthday Twitter has launched FirstTweet, a tool that helps users find the very first message they sent.   We take a look at what some of Australia’s top startup folk had to say in their first tweet.   First off, here’s mine, clearly not aware of the location irrelevance of social media:   Anyone here from Perth, Australia?— Bronwen Clune (@bronwen) February 3, 2007   And StartupSmart journalist Rose Powell took the opportunity to be excited about being on Twitter:   @kirifarrell I know, I feel like this weekend went so fast. And looook, I'm on Twitter!— Rose Powell (@rosepowell) May 13, 2011   The Fetch’s Kate Kendall’s first tweet was in that awkward third person thing we used to do:   is being a night owl— Kate Kendall (@KateKendall) June 15, 2008   Atlassian cofounder Mike Cannon-Brookes tweeted about tweeting:   is making his first twitter post - and feels like a twit - albeit a connected one apparently!— Mike Cannon-Brookes (@mcannonbrookes) January 7, 2008   Muru-D’s Mick Liubinskas wanted us to know where he was:   Working from home in Woolloomooloo— Mick Liubinskas (@liubinskas) September 25, 2006   Canva Founder Melanie Perkins went for something fairly safe and vanilla:   Enjoying San Fran and all the exciting tech events it has to offer.— Melanie Perkins (@MelanieCanva) June 5, 2011   Twitter has asked users share their initial messages using #FirstTweet. 

Nominations open for EY’s Entrepreneur of the Year awards

2:38AM | Wednesday, 26 February

Ernst & Young has opened nominations for its annual Entrepreneur of the Year awards, with the Australian winner going on to represent the country at the global awards in Monte Carlo.   “Entrepreneurs have an extraordinary passion, self-belief and drive that keeps them going when others might give up,” Oceania awards leader Bryan Zekulich says in a statement.   “Because of this, they play a crucial role in helping support and diversify the Australian economy – creating new jobs, fuelling growth and driving innovation.”   Bert Bardoel, EY Oceania leader for strategic growth markets, told StartupSmart a good entrepreneur was a person who innovates in an industry.   “That could be either innovate the business model for that industry or the product or services on offer in that industry,” he says.   “Through that they create a better value proposition which is the basis of their growth.”   Zekulich says Australia is home to world-class entrepreneurial talent.   Last year’s national winner was Andrew Bassat, co-founder and chief executive of online job advertiser and education services provider Seek.   Other winners have included the brains behind companies such as internet services provider iiNet, online car classifieds firm Carsales.com.au, and tech company Atlassian.   Nominees are assessed on six core criteria by a panel of independent judges, including previous Entrepreneur of the Year award winners and other successful Australian business leaders: entrepreneurial spirit, innovation, personal integrity and influence, financial performance, strategic direction, and national and global impact.   Nominations close March 14, with regional awards ceremonies held in July and August, with the national awards announced on November 20.   More information can be found here.

Friends in high places: The rich listers investing in Australian start-ups

10:50PM | Monday, 7 October

It takes many things to get a business off the ground.   It takes a flash of insight, plenty of drive, and good advice. It takes savvy staff and helpful networks. It also takes something few start-up founders have to begin with: money.   Australia’s venture capital industry is growing and maturing. But the funds to finance start-ups don’t just come from high finance. Increasingly, a generation of Australian entrepreneurs who made or grew their fortunes over the past decade are investing their money back into start-ups, either directly or through niche venture-capital firms. Through this, they’re helping build a start-up ecosystem able to support new, growing start-ups, using the spoils of yesterday’s success stories.   Here are just a few rich listers putting some of their money back where it came from.   James Packer   In many ways the trailblazer in this regard was James Packer, who made a fortune investing in companies like SEEK and Carsales.com.au a decade ago.   While by no means a successful start-up leader (Packer inherited most of his money), he has nonetheless grown his fortune through savvy start-up investing, a passion that doesn’t appear to have ebbed with time.   Packer bought a 25% stake in SEEK for $33 million in 2003. When the business listed, Packer’s stake was worth $150 million. By the time he sold out, he had made $440 million from his investment.   He was also an early investor in Carsales.com.au, putting $100 million for a stake in the company that sold for $500 million a few years later.   Those were some of the best dot.com investments ever made in Australia, and, perhaps spurred by his early success, Packer has continued to invest in start-ups with potential to disrupt their industries.   One of his most recent investments was last month in taxi app goCatch, which could radically disrupt Australia’s cab companies and Australia’s Cabcharge monopoly by allowing passengers to book a taxi by directly liaising with the driver.   Paul Bassat   Packer is joined in his goCatch investment by Paul Bassat, a cofounder of SEEK who’s since left running the business to his brother while he focuses on investing.   Bassat is the cofounder and joint chairman of Square Peg Capital, a newly minted venture capital firm that’s already put money into a heap of start-ups like beauty-box business Bella Box and design start-up Canva.   “First and foremost, we want to back fantastic people who are smart, passionate and high integrity,” Bassat told StartupSmart when Square Peg was formed a few months ago.   “For businesses that have been around for a few years and have a bit more traction, the question of if they’re solving a problem has been partially answered. If it’s an early stage business without a track record, we want to know exactly what the problem you’re trying to solve is if you’re actually solving it, in a unique and differentiated way.”   Bassat is also a mentor at Startmate, which offers mentoring and seed financing to online and software start-ups.   Mike Cannon-Brookes and Scott Farquhar   Bassat isn’t the only rich lister to volunteer his time mentoring young companies.   Scott Farquhar and Mike Cannon-Brookes, who cofounded Atlassian and for two years have topped the BRW Young Rich list, are also mentors at Startmate.   Last year, Cannon-Brookes also invested in Shoes of Prey, which gives shoe lovers the chance to customise every part of their shoes online and have a unique pair created and shipped.   Both Atlassian cofounders put money earlier this year into Ninja Blocks, a Sydney start-up that builds devices that let people link their devices to physical things in their homes (‘SMS me when the washing is done’, for example).   This story first appeared on SmartCompany.

Employee share scheme tax systems set for an update

6:10PM | Wednesday, 5 June

The federal government is set to consult with Australian industry over the tax treatment of employee share option schemes, which start-ups say needs to be overhauled to promote growth.   The government is aware the current tax situation around employee shares creates difficulties for some sectors of the economy, especially start-ups, and will consult with industry on the impact of tax and administration requirements for the schemes, StartupSmart has been told.   Revamping the tax treatment of employee share option programs is fundamental to growing the start-up sector in Australia, says Malcolm Thornton, investment director at venture capital fund Starfish Ventures.   “It’s a key currency that people employ to keep highly talented people on board while conserving cash,” says Thornton.   The start-up sector can expect consultations with the relevant federal government departments in the future, with sources telling StartupSmart the government is aware the current tax situation around employee shares creates difficulties for some sectors of the economy, especially start-ups.   Employee share option programs enable start-ups to attract and retain leading talent to their company by offering staff a proportion of the future company on top of the (often low) wages they are able to pay.   The complexity of the current system has held Australian start-ups back from embracing the system. A key drawback is that employees can become liable for significant amounts of tax based on the asset’s value, even if it’s not currently earning any capital.   Thornton says an update of taxation rules around the program is “imperative” for the start-up sector.   “It’s completely complicated and convoluted in Australia, compared to when our companies are US-based, and we can just take a program off the shelf and every lawyer in San Francisco knows how to manage the process.”   Thornton says the current system fails to grasp the variety of companies that would benefit from the implementation of such schemes.   “Start-ups and high growth companies have very different characteristics to large, mature multi-decade companies,” he says.   “One of the key elements to appreciate is that there is little to no value in the options until the company has grown and either lists or is acquired.”   Alan Downie, chief executive and co-founder of BugHerd, a visual bug tracker for web developers, has recently implemented an employee share scheme for one of his six staff and is working on setting the scheme up for another employee.   “It’s a critical issue for start-ups,” says Downie. “As a start-up you don’t have a lot of cash so it’s the way to keep talent. If you have to compete with guys like Telstra and Atlassian for developers, all you’ve really got is the growing company equity.”   Downie and his co-founder Matt Milosavljevic spent 12 months working out how to implement the scheme for their first hire, a developer.   “It was a very long and tedious and expensive process,” he says. “There is no standard way to do it and that’s the problem.”   “When our developer started with us, he was on a third of what he could make as a developer. But he was so engaged and he got we didn’t have the money, so it was really important to him to get a piece of the company.”   Downie says he spoke to four accountants, a few lawyers and several entrepreneurs about how to implement an employee share scheme, and they all had different answers.   “It’s still not ideal for the employee, as they still have a bit of uncertainty. From the employer’s point of view, you want to have solid understanding of what the government wants, rather than jumping through hurdles.”   He says the Australian Tax Office hasn’t spoken to any of the parties involved, so it’s still untested.   According to a report by the ABC, the employee share options scheme will be explored in the next update to the National Digital Economy Strategy.

‘Just outraged at the insanity of Julia Gillard’: Tech start-ups hit back in 457 visa row

3:39AM | Friday, 15 March

Key players in the Australian tech start-up scene have lashed out at Prime Minister Julia Gillard’s suggestion the 457 visa program is being abused by the IT industry.

Blackbird Ventures rolls out $30 million start-up fund

3:09PM | Thursday, 14 March

Blackbird Ventures is determined to offer Australian start-ups much-needed Series A funding rounds, after announcing the formation and first close of its $30 million venture capital fund.

Pollenizer celebrates fifth birthday: Five lessons from the start-up pioneer

3:34AM | Monday, 4 March

Mick Liubinskas has highlighted the trials and tribulations of Pollenizer, including how it turned Spreets into a $40 million company, as the online venture builder celebrates its fifth birthday.

Star-studded event series helps entrepreneurs face the Startup Grind

2:40AM | Wednesday, 27 February

The US-founded Startup Grind event series continues to grow in Australia, with the Sydney and Melbourne chapters set to host the founders of Atlassian and Zendesk respectively.

Independent eftpos provider Tyro surpasses $3.5 billion in transactions

3:27AM | Monday, 11 March

Independent eftpos provider Tyro Payments has vowed to step up its fight against the big banks, after revealing it surpassed $3.5 billion in credit and debit card transactions in 2012.

Shoes of Prey joins David Jones to launch in-store sales booths

3:25AM | Monday, 11 March

Local online retailer Shoes of Prey has taken a step towards the bricks-and-mortar world, teaming up with department store giant David Jones as the two companies explore new ways to boost sales.

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