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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.

Atlassian rolls out second ‘Hack House’ for budding techies

3:05AM | Friday, 15 March

The first class of Atlassian Hack House graduates have highlighted their achievements since participating in the program, after the second class began work yesterday.

Why VC firms now take start-ups seriously

12:33AM | Tuesday, 4 December

It appears that the ‘lean’ spirit of modern entrepreneurship has finally inspired the Australian venture capital industry to invest in early stage start-ups – a trend is set to increase due to the accelerator boom.

Gillard urged to help create 'Silicon Beach' for Australian tech businesses

3:53AM | Tuesday, 12 March

Government regulations need to change if Australia is to create a 'Silicon Beach' that will compete with the world's leading digital economies, a gathering of tech giants and start-ups has told Prime Minister Julia Gillard.

2012 BRW Young Rich List – eight standouts from a tech dominated year

9:05AM | Thursday, 27 September

The 2012 BRW Young Rich List has a strong start-up and tech flavor, with Atlassian founders Mike Cannon-Brookes and Scott Farquhar heading the rankings.

Start-ups warned over staff equity tax drawback

8:20AM | Wednesday, 29 August

An expert has issued some advice to start-ups who plan to offer stock options to employees, after players in the technology industry highlighted the drawbacks of Employee Share Option Plans.

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