Amazon, the e-commerce internet giant, is launching its first smartphone. Media attention is focusing on whether the phone’s features, such as its rumoured 3D interface, are really as cool as portrayed in its trailer video which aims to wow early users. But by entering into the fray of an already hyper-competitive mobile phone industry, Amazon is doing a lot more than adding another gee-whizz feature to a smartphone. This launch tells us a great deal about CEO Jeff Bezos' strategy for his company – and what it might mean for the future of competition and innovation in our increasingly digital world. First, let’s ask the obvious questions. Why is Amazon, known for internet retailing and related software development, entering a hardware market where leading incumbents like Nokia have already failed? After all, what does Amazon know about the telecoms business? Can it succeed where Google has failed? We have seen Google, which has virtually limitless financial resources, enter the mobile phone handset industry by purchasing Motorola Mobile in 2012, only to take a heavy loss after selling it on less than two years later. Even incumbent firms who had a very strong set of phone-making capabilities have taken tough hits in this turbulent market – witness Nokia’s dramatic plunge, which led to a sale of its mobile phone business to Microsoft. Platform Number 1 You cannot understand Amazon’s move without situating it in the broader context of platform competition. Platforms, these fundamental technologies such as Google search, Facebook and the Apple iPhone, are the building blocks of our digital economy. They act as a foundation on top of which thousands of innovators worldwide develop complementary products and services and facilitate transactions between increasingly larger networks of users, buyers and sellers. Platform competition is the name of the game in hi-tech industries today. The top-valued digital companies in the world (Amazon, Apple, Google, Facebook) are all aggressively pursuing platform strategies. App developers and other producers of complementary services or products provide the armies that sustain the vibrancy and competitiveness of these platforms by adding their products to them. The more users a platform has, the more these innovators will be attracted to developing for them. The more complements available, the more valuable the platform becomes to users. It is these virtuous cycles – positive feedback loops, or “network effects” – that fuel the growth of platforms and transform them into formidable engines of growth for the companies and developers associated with them. The smartphone is a crucial digital platform. Achieving platform leader status in this space is a competitive position all the hi-tech giants are fighting for. Google has its ubiquitous Android operating system, Apple has shaped the whole market with the iPhone, Microsoft has purchased Nokia’s phone business, and Facebook has invested $19 billion in WhatsApp among other acquisitions for its growing platform. In fact, I suppose I should have rephrased my question a little earlier – why hasn’t Amazon already staked its claim to lead this digital space after having launched its Kindle Fire tablet and Fire TV set-top box? Opening the door Simply put, the smartphone is the main gateway to the internet today, and, in the hand of billions of users throughout the world, is the physical embodiment of a conduit that links those users to each other and to the whole content of the internet. There are almost 7 billion mobile phones in the world (and only 1 billion bank accounts). And the trend is staggering. Mobile payment transaction value surpassed $235 billion worldwide in 2013, and is growing at 40% a year, with the share of mobile transactions already reaching 20% of all worldwide transactions. So, while risky, Amazon’s entry into the smartphone business is a classic play: a platform leader entering an adjacent platform market that is also complementary to its primary business. All platform leaders aim to stimulate complementary innovation (think how video game console makers aim to stimulate the provision of videogames), and they often attempt not to compete too much with their complementors in order to preserve innovation incentives. But at some point all platform leaders start to enter these complementary markets themselves. Google has done it through Android, Apple has done it with iTunes, Facebook has done it with Facebook Home. It happens when platform leaders feel threatened by competition in their core market, or when they want to steer demand, competition and innovation in a particular direction. The idea is to use their own user base as well as their own content and technologies to create an unassailable bundle, one that is difficult for external competitors to break into. Think of it as creating barriers to entry, while expanding the core market. The reasoning behind entering a complementary market is well known, and related to the benefits of bundling. In the case of hi-tech platforms, the benefits are even stronger. By optimising and controlling the interface between a platform and complements, a company can have a structuring impact on the evolution of the platform ecosystem – and that means on all the innovators around the world that invest and make efforts to develop complementary products and services. In your hands So, these are the reasons why Amazon is entering the mobile phone market, despite the difficulties inherent in taking on an über-competitive market. This strategic choice makes a lot of sense. As to whether Amazon has a fighting chance of succeeding, there are reasons to be optimistic. Beyond its deep financial resources, Amazon has learned something of what it takes in the development and successful commercialisation of various versions of the Kindle. That has given it expertise in hardware, on top of its software background, and should prove a useful training ground to allow it to launch other consumer products such as the smartphone. But the ultimate judge will be you, gentle readers. Will you be willing to swap your favourite mobile phone for a yet another new kid on the block, even if it does let you browse Amazon’s ever-growing catalogue in splendid 3D? Annabelle Gawer is Associate Professor in Strategy and Innovation at Imperial College Business School. This story was originally published at The Conversation. Read the
According to SEEK co-founder and Square Peg chief executive Paul Bassat, payments are the “holy grail of innovation”. He made the comment at The Australian Financial Review and Macquarie Future Forum on Tuesday, where some of Australia’s leading entrepreneurs declared the industry ripe for disruption. Despite banks in Australia being protected by complicated regulations, entrepreneurs are placing the industry under increasing pressure. Adding to banking woes are the likes of Google, Amazon, Apple and Facebook eyeing entry to the payments market. Here are the top four Australian disruptive financial services startups to watch: 1. Society One Society One is Australia's leading peer-to-peer lending platform, with a $5 million investment from Westpac’s Reinventure Group, a $50 million fund set up to back early stage startups. It’s rumored to be on the investment radar of both James Packer and Lachlan Murdoch. Borrowers list loan requirements and investors decide which loans they choose, how much to invest in each loan, and the rate at which you want to earn their interest. Its personal loan rate for a prime borrower is 9.80% pa, 5% lower than the average rate from the major banks. 2. Tyro Payments Tyro provides credit, debit and EFTPOS card acquiring services and does not take money on deposit. It was founded in 2003 by ex-Cisco employees Peter Haig, Andrew Rothwell and Paul Wood as MoneySwitch Ltd. Eleven-year-old Tyro is in its second year of profitable business operations. Disrupting the Australian banking industry was never going to be easy, and it took the team over $30 million in capital and a founder break-up to get there. At launch it was the first new entrant into the eftpos space in 15 years. 3. Pin Payments Pin Payments is an Australian-based startup operating from Melbourne and Perth that offers onsite payments and a developer API without the need for a merchant account. It received a grant from Commercialisation Australia and partnered with some of the Australian banks to make its offering possible. Both overseas-based Braintree and Stripe operate in the same space, but Pin has a solid local focus. Getting access to a payment system has previously been a juggle for companies, especially early stage ones. Pin Payments is aimed at developers who can easily integrate its service through their API. 4. CoinJar CoinJar, a Melbourne-based bitcoin exchange and payment system, which has raised $500,000 in seed funding from a range of individual investors and the Blackbird Ventures seed fund. Launched in February by Asher Tan and Ryan Zhou, CoinJar has over 10,000 active users in Australia. The company charges a low single-digit percentage fee for each transaction. CoinJar was the first company to get its Bitcoin app re-listed in the iPhone App Store, after Apple revised its app guidelines to include virtual currency apps that it previously excluded.
News that Google representatives are in talks with Richard Branson’s Virgin Galactic are seen as further evidence the web company is looking to set up a series of low-orbit satellites to help connect more people to the internet. Reports earlier this month said Google was planning to spend more than US$1 billion on a network of 180 satellites to provide internet access from space. Then Google revealed last week that it paid US$500 million for the satellite imaging company Skybox. It says the deal will give it access to better imaging technology for Google Maps, but it could also see it launch a new satellite network for delivering internet access. Google is already experimenting with new ways to provide internet access in remote locations through its Project Loon, which began in New Zealand last year and uses antenna held aloft in balloons. Access to digital networks and information are playing an increasingly important role as we move towards a more networked society. The global population today is approximately 7.1 billion, yet only 2.4 billion people are connected to the internet. Over the next six years this is expected to double, reaching 5 billion in 2020. It’s not just about the web Significantly, internet users will not be the key source of growth. There is increasing demand coming from a range of devices, systems and infrastructure being connected to the internet – home security systems, personal health monitors, cars, trams, trains, smart meters for power, gas and water, traffic lights and offices, as well as public spaces and buildings. As the internet is further industrialised the big technology companies are tapping into the growth in networked devices – usually referred to as the Internet of Things. Currently, 16 billion devices such as smart phones, tablets, security systems and smart meters have a network connection. This will grow exponentially towards 50 billion in 2020. There is a change in the focus of connectivity too - from individual people to houses, towns and cities. Large information and communication technology (ICT) companies such as Google are driving this increase in global connectivity, as their biggest market growth opportunity lies in the areas of population that do not have internet access. The World Economic Forum – which monitors the digital divide through its annual Networked Readiness Index – also sees the urgency in making the internet accessible to remote communities from the developing world. They are the people likely to benefit from substantial improvements in the quality of life through access to ICT. Other players trying to connect the world Google is not alone in this race. Facebook’s founder Mark Zuckerberg has also announced similar satellite plans to connect the unconnected, through the internet.org project. There have been past attempts to increase internet connectivity via satellites, such as the Iridium Project by Motorolla, now Iridium Communications. Iridium provides satellite phone connectivity across the globe via a constellation of 66 satellites. The service is limited by very low data rates - approximately 10kpbs - with costs of around A$1 to A$2 per minute of access. Well ahead of its time, the Iridium project faced significant challenges with a range of technological issues as well as failing to effectively monetise the idea. There were serious issues with the inter-satellite links needed to maintain the network, its handsets were bulky and its internet access plans were expensive. It remains largely an emergency communication tool and for infrequent access such as asset tracking in maritime/defence applications. Iridium plans to launch a new satellite service, Iridium NEXT, delivering peak download rates of 1.5Mbs by 2017. We will have to wait to see if the second incarnation of Iridium can increase its subscriber base. There have also been several other commercially yet-to-be-proven proposals that looked at high altitude long operation platforms making use of aircrafts and balloons to deliver similar broadband services. These platforms use the millimetre-wave (30-300 gigahertz range) frequency bands (currently targeting around 28-33 gigahertz range) to deliver broadband wireless services to locations theoretically wherever access is required. But none have yet to offer a product to market. Current satellite constellations are small (such as the 66 in Iridium) with each satellite often covering an area in excess of 1000km2. With limited bandwidth (often less than 100 megahertz available) to share between thousands of subscribers, individual subscribers get very low internet speeds. Looking for growth Yet new services are emerging. The Federal Communications Commission in the United States has approved Globalstar’s request to use a frequency band adjacent to the WiFi frequency window to offer satellite based WiFi coverage. Additionally, operators such as Intelsat and Inmarsat provide satellite internet connectivity across the globe. The growth in connected people and things presents an expanding market opportunity. Google’s business relies on its users delivering information upon which it can target advertising. It appears to be pre-emptively meeting the projected demand in order to increase its services. Satellite technology has matured and is now able to provide increased access and throughput to users and devices. Google’s approach is similar to that deployed by mobile phone operators. By increasing the number of satellites, individual beams can cover smaller areas, approximately 100-200km2 thus sharing scarce frequency spectrum with fewer customers, increasing internet access rates. Competition for Australia’s NBN In Australia, NBN Co offers broadband plans using existing satellites to about 3% of Australian population scattered around the massive landmass in areas with lower population density. The company has been designing its own satellites, which will be launched soon to increase access to broadband in remote Australia. But the project is facing major obstacles in terms of securing the highly regulated satellite launch rights. It is reported that NBN is in negotiation to secure a launch orbit spot. Google is not confining its vision to satellites or balloons. Google Fiber also plans to offer fibre connections with greatly improved speeds (compared to that offered by NBN) in selected USA cities directly competing with traditional telcos such as AT&T. This is driving innovation in the sector, with these new technologies providing possible options for the NBN to deliver broadband to cheaper and faster to remote Australian regions where wireline access to broadband may be difficult. Google’s satellite play highlights its serious intention to move into the new converging world of computing and communications, driving further competition and changes in the communications sector in the near future. Thas Ampalavanapillai Nirmalathas is currently the Director of Melbourne Accelerator Programs (MAP) which supports entrepreneurial activities of the University Community through business acceleration models. He is also an Associate Director for the Institute for the Broadband-Enabled Society. This story was originally published at The Conversation. Read the original article.
While many apps want users to spend all their time on their phone, social app Bridge is encouraging people to put down their phones and meet new people. Based in Sydney and co-founded by brothers Paul and Michael Lutkajtis, Bridge aims to bring like-minded people together in real life. Using an app available for both iOS and Android, users link their Facebook accounts to Bridge and then are able to connect with people by creating their own ‘bridge’ which can then be found on the apps map. Say you’re looking for someone to go for a hike with, the app lets you create a ‘bridge’, then other users looking for a partner can connect and you can organise a hike together. Co-founder Paul Lutkajtis says he and Michael came up with the idea because they were both looking to meet people, because many of Michael’s friends were doing shift work, and Paul had just moved back to Australia after living in the United States for a few years. “I was looking to rebuild my social circle,” Paul Lutkajtis says. “It wasn’t just people who shared similar interest, but also had a similar schedule.” Since launching in April, Bridge has around 8000 users in Australia and the United States and has created close to 5000 ‘bridges’. “We’ve seen quite a few revolving around fitness,” Lutkajtis says. “Tennis partners, workout partners, running buddies, but there’s the business side of things as well. “People that want to meet people who work in a similar industry and talk shop over a drink or two. “It’s very broad, which is great as well, because it allows people to see that wide spectrum of things out there. “We think it’s the missing link in the sea of dating and social apps.” Development began on Bridge 18 months ago, and so far it’s been self-funded, in about four weeks’ time Lutkajtis says they’ll be running a kick-starter to fund “the next stage of growth” and build awareness. He says the company will likely look at developing corporate partners in order to monetize the app, but for the time being they’re focused on gaining traction. “Grow, grow, grow,” he says of the startup’s plans moving forward. “It’s all about building the user base.”
Most startups don’t often admit to going after the big guns, but not Melbourne-based online marketplace startup Locl, which is looking to offer an alternative to eBay and Gumtree for local sales. The Locl app which is available on iPhone, and will eventually be available on Android, launched four weeks ago and enables users to quickly list items for sale by taking a picture, setting a price and uploading a listing with a smartphone. Buyers can then browse listings in the app based on their proximity or a number of categories and set alerts for specific types of new listings. A diverse range of items are listed for sale on the app at the moment, from smaller items like games, clothes and shoes to larger items like cars, motorbikes and even a Sydney apartment. There are no seller fees, no auction time limits and buyers and sellers can chat anonymously in the app and buyers can review sellers they’ve brought from. The app is also integrated with Facebook and Pinterest, allowing users to share listings. Locl co-founder Arie Spivak, who is an eBay PowerSeller, says the success of Locl doesn’t necessarily hinge on the demise of Gumtree or eBay, rather the app is servicing what he believes is a gap in the market. “I’ve been very aware of eBay fees, which have become astronomical,” he says. “Auctions were too slow. There’s a long wait for shipping from overseas. That whole model was becoming a little bit stale. “Gumtree has always been a bit of a wild west, you don’t know who you’re dealing with, there’s no reviews or ratings for buyers and sellers and no context with history. “We saw a huge opportunity there and got together about a year ago, and set out to create a mobile app that would be nothing short of the easiest way to buy and sell at a hyper local level.” Since launch, Spivak says Locl has had “thousands of downloads” each week, 70% of which are in Australia and 30% from the rest of the world. Spivak and fellow co-founder Nir Davidson funded the development of the app themselves around a year ago, but since they’ve taken seed funding based on a $1 million valuation of the company. Spivak says that’s all the information about investors he’s able to provide. No plans have been made to monetise the service yet, but he says there’s plenty of potential. “We’re really committed to achieving a critical mass, so as soon as we feel the time is right there’s a lot of opportunity in terms of advertising, in terms of chain stores,” he says.
Pearcey Award winner Guy King warns Singapore’s “kicking our arse” in the race to become Asia’s tech hub6:27AM | Thursday, 5 June
Hefty tax concessions are the only way to keep world-beating startups leaving Australian shores, according to RetailMeNot co-founder turned angel investor Guy King. He adds that Singapore is “kicking our arse” in the battle to become Asia’s tech hub and to secure the initial public offerings that would come with it. Last night, King and fellow Retailmenot co-founder Bevan Clark were named the 2014 Victorian Pearcey Entrepreneur Award winners at the Victorian iAwards. The award is aimed at encouraging and rewarding innovative talent within ICT and is given to people “who during their career have taken a risk, made a difference and are an inspiration”. In 2010 King and Clark sold their coupon trading website RetailMeNot for $90 million, they’re co-the founders of LIFX and mentors for Melbourne-based accelerator Angelcube. “If the next Facebook is started by Australians, it will end up floating in the US and none of those jobs or taxes will flow back into the country,’’ he says. “Increasing the amount of venture capital available in the country would go a long way to helping that, and the only practical way I can think of doing that is to provide hefty tax concessions. “I’d love to see a concession for early stage investing, but I doubt we’ll ever see that in this country because it’s a political issue about giving rich people tax breaks and stuff like that. “Which is a real shame because it is risky to invest in startups.” That said, King noted that pool of venture capital could be about to expand naturally. “I almost feel like there’s a bit of a quiet period before we start to see some new runs on the board come through relatively soon and those entrepreneurs will then feed back into the system,” he says. “For example, Atlassian are probably on the cusp of an IPO and it’s going to create a whole new generation of entrepreneurs out there.” King lamented the government’s general ambivalence when it came to nurturing the startup scene. “It’s hard to criticise the government’s approach, it’s been fairly non-committal either way, which is a problem I think in and of itself. “Even things like the ESOPs (employee share options scheme), they’re a nightmare as well – that’s really the engine for startups in the Valley. “That’s how you attract the best people and motivate those people.” King and Clark founded RetailMeNot in 2006, and while they believe the government can do more, they say the Australian startup system is generally much healthier than it was then. “A lot has changed in the last six or seven years, since RetailMeNot; I don’t think the community existed then,’’ Clark says. King agrees. “It didn’t feel like we had mentors we could turn to or a community,’’ he says. “It probably was there but a lot smaller and fragmented that what exists now. “I think generally there’s a much greater awareness of the whole entrepreneurial thing.” Clark says the changes aren’t all good, noting how the recently scrapped Commercialisation Australia helped them in their early days. “It’s a huge thing and it’s going to have an impact, but I think entrepreneurs in this country will push on through that,’’ he says.
The co-founder of Melbourne-based startup HealthKit, Alison Hardacre, was surprised and confused to learn Apple is using its name for one of iOS 8’s features. Even the capital K. In the early hours of Tuesday morning, Hardacre woke to the startling news. . @HealthKit was around a long time before iOS 8... #justsaying — Healthy Startups (@healthystartups) June 3, 2014 “I just happened to wake up at 4.15am and couldn’t get back to sleep, so like any good tech entrepreneur I decided I’d check my emails on my iPhone,’’ Hardacre says. “I found an email from a friend asking, ‘Has Apple just trampled on your name?’” Surprised, she jumped out of bed and checked for herself and found numerous reports about HealthKit, Apple’s new native health tracking platform. Apple’s HealthKit is designed to help users keep track of all their health and fitness data, effectively collating health data from the many health apps available by allowing them to share data. The Melbourne-based HealthKit is a global health administration platform which enables patients to find practitioners online and enables users to track, manage and share their health records. “Every startup worries that Google, Apple or Facebook will enter their market, but nobody thinks they’ll take their name when they do it,’’ Hardacre says. @healthystartups @HealthKit The new cyber squatting. The big don't have to care! #notfairapple — Tim Offor (@timoffor) June 3, 2014 Following the announcement her company’s name was the fifth most popular trending term on Twitter yesterday and traffic on its website www.healthkit.com, which it has owned since 2012, was 10 times more than usual, according to Google Analytics. “We’ve been growing at a rate of 7% a week, which is really a fantastic rate of growth, it’s what the founders of Airbnb say you should be aiming for,’’ Hardacre says. “We’ve been over in San Francisco at health tech conferences; we’re not like some company hidden in some backwater. We’ve grown and we’ve followed a particular strategy, we’ve looked at moving the company to Silicon Valley. “Part of me thinks it’s the cut and thrust of the business, but it’s actually not. “It made me realise that this could happen to every startup. “I kind of felt a little bit let down – didn’t they spend five seconds to visit HealthKit.com?” Hardacre says HealthKit had already filed a trademark for HealthKit in Australia. StartupSmart contacted Apple for comment, but has yet to receive a response. @tim_cook @HealthKit I know you're new to this whole Ruthless-Like-Steve-Jobs game, but my good man, you need to learn subtlety! — Daniel Cohen (@CodaAzzurra) June 3, 2014 Executive director of Premier IP Ventures and intellectual property expert Brian Goldberg says the incident serves as a warning to startups to ensure they register their brand name as a trademark. Goldberg says it’s not conclusive at this stage that the brand HealthKit is entirely owned by the Australian startup, nor whether or not Apple will use it as a standalone brand name or in conjunction with its core Apple brand. “So at this stage the Australian startup may have some brand rights in Australia but it’s not definitive as to the extent,’’ he says. “It is important to file your brand as a trademark. This provides certainty and clear rights for the brand owner. Importantly the rights can then be enforced as well as negotiated." Note: this story has been updated for clarification.
Hardware is hot. It feels as though nearly everyone in the startup community has a secret desire to be a maker, nursing a product that will ‘make a dent in the world’. Although well-trodden, the path from great idea to great product contains more than its fair share of switchbacks, cul-de-sacs and dead ends. Goals that appear to be easily achievable get swamped by a morass of details. Schedules slip, mistakes get made, smooth processes jam up. Everyone who’s made the journey from idea to product agrees: hardware is hard. Drawing on our experience bringing Holiday by MooresCloud to market, this series covers our whole journey, from concept to design, preparation for mass production, compliance testing, manufacturing, and what to do when things break down – because they will break down. With luck, aspiring hardware entrepreneurs can avoid some of our mistakes. Part One: Concept to design Begin with a good idea, then prototype. MooresCloud grew with a from straightforward (if geeky) idea: An inexpensive Linux-based computer driving a string of LEDs, connected via WiFi to the Internet. The first prototype - soldered together across a weekend in August 2012 - looked a lot like a pipe bomb. But it worked well enough to pique the interest of two key talents and soon-to-be co-founders of MooresCloud: hardware genius Kean Maizels, and industrial designer Robert Tiller. Tiller Design - Robert’s firm - presented us with concept drawings for what this ‘Light’ might look like. Kean considered the suitability of the proposals from an electronics perspective, while I weighed the sizzle and usability of their designs. Light by MooresCloud had a clear, sensible design, which obscured a large problem. Always design from a use case. Ask yourself ‘Why?’ We’re creatures of habit. Experience informs our expectations. When you name your product ‘Light’ - and it looks like an arty lamp - quite naturally people expect it turns on and off. Full stop. When we explained how Light was very different from any other lamp, that a smartphone could be used to adjust its colour and pattern, or that Light could tie into Facebook or Twitter, we lost them. Light lay too far outside their expectations. If you need to explain your product design, you’ve made a serious mistake. MooresCloud raised over a quarter million dollars on Kickstarter, but despite that kind of success, we could never articulate what made Light so fantastic to someone who wasn’t already a deep geek. Our design failed to reveal Light’s potential. Had we researched several different form factors, we could have saved ourselves months of frustration. As soon as we redesigned Light, ‘unwrapping’ it into the string of lights we named ‘Holiday’, people responded. We have seen fairy lights all of our lives. We have a deep emotional relationship to them. Holiday brought to life the qualities people already projected onto fairy lights, leveraging an existing expectation. We created a new product out of a widely-held belief. Now to take that design – still on paper – and bring it to life. Design experiences – not products. To be successful, Holiday needed to delight a wide range of users, from the technologically sophisticated to the absolute technophobe. We wanted customers to have a lovely experience without ever reaching for a smartphone. This meant Holiday needed ‘off’ switch. (You’d be astounded at the number of connected products which lack a physical off switch.) Our design resolved into a small ‘controller’ with three buttons – ‘mode’, ‘up’ and ‘down’ – and a seven-metre string of fifty oval, opalescent light globes. Once we had a basic design in place, we tweaked it to fit the use case, adding a metre of string before the first globe, because Holiday is frequently strung up the centre of a Christmas tree, and shaping the controller so it can be operated with one hand - even strung as an bauble. The buttons give a reassuring audible click. A few small changes to the physical design of Holiday made it much more fun to use. A great designer like Robert Tiller can make a product beautiful, but MooresCloud learned that design is always the handmaiden to utility. Every great product has a great experience within it. Let the design amplify that experience. Next week: moving from design to manufacture. Mark Pesce is a co-founder of MooresCloud. His website is at www.markpesce.com. Images copyright Mark Pesce.
Many startups think about building and testing their product, their marketing and their sales strategies in Australia and then taking their product into the much larger markets in Asia, Europe and the United States. But what happens when your export plans are interrupted by a large, well-funded competitor entering the Australian market? That is exactly what happened to Marketing4Restaurants.com, a company with a team of seven (and growing) that provides restaurants with online tools to find new customers and turn them into repeat customers. One of our products is an online booking feature which has been growing at around 8% per month and on a good day does 6% of all online bookings in Australia. In December we discovered that leading European online booking company Restalo had raised $10 million for the express purpose of entering the Australian market – that is a significant war chest. (Although we have seen others spend more trying to build market share in Australia and still not get cash flow positive.) They were probably focused on the largest online booking company in the world, Open Table, and seeing that they weren’t in Australia, they may have seen an opportunity. We sat down and came up with a plan to address their entry into our market. We came up with the following action plan: Focus on what we do well. We focused on our competitive advantages – our bookings product is offered free and we never share a restaurant’s customers’ details. This is very different to our competitors and we ensured our marketing clearly got that message across. Educate our team. We made sure that everyone in the team knew about Restalo, what they offered and why we thought we were a better choice for our customers. This meant that every time it came up in a conversation with a customer, our team had all of the answers. Educate our market. Facebook and blog articles generated a lot of very targeted traffic, and provided us a very cost-effective way to get the message out to our prospects. Fight for information. We spoke to their customers, we searched to see who they were hiring and we talked to other companies in the industry, so we had a clear idea about what they were doing and what their strategy was. We learnt that they had 130 employees and we viewed that as positive for us. We are nimble and we are often a little cheeky in our marketing and being a small company makes that a lot easier. Home field advantage. Entering a new market means understanding their culture and language and Restalo had some issues with website and text. This highlighted to us the difficulty of entering non-English-speaking countries. Don’t panic! We knew our market and the largest player has less than 25% of the market (and decreasing), so it is quite fragmented and in reality another player with a decent share of the market wouldn’t be a particularly bad thing, because it meant that no one would have a dominant position. We made sure that everyone was kept up to date with developments. Luckily, we didn’t lose any customers to Restalo and were able to continue growing fast enough that it was placing pressure on our provisioning system, which I guess is a great problem to have. In mid-May, we discovered that Restalo had pulled out of Australia. They realised quickly that they were going to struggle to make their targets, tried a few adjustments to the plan and when they didn’t work, they moved on. They have gone back to Spain with a large part of the money they raised intact, and live to fight another day. We have seen others in this industry spend well over $10 million and still not be able to make it work. For fast growing startups, it is a lot more fun playing offense, but at times we need to devote some time to playing defence and by spending a little time planning out the response. The competition is a great thing for us because it has reinforced our faith in our product, made us think about strategy and what our customers think of us and it has definitely forced us to make our marketing more focused. James Eling is managing director at Marketing 4 Restaurants.
Australian startup Bugcrowd has added social media giant Pinterest to the growing list of companies using its platform. Bugcrowd is a marketplace for security testing websites where companies offer bounties to its network of security researchers for capturing vulnerabilities in their code. The startup’s CTO, Chris Raethke, says they’re thrilled to have Pinterest on board. “It’s amazing, it’s nice to see companies that are consumer focused joining us, the security among tech companies are often reserved to people who are in the developer kind of space,’’ he says. “People are getting to the point now where they reach a certain stage where they’d like to do more security wise, but not a lot of companies are in a position like Facebook to go it alone.” In a statement introducing its bug bounty program, Pinterest security engineer Paul Moreno says the company hopes tapping into Bugcrowd’s network of over 9000 security researchers will allow it to learn more from the security community and respond faster to white hats. “We anticipate a much more efficient disclosure process as a result, and an even stronger and bug-free environment for Pinners,’’ he says. The general public might be more aware of the importance of software security than ever before after the Heartbleed bug and it’s well documented consequences earlier this year. Raethke says while the majority of consumers still don’t understand the full impact of something like Heartbleed, they are more aware of the need for security and as a consequence companies are too. “Big companies are really trying, and that’s what happens when there is such an awareness around security, people are stepping up their game,’’ he says. “But it does take time to get up to that next level.” Bugcrowd raised $1.6 million in seed funding last year and its pool of researchers has steadily grown since beginning in 2012. The company is now based in San Francisco but Raethke says it will always have a presence in Australia both because of patriotism and the need to service the market in this region of the world. “We have some amazingly talented developers and security people in Australia,’’ he says. “It won’t ever be that we never have a presence here, but we’re focusing on the US moment.”
Too often businesses take an unplanned approach to their marketing, either following the crowd or acting on a hunch they decide to "try it and see". But it's the fastest way to blow your marketing budget. True marketing magic happens when the right product or service, with the right message meets the right people, at the right time, on the right marketing platform. Though, to do that, you need a strategy, and you need to test and measure your results. So stop doing what you think you should be doing, what the company down the road is doing or what you heard would be good to try and start strategising the best way to create the marketing magic for your business. Here are five tips to get you started. 1. Qualify your marketing efforts In order to make the most of your marketing campaign and investment you need to: Check there is a need for your products or services Craft messages that are relevant and emotionally engaging with the audience that have the need Ensure the platform or strategy you use will reach a large number of the audience you are targeting By evaluating your marketing efforts, strategies and opportunities on the simple criteria of relevance, target and reach, you can quickly protect your budget from marketing strategies that "everyone is doing" and decide what you will and won’t do. 2. Know the purpose Whatever marketing or advertising you do, there needs to be a clear purpose for it. You need to know what you want someone to do after reading or hearing the specific message you have created, as this will impact the call to action you use. Is it to call you? Go to your website? Sign up to the mailing list? Buy immediately? Once you know what you need them to do, you can then make sure your copy, call to action and incentive all work together to make it happen. 3. Ensure there are real benefits or an opportunity to get a return It sounds obvious, but many marketing campaigns proceed under the guise of "increasing brand awareness" (sponsorship can be an ideal example of this), which is fine if you already have brand awareness, have a large marketing budget to play with or if it's a highly relevant and targeted opportunity, but it's impact is very hard to measure. Whatever you look to invest your marketing dollars in, there needs to be real benefits and return. So, to use the sponsorship example, find a way to proactively reach your audience in a measurable way like sponsoring a prize and getting the business cards of those who enter. 4. Test your message on a smaller campaign Before you embark on a larger marketing or advertising campaign test your headline and message on a smaller one. It could be through a focus group, survey, Facebook advertising campaign, a Google AdWords advertisement or a smaller mail out to test and measure the results. Better to find out a message doesn't work on a small scale with a small investment rather than a large one. 5. Don't confuse persistence with foolishness While you need to allocate a set amount of time to tell if a product, message, platform or strategy is working, you don't want to keep wasting time, money and effort on something that isn't. To prevent this from happening, set a cap or measurement on your efforts. It could be a time limit, or a set amount of mail outs you do in order to test the product or service, message or platform to see if it is getting a response. As entrepreneurs we need to be mindful that sometimes business ideas, products or services and marketing campaigns don't work out. When this is the case, it is important for your business and your bottom line to stop instead of persisting, put it down to education and move on to the next thing. How do you ensure your marketing is strategic?
I started a page for Floragram and shared it through my personal Facebook. Initially, it was family and friends that liked my updates and photos, as well as sharing a few posts. As they engaged with the page, I found their friends started to notice the activity and became aware of Floragram as well. For each of my posts I try to include a photo of a bunch I have made, as visual content grabs more attention in the news feed, particularly when people like a post or comment on it (this activity often comes up in their friend’s news feed as well). The more active I am on the Floragram page then the more likely people will be to see the brand and trust the brand. They can see the style and quality, and the fact that other people are ordering bunches and hopefully think of the brand when they need flowers next. Fortunately, no real capital was required to get the basic idea up and running. My first Facebook post simply told people that I would be delivering flowers on Sunday, and asked them to send me a message if they would like to order a bunch for 'someone special'. I took a photo of the first orders and posted them to the page, along with photos of other bunches I had made up to experiment with wrapping, bunch size and colour mixing and test demand. So far I have also created a basic logo, printed my own gift tags to send with the flowers and have been completing the deliveries myself, which was based on that testing and feedback. Awareness is starting to grow organically through social media and word of mouth – I'm now starting to get page likes and enquiries from people who have seen the posts, seen the flowers delivered or know someone who has ordered them. Currently, I am taking orders through Facebook messages and organising bank transfers – both of which do not incur a fee. To start off small and keep costs down, I only purchase flowers on days that customers have placed an order. As Floragram grows, I would love to buy a minimum number of bunches and start selling them each day. Through Facebook messaging I have really enjoyed building a direct relationship with customers. Because word of mouth has been important for growth, I think it's been crucial to build trust and that one-on-one relationship. I also like to send a follow-up message to confirm once the flowers have been delivered, and the majority of the time I get a message back from the sender saying the recipient loved them. In general, I've been getting a lot of positive feedback about the idea and the bunches, so I think my next step is building awareness. And of course, now that I’ve proved the idea, creating a website is at the top of my list.
Google has predicted advertisements could soon be featured on places such as refrigerators and watches, in a bid to capitalise on the roll-out of ‘smart’ appliances. In a December 2013 letter to the US Securities and Exchange Commission, released earlier this week, the tech giant said it expects to see itself and other companies develop advertising on devices beyond mobile phones. “We expect the definition of ‘mobile’ to continue to evolve as more and more ‘smart’ devices gain traction in the market,” the letter reads. “For example, a few years from now, we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses and watches, to name just a few possibilities,” said the company. In the letter, Google described this approach as “device-agnostic”. This means rather than traditional desktop or tablet marketing campaigns, advertisers’ campaigns will not be tied to a particular device. Michelle Gamble, founder and chief executive of Marketing Angels, told SmartCompany she isn’t shocked by Google’s suggestion that advertising could intrude further into the home. “I think we’re already seeing it,” says Gamble. “It’s the price you pay for having amazing technology offered to you very cheaply. As things have gotten cheaper and moved to the cloud, you’re starting to see advertising being integrated into your applications more and more,” she says. Gamble says consumers could react negatively at first, but examples such as Facebook jumping on the advertising bandwagon show that if the product is good enough, people will eventually get used to the idea. “I think there will be a bunch of early adopters that will rally against it, but much like anything else they’ll eventually accept it,” says Gamble. “Consumers are always going to protest against more advertising. But they’re certainly not going to stop paying for a service they’re hooked on,” she says. They key here is striking a balance between the advertiser and consumer, says Gamble. “One thing Google has always done though is put the user first,” she says. “They’re great at technology and rolling out new ideas, and quickly canning them if they don’t work. I’m sure they’ll somehow find the right balance between pushing advertising onto the consumer and interrupting the consumer too much.”
Samsung is developing a VR headset for its phones and tablets. Sources told Engadget a Samsung VR headset is not only under development by the company’s mobile division, but it’s set to be announced this year. The urgency is said to be in order to beat Facebook’s Oculus Rift and Sony’s Project Morpheus to market. More problems for Apple’s iMessage The problem of having text messages trapped in the cloud when customers move a phone number from an iPhone to an Android has been made worse. A recent server glitch undermined one of Apple’s key methods of trying to fix the issue. The company says a fix is coming, although it hasn’t indicated when. The matter is now the subject of legal action by a Californian woman who is seeking class-action status against Apple. The suit claims Apple has violated California’s unfair competition law and also interferes with a wireless carrier’s abilities to deliver its promised service to customers. HP to cut up to 16,000 jobs The company reported results for its second fiscal quarter with sales figures slightly below expectations. HP says it expects to add to the 34,000 job cuts it announced in 2012. Between 11,000 and 16,000 more jobs are expected to go. Overnight The Dow Jones Industrial Average is up 10.02 to 16,543.08. The Australian dollar is trading at US92 cents.
When Jo Burston stood up on the podium to accept the Pearcey Entrepreneurship Award for her contribution to ICT in 2012, she was struck by one thing: looking out across the crowd she noticed only a handful of women at the event. As founder and managing director of Job Capital, and as someone who “needs to change things I see wrong with the world”, Burston could not shake her “a-ha!” moment and recently set up Inspiring Rare Birds, a movement aimed at encouraging women to be entrepreneurs. She has set a target of creating one million more female entrepreneurs by 2020, but how that would be quantified is not known. One of the first things she did was visit a number of schools and talk to young women about what they thought about being an entrepreneur. She found many didn’t know what the word was, and those who did mostly identified entrepreneurs who were men. It made her even more determined to change things. The initial project for Inspiring Rare Birds is a book that profiles successful Australian female entrepreneurs and the launch of a website as a platform to showcase their successes. Burston is hoping to launch both in August. It’s not far from Burston’s own profile, with her business turning over $500,000 in its first financial year and growing rapidly in three years to have a turnover of $3.7 million. After six years, the business had reached $38 million and had gone from two staff members to 13. Over the course of her career she has founded seven startups, “some of them great successes and some of them great failures”. Burston stresses she doesn’t want Inspiring Rare Birds to be seen as a feminist movement. In fact, its Facebook page points to a story with a disclaimer that IRP is “feminist neutral.” “Women are only the first port of call because at the moment that is where the problem is,” Burston says. “Women only make up 12% of entrepreneurs. In some cities that is as little as 4%.” She says she preferred for the movement to be identified with entrepreneurship, which is her passion.
News that Telstra plans to build a national wi-fi network, as reported by The Australian and Fairfax mastheads, shouldn’t come as a shock. Given the volatility of anything and everything to do with mobile internet use, nothing should surprise us any more. But it should scare you. Telstra’s plan, which is being announced right on Crikey’s deadline, will — according to tweets from ZDNet’s Josh Taylor — reportedly see $100 million spent showering the country with new modems for broadband customers who choose to act as wi-fi hotspots using Fon sharing technology. It’ll be free to use by the telco’s fixed broadband customers, although any data used will count towards their quota, and a “small daily fee” for others. Arranging free wi-fi for fixed broadband customers is not uncommon in Asian and North American cities, although the Fon sharing is a less common twist, and it’s a logical move for Telstra for the same reasons. It makes the telco’s fixed broadband packages more attractive, it reduces the load on 3G/4G mobile broadband services in high-traffic areas, and — not talked about so much — it provides more opportunities to track customer behaviour for all those data mining and monetisation strategies that make modern telcos into something much more like a media company. For all the hype around the “mobility revolution”, and while consumers are increasingly using their mobile devices away from the home or office, the growth in Australia’s mobile broadband market was just 3% in the 12 months to December 2013, according to research released yesterday by analyst firm Telsyte. The proliferation of public wi-fi hotspots, which Telsyte analyst Alvin Lee says are “sprouting like mushrooms and are now widely supported by local councils, shopping centres, local businesses and increasingly our transport networks”, means that there’s less need for a dedicated mobile broadband device — particularly as most smartphones can now operate as a wi-fi hotspot, and people are becoming more comfortable pressing that button. “The opportunity for dedicated mobile broadband is diminishing even as mobile traffic continues to grow,” Lee said. As a result, Telsyte believes telcos will only be able to monetise 20% of the consumer media tablet market. Indeed, why would anyone want to load yet another device into their pocket, perhaps with yet another charger, and certainly with another monthly bill? Whether this will play out well commercially for Telstra remains to be seen. As Fairfax’s David Ramli points out: “Other Australian companies have attempted to use Wi-Fi hotspots to give customers more internet services on the go with very low success rates.” iiNet sees its wi-fi offering more as a marketing tool. My weekend in San Francisco showed how this might play out. AT&T has wi-fi hotspots across the city, and you see their branding every time you look for a connection. It left an impression. But at the same time, most bars, cafes and shopping malls have “free” wi-fi too — along with power outlets and somewhere to sit. “Free” is in scare quotes there because the use of wi-fi for tracking consumers is becoming ever more sophisticated. Toronto-based Turnstyle is just one of the companies pushing the boundaries in this regard. By rolling out a unified wi-fi network throughout the shopping district, they can track people as they go about their business. As The Wall Street Journal reported in January: “Turnstyle’s weekly reports to clients use aggregate numbers and don’t include people’s names. But the company does collect the names, ages, genders, and social media profiles of some people who log in with Facebook to a free wi-fi service that Turnstyle runs at local restaurants and coffee shops… It uses that information, along with the wider foot traffic data, to come up dozens lifestyle categories, including yoga-goers, people who like theater, and hipsters.” If Telstra is planning something similar — and given that this is increasingly the way things are done, I suspect it’s likely — then this could be the start of one of the most comprehensive consumer tracking databases in the country. This article first appeared on Crikey.
Recently, I was looking back through the very first plan I put together for what has now become Canva. It’s amazing to look at the similarities between what I first imagined seven years ago and what we’ve now built. After we had built our very first version of our online design platform in 2007, I wrote an instruction manual. It explained how all the buttons functioned, how to create a design, everything you needed to know. After flicking through all these pages, it struck me: why should a user need to read a manual before they can use your program? Technology should adapt to the user, not the other way around. This guiding principle has stuck with me over the past few years. With Canva, we’ve done everything to make it as simple as possible to take an idea and turn it into a design. There is so much involved in building a compelling product. Here are a few pieces of advice based on my experience. Make your product work the way your users expect Users go on an emotional journey when they use a product. We did lots of user testing before we launched Canva. We ran design workshops where we asked different groups of people to come in and try our product. Usertesting.com was also incredibly helpful. Despite spending years building the simplest tool we could possibly imagine, we found through user testing that people doubted their own creative ability and felt scared to experiment in case they broke something. We realised we needed to change people’s entire mindset in a few minutes. They had to realise that Canva was a safe and fun place to create; that they didn’t need to invest years of learning our design tool. They needed to realise that they could create something that looked good. We introduced a 23-second animation which walked the user through the basics of how to use Canva. This is followed by a series of five Starter Challenges which allow users to play with Canva. Now in the first few minutes of entering Canva a user’s entire belief about design tools being hard to learn and self-belief about their own creative abilities is transformed. This new onboarding experience dramatically increased net promoter score and people are now much more likely to recommend Canva to others. Solve a real problem I optimistically believe that in the future, the world will be better, healthier, safer, friendlier, wealthier, and smarter. For a long time, I’ve had a vision for the way design should be done. There was simply no doubt that in the future, design would be simple, online and collaborative. Back in 2007, when I was teaching design at university, students were using Facebook to connect with each other. Yet design software was still expensive and difficult to use. The vision for Canva hasn’t changed. While we’ve applied a lot of polish along the way, the plan for the product has been as we originally imagined it. Find a real problem that you know exists and solve it. That’s the best way to create something compelling. Focus on the user experience When a user lands on your product, it should be so intuitive that a user doesn’t need to read instruction manuals or spend years learning how to use your software. They should be able to do what they need to do right away. Since launching eight months ago, Canva has grown to 400,000 users. We’ve learned a lot about our users during that time. Getting to know your users is essential. We’re now seeing 150,000 designs created each week and people are coming back daily to use the product. Every decision you make is an important one. Focus on the details of each interaction in your product. While we know where we want to take the product, we’ll always test new features to make sure users find it simple to navigate. Sometimes a small tweak to a menu or a different icon can make all the difference. Listen not only to what your users say, but also what they do. While every step of the way has its challenges, that’s one of the best things about starting a company. The most important thing is to get started. For me, that was writing out a plan for how an online design platform would work. Only once you start can you gather feedback, test out your ideas and put the wheels in motion. Melanie Perkins is CEO of Canva, which makes graphic design simple for everyone. Since launching eight months ago, the company has grown to 400,000 users who’ve now created more than 2 million designs. Connect with Melanie on Twitter: @MelanieCanva
In almost every industry there are innovators, ‘smart companies’ who are leveraging disruptive technologies to stay ahead of competitors and offer the latest and greatest features to their customers. The world of app development is no different. Here are a few recent innovations and some thoughts on what they might mean for your business. 1. Facebook and IBM active in mobile app space Facebook and IBM aren't usually linked together, but both are currently marketing their presence in the mobile app space as a critical path for their future. Facebook announced at f8 (their annual developers conference) that they are launching the mobile ads Audience Network. Facebook will start serving ads to third-party mobile apps via this new network. This means that partnerships between mobile companies will increase, and app developers can now serve Facebook ads in their apps. Ads will be more targeted to the recipient, as Facebook understands their members and their interests. This is good news for companies interested in reaching mobile users who often log into apps via their Facebook account, as this increases the effectiveness of your mobile-delivered marketing messages. Global behemoth IBM is fuelling an open-source platform movement to help generate more business value from mobile computing. At IBM’s Impact2014 conference held last week in Las Vegas, the company announced a significant expansion of its MobileFirst Business Acceleration portfolio, which includes IBM Ready Apps offering standardised customisation to reduce time and resources required to create apps. It is also introducing 18 ‘development studios worldwide’ to foster innovation in custom apps – with mobile experts from designers, developers and architects. If IBM is investing so significantly in making apps more accessible to its customers, shouldn’t you be considering making your company’s services just as open and easily accessible? 2. Mobile app-linking New technology is now directing users to specific areas of mobile apps instead of website pages (Instagram is a good example). This is another leap in mobile innovation as Facebook and others continue to challenge the key issue of the mobile-computing world – ‘users spend most of their time inside apps rather than on the web’. Consider the importance of this in increasing convenience for customers if your business still relies on an old-style, non-responsive (i.e. mobile un-friendly) website. 3. Mobile payments Smartphone apps such as Venmo are now replacing cash on many US university campuses. The era of ‘mobile payments’ – leaving your wallet at home and using your phone to pay for everything – is still in its early days, but its mainstream take-up seems inevitable. Think about your own ease of purchase in the app stores. It’s plain to see that if the next generation of consumers is eschewing cash and using an app to pay for everything from their lunch to their rent to their parking to their bar tab, then they’ll also expect the convenience of buying your goods or services through an app. Of course, most companies don't have the internal resources, or actually need the resources to get themselves into the app space. The creation of links within apps and how to take advantage of this new wave of opportunities should be left to companies that specialise in it. Having your own branded app and promoting it well to your customers will pay off – delivering more engagement, more loyalty and more convenience. Don’t be the one who gets left behind. Dennis Benjamin is the founder and chief executive of mobile apps specialists AppsWiz and the Informatel Group. He is an expert in the areas of mobile trends, mobile apps, apps for businesses, entrepreneurship, and startups. This article first appeared on SmartCompany.
Australia’s first cat café will soon open its doors after the owners announced they have found the “perfect location” nearby the popular Queen Victoria Market. Speaking to SmartCompany, Anita Loughran says the idea of a cat café in Melbourne came after her husband suggested it after visiting Japan for their honeymoon. “He just kind of threw the idea out there and I just couldn’t stop thinking about it,” she says. Cat cafés are popular in Asia, where customers can pat a friendly feline while enjoying brunch or a cup of coffee. Loughran says one of the biggest difficulties the business venture faced was complying with local council regulations. “It did take three months for us to get permission from them and with the permission there was a list of regulations we’re going to have to comply to,” she says. “We need to have airlocks between any food areas and the cat areas and just a lot to do with the health and hygiene side of things.” Loughran says this includes cleaning stations for customers to wash their hands with soap and hot water before and after touching the cats. One of the business’s other obstacles, said Loughran, came from property owners turning them down because they didn’t want cats to be on the premises. However, her advice to those with a quirky business idea is not to give up. “It can be hard, even in a city like Melbourne where there’s generally quite different things around and you’d think people would be more open minded,” says Loughran. “It’s just persistence and if one way of doing something doesn’t work, do it a different away.” Loughran says the business owes a lot to the popularity of cats on the internet. “I can’t tell you why cats have taken over the internet,” she says. “But it’s definitely helped us. We have got a lot of followers on social media.” According to Loughran, Twitter and Facebook were integral in raising awareness of the business idea. The business has more than 7000 likes on Facebook. The couple has also launched their last crowdfunding campaign on website Indiegogo in order to help cover refurbishment costs of the shopfront—a space which was a lot larger and older than they originally anticipated. “Reaching out on social media you never know who’s going to come back with some advice or help,” says Loughran. “It completely changes the way business is done.” Loughran says because the cat café is effectively going to be two businesses in one, they are going to start with a traditional café menu before trying anything adventurous with the food. “As the business grows we will be able to develop the menu and meals,” she says. Cat Café Melbourne will be located at 375 Queen Street, adjacent to the iconic Queen Victoria Market. Loughran says an online booking system will be set up on the business’s website in order to prepare for an influx of customers. The café hopes to be open by July and will be working with the Geelong Animal Welfare Society. This article first appeared on SmartCompany.
“Australian startups and Australian entrepreneurs find the American market very, very accessible. We need to do a better job of commercialising technology here in Australia.” That was what Federal Minister for Communications Malcolm Turnbull said, at an event in February last year, when he was still in the shadow cabinet. While in opposition, Turnbull talked about better R&D incentives, criticising the Howard government for creating uncertainty by changing eligibility rules on this one; he blasted red tape that slowed down the speed of innovation; and was critical of the fact that the number of startups funded by public organisations had decreased over time. “As we continue to pursue the important goal of improved productivity, which is closely linked to a better utilisation of technology, we have to ensure that governments are doing everything they can to make it easier for people to innovate,” he said at that time. So when Turnbull took up his mantle in the Abbott government in September last year, there were high hopes of improved government support for startups. This, thought the startup community, was a man who ‘gets’ what we’re about. Despite the fact that his stance on NBN is a source of much contention (that is another seven columns in itself), most in the startup community still saw Turnbull as the answer to getting some much-needed government attention. And he continued to say all the right things when in power. In January this year when conducting a live Facebook Q&A session (while visiting Facebook as part of a tour visiting leading US startups), he praised the potential for crowdfunded equity and said more needed to be done to encourage innovative companies. “We need to do more to encourage innovative companies in Australia . . . an obvious area is rectifying the anomalous treatment of employee shares and options in Oz,” Turnbull wrote at the time. “There is a lot of potential for crowdfunding-type models for aggregating venture capital. We need to think laterally on this critical issue.” It was only in March this year when he responded to a conversation between Nitro chief executive Sam Chandler and BlueChilli CEO Sebastien Eckersley-Maslin discussing later stage funding options for Australian startups. Turnbull waded into the conversation and invited both of them to meet and chat about the issue with him. A meeting, by the way, that never happened. Turnbull also wrote an opinion piece of his own for The Sydney Morning Herald, telling Australian startups that the government can help them. When it comes to funding, wrote Turnbull, “The role for government here is to foster a framework in which investors are protected and yet start-ups can raise money without hiring teams of lawyers and financial advisers.” Again he mentioned that the government was investigating ways to simplify rules for crowdfunding. “And finally, the government has a role in making life easier for start-ups to do business in Australia and stay here, as opposed to moving offshore,” he wrote. “One of the key priorities for the government is changing employee share schemes so that employees are not taxed on receipt of shares and options. But hopes were shattered on Tuesday when the federal budget was released. Nothing that Turnbull had floated was mentioned, and the limited support that startups had was effectively abolished. The budget announced the creation of the Entrepreneurs’ Infrastructure Program with an allowance of $485 million over five years, at the expense of the Innovation Investment Fund, Commercialisation Australia and other smaller support programs, saving $845 million over five years. That means even less public money for startups (about half of what it was), something that Turnbull had us believe was an important issue for him. Details of the new program still remain unclear. The government also cut the R&D Tax Incentive Scheme, and lo and behold, it appears it will become a more complicated process, as BDO points out “in a practical sense, the change in rates results in a more complex calculation of the benefit of the R&D tax incentive”. That was the very thing that Turnbull was critical of the Howard government for. But that’s not even where it ends. What about his ideas of better employee share option schemes and changes to rules around crowdfunded investment? Two things Turnbull has consistently argued would make a difference to the Australian startup scene. It was only a few days before the budget was announced that the government delayed plans to introduce a new regime for the employee share scheme. The delay was meant to be until later this year, but there was no mention of it in the budget. Ways to liberalise the rules to allow greater involvement from investors to facilitate crowdfunded investment are still under review, but there is no deadline on when the report on that will be delivered. You’d be forgiven for thinking it's not going to happen.