Pollenizer is a cornerstone of the Australian start-up ecosystem and like any start-up they’ve been evolving constantly. In the month of their sixth birthday, co-founder Phil Morle spoke to StartupSmart about how they’ve grown, what they’ve learned and what’s next. “We think our purpose is to build a guild of entrepreneurs across borders. We use the word guild because we’re excited about the idea of people who are united by a common practice, a skill or trade and that’s entrepreneurship and the carving out new of economies,” he says. Pollenizer began as a venture technology company in 2007. Employing a team of developers and product managers, Morle says they aimed to be the technical co-founder for smart people with good ideas who didn’t know where to go. The model may sound familiar. It’s similar to the core of what the Blue Chilli accelerator does today. “Blue Chilli’s model is similar to our old one. It’s a model that is still needed but we needed to evolve to survive and thrive,” Morle says. This model saw the group cultivate four to six start-ups a year, including break-out success Spreets which sold for $50 million in 2009. But their early approach was to develop ideas and bring in entrepreneurs almost as employees to run the business. “We realised that every company goes through moments when it should die. And it’s the founding team’s passion that lets them make it through. So we re-configured Pollenizer so everyone was passionate and aligned because that’s what helps you punch through,” Morle says. Today, Pollenizer is partly an incubator but much of their revenue and passion is wrapped up in consulting and working with large companies to work with entrepreneurs and implement start-up approaches such as lean and agile. It was their ongoing work with Telstra that alerted them to the fact the telecommunications giant intended to launch an accelerator program, which co-founder Mick Liubinskas now works. “We’re stable now but a lot of people think we’re an accelerator or investor, which we’re not,” Morle says. Pollenizer develops business ideas and then coordinates teams from within their own network. They invest $100,000 in each idea, and bring on board another $100,000 from an external investor. They only launch one or two new companies a year. Their most recent is True Property, a company seeking to establish a realestate.com.au or domain.com.au-style offering in the Philippines. “Working with so few companies is definitely a changed position for us. Two years ago I would have talked about starting lots of companies but now we only want to launch companies we can back to the bitter end because it’s hard work and needs all of you,” he says. Having worked with so many start-ups in their most precarious days, not everything you may hear about Pollenizer will be positive. Morle says he and Liubinskas still support every decision they’ve made so far. “I honestly believe that every decision we make as a company has to be rich with integrity and we always imagine ourselves on the other side,” he says. He adds for the companies they decided to pull out of or had disagreements with, they’ve been quick to find solutions such as selling the founder who wants to continue their equity so they can continue on. “We’ve had all kinds of experiences without entrepreneurs. We’ve had the deepest love and strongest anger from both sides. What we’re doing here is very, very difficult, and emotionally driven in both sides,” Morle says, although he’s quick to level the idea they take an exploitative amount of equity. “People can only say this if they think we’re an accelerator. But we come up with the ideas, we’re there every step of the way. We don’t take equity, we give it to incentivise the right people and let them know they’re in control.” Six years of start-up incubating and a couple of years of corporate facilitating means the Pollenizer team has honed their start-up to a smoothly deployed system that enables significant expansion. In the coming year, Pollenizer will be setting up in Myanmar. Funded by global telco Ooredoo, their job is to help grow a start-up ecosystem as internet penetration goes from 1% of the population to an estimated 70% in three years. “Asia is exciting to us because it’s an exploding market with so much opportunity. We intend to focus a lot of our resources and efforts there,” Morle says. Ultimately, Pollenizer hopes to become a network of entrepreneurs and start-ups spanning the Asia-Pacific and facilitating cross-border partnerships. While the plan is always to create profitable and rapidly growing companies, Morle says even the little moments make the hard slog worth it. “When we see traction it’s the most wonderful thing. Selling Spreets is the extreme end, but a company today just got their first customer and that was just such a rush, even if it’s just a $50 sale.” He adds perhaps it’s because the moments are harder to achieve that makes it all the richer.
Macquarie Radio Network director John Singleton has revealed he is “very interested” in investing in regional Seven Network affiliate Prime Media. The move comes after Prime’s chairman, Paul Ramsay, sold his 30% stake in the company. Prime could become a takeover target if media regulations limiting the reach of metropolitan broadcasters are lifted, allowing the major television networks to purchase their regional affiliates. Newspaper launches Morry Schwartz, the publisher of The Monthly, released the first issue of his new weekly newspaper, The Saturday Paper, over the weekend. “The internet has smashed the business model of those papers by providing a more cost-effective platform for advertising," Communications Minister Malcolm Turnbull said at the newspaper’s launch. “Even though I expect to disagree with a lot of things in your paper, I probably agree with quite a few too. I welcome that diversity. We should rejoice in our democracy and the diversity of our news and our journalism.” Telstra completes Sensis sale Telstra announced on Friday it has completed the sale of a 70% stake in its Sensis directory business to private equity firm Platinum Equity for $454 million. The deal has already received approval from the Foreign Investment Review Board, and is part of a strategic shift in focus at the carrier towards cloud-based network applications and services (NAS). “Sensis is now the leading digital marketing services and directories business in Australia. To drive further momentum, we believe it is the appropriate time to introduce Platinum Equity, as a strategic partner,” Telstra chief executive David Thodey said. Overnight The Dow Jones Industrial Average is up to 16321.7. The Aussie dollar is down to US89.03 cents.
This week in Barcelona, the GSMA – the peak global standards body for the mobile phone industry – is hosting its annual industry trade event, the Mobile World Congress. The MWC is arguably the largest annual event in the telecommunications industry. It brings together carriers with mobile phone makers, equipment makers and app developers. It’s where handset manufacturers make the big pitch to mobile carriers for the year ahead. A strong presentation can bring your products to the attention of mobile carriers the world over. Perhaps more than the Consumer Electronics Show in January, the MWC is the big event where mobile phone makers unveil their new smartphones and other products for the year ahead. This year’s event certainly hasn’t underwhelmed, with major announcements from some of the industry’s biggest players. It’s time to take a look at eight of the biggest announcements from this year’s show: 1. Samsung Galaxy S5 Samsung is now easily the biggest handset maker in the industry. According to IDC, for the full year of 2013, it shipped a massive 313.9 million smartphones worldwide – that’s three out of every 10 smartphones shipped anywhere in the world. Forget about Apple versus Samsung, it’s not even a race anymore at this point. Apple shipped 153.4 million units in 2013, meaning that for every handset Apple shipped, Samsung shipped more than two. In fact, with the exception of the US and Japan, Apple is not even really competitive with Samsung anymore. That race was lost two years ago. In addition to manufacturing smartphones, it also supplies itself with almost every component, from batteries and processors to cameras, memory chips and displays. It is both the world’s second biggest chip builder, and the world’s second biggest ship builder. So when Samsung unveils its main, flagship smartphone for the year, you better believe that everyone in the industry – from carriers to competitors – is watching very closely. This year’s flagship, the Galaxy S5, was largely an incremental improvement on its predecessor, with the South Korean tech giant confirming speculation the new device is both dust-proof and waterproof. Needless to say, both Telstra and Optus have already announced they’re carrying the new smartphone. Aside from the Galaxy S5, Samsung shocked the industry when it snubbed Google for the latest version of its Galaxy Gear smartwatches. Instead of Android, the new devices will be powered by its own operating system, known as Tizen. 2. Microsoft’s Nokia X smartphones – powered by Android For nearly two decades, Microsoft’s Windows operating system had battled an open source rival, known as Linux. While Linux has struggled to make inroads in the desktop PC market, it has emerged as the dominant operating system for servers. Linux also forms the basis of Google Android, which competes head-to-head with Microsoft Windows Phone. Meanwhile, in September last year, Microsoft bought the mobile assets of Nokia, along with a licence to use its patents, for $US7.2 billion. In light of this, there was some scepticism when rumours first surfaced that Nokia was gearing up to release a series of smartphones powered by Android. At MWC, Nokia confirmed the rumours by unveiling a new smartphone product line powered by Android called the Nokia X series. The new devices will come with Microsoft’s cloud-based apps and services pre-installed and won’t come with the Google Play app store. Nonetheless, when Microsoft takes control of Nokia in April, it will be selling a consumer product based on Linux. Who would have thought it? 3. Facebook buys WhatsApp for $US16 billion A week before the MWC, Facebook announced it is taking over mobile messaging service WhatsApp for an incredible sum – $US16 billion. With both WhatsApp co-founder and chief executive Jan Koum and Facebook founder and chief executive Mark Zuckerberg delivering keynote speeches at MWC, the tech world was certainly going to pay attention. During the keynote, Koum did not disappoint, announcing WhatsApp was launching free voice calls through its app during the second quarter, once the takeover by Facebook has been completed. No doubt some of the mobile carriers were a little edgy about the prospect of Facebook launching an all-out assault on their lucrative voice call and text message businesses. 4. Mozilla unveils a $25 smartphone This year’s Mobile World Congress marked the one year anniversary of the debut of Mozilla’s smartphone platform, Firefox OS. For those unfamiliar with the platform, Mozilla is best known for its Firefox web browser. Last year, it announced it was creating a mobile operating system based on Firefox that would compete head-to-head with Google Android, Apple iOS, Windows Phone 8 and BlackBerry 10. In Firefox OS, all apps basically work like interactive websites and are coded in web standards, including HTML5 and CSS. Since this is less demanding than running a “full” operating system with apps, the theory went that Firefox OS would perform well on low-end devices aimed for emerging markets. In practice, some of the first Firefox OS smartphones, including the ZTE Open, have left a lot to be desired. As I explained in Control Shift last week, Mozilla’s expansion drive has left it in a precarious position in the marketplace: As if the situation weren’t already urgent enough already, Mozilla’s lucrative deal with Google expires in November of this year. In a sense, it’s fitting that [Mozilla founder Mitchell] Baker has taken up trapeze as a hobby, because Mozilla’s in the middle of a high-wire act. It might be that, over the coming months, one of Mozilla’s growing number of Firefox OS-driven side-projects gains traction in the market place. However, it could also backfire spectacularly, endangering its main source of revenue in the process. Aside from the seven new smartphones on display, Mozilla also announced that a smartphone costing just $25 would hit the market this year. Given that, up until the fourth quarter of last year, more than half of all mobile phones sold worldwide were still featurephones, mostly in emerging markets, the $25 phone might just be the big hit Mozilla’s looking for. Story continues on page 2. Please click below. 5. Major updates for BlackBerry enterprise customers BlackBerry chief executive John Chen’s bid to turn around the fortunes of the smartphone pioneer were filled out in a series of major product announcements at MWC. Up until now, enterprises using BlackBerry Secure Work Spaces on BYOD (bring your own device) smartphones needed to use different versions of BlackBerry Enterprise Service (BES) depending on whether staff used newer BlackBerry 10/Android/iOS devices, or older BlackBerrys. That has been cleared away with the release of BES 12, in the process clearing away many headaches for IT administrators. As an added bonus, it supports Windows Phone devices too. The company also unveiled a new flagship phone with a full keyboard called the Q20 and an enterprise version of its BlackBerry Messenger service called eBBM Suite. 6. At least Sony’s new products are water-tight Earlier this month, Sony announced it is selling its VAIO PC business to investment firm Japan Industrial Partners, spinning off its Bravia TV business into a separate subsidiary and slashing its global headcount by 5000 as part of a major restructure. At the time, the Japanese tech giant announced it’s setting its sights on the smartphone, tablet and wearables markets for its future growth. Suffice to say, the company is hoping it delivered a hit with the products it unveiled at MWC. The company unveiled a new flagship smartphone called the Xperia Z2, a 4G Android 4.4 KitKat smartphone powered by a 2.3 GHz quad-core Qualcomm processor. The company is proclaiming its 20.7-megapixel camera capable is the most ever used in a waterproof smartphone. Which I’m sure is fantastic news for scuba-diving photographers. The company also unveiled a 10.1-inch tablet called, imaginatively enough, the Z2 Tablet. The tablet is being marketed as the lightest ever used in a waterproof tablet. Finally, the company unveiled a smart wristband called the SmartBand. 7. Opportunity knocks for LG? The highlight for LG was an update of the KnockON security system called “Knock Code”, which uses a series of knocks rather than a password to secure a device. The new feature will appear on the LG G Pro 2 phablet, a new six-inch phablet set to go head-to-head with Samsung’s popular Galaxy Note devices. The company also unveiled its “L Series 3” range of low- to mid-range smartphones at the show. That said, most of LG’s big announcements came at the 2014 Consumer Electronics Show in Las Vegas in January, including its LG Lifeband Touch activity tracking bracelet, LG Heart Rate headphones, and webOS-powered smart TVs. 8. Tickets please! With the rapid growth of mobile ticketing, it’s no surprise the world’s largest telecommunications show would embrace NFC tickets. Telstra was one of a range of carriers to trial NFC badge technology for tickets to this year’s event. The badges use information stored by a mobile carrier, including name and telephone number, to help verify an attendee’s identity. The validation process also includes a photo ID check. This year’s show also features an NFC Experience demonstrating NFC-based mobile commerce systems for payment, retail, transport, mobile identity and ticketing/access. In addition, there are 61 NFC-enabled Tap-n-Go Points providing event news, schedules, documents, presentations, videos and other information. According to figures published by ABI research, in the next five years, 34 billion tickets to be sent to mobile devices,. In terms of technology used to authenticate tickets, the figures show 48% will rely on QR codes, near-field communications (NFC) will be used on 30%, while SMS or other technologies will be used on 22%. If the forecast is accurate, it suggests using our smartphones to touch on for events, public transport or entry into secure areas could soon be a part of everyday life.
The Agile Australia conference gathers together thousands of developers and business leaders to discuss the power of the agile development approach and best practice approaches. Agile development is an iterative process of small developments discussed and reviewed by teamwork. The conference is currently seeking start-ups who use this approach to be part of the line up at the two-day conference. Conference keynote speaker Brant Cooper told StartupSmart from San Francisco that there would be lots of options for start-up talent. “There is not a start-up in existence today that isn’t doing agile at this point. Even if you’re not following the lean methodology, if you’ve got your own developers you’ll be doing some flavour of agile,” Cooper says. Cooper says agile has become necessary for any tech start-up given investors will no longer back an idea without some evidence the business model will work. Beyond investment, he adds, agile just makes sense for start-ups. “You want to get code in front of early adopters as quickly as possible. If you’ve under-developed that’s okay, you keep going and you haven’t wasted anything. Whereas if you over-develop, you might have used up every resource you’ve got,” Cooper says. Given the popularity of the approach, many courses and tools have been created for aspiring founders, but Cooper says these can often be a distraction. “Buying the tools and following the processes really carefully can feel bloated. But agile is pretty darn easy. You may think you need training, to do courses and get certified, but that’s not true,” Cooper says. He adds extending the agile approach from development to the business side of a company is where start-ups can really benefit. “Agile doesn’t just belong to engineering; you can move the needle of the organisation if you make the whole company agile. That’s the next evolution for this,” Cooper says. “Just try it. Get everyone in the company in a room and identify what has to get done that week. Then get it done, report back and set new goals.” Start-ups that want to speak at the conference can submit an application around the topics they wish to explore. The ideas are then discussed in an online community and conference chairs select the line-up. Conference coordinator Rachel Slattery told StartupSmart it would good to have the best of start-up stories alongside companies as big as Telstra. “The conference theme is ‘embracing disruption’ so any start-up (and most of them are disrupting!) who can talk to this as well is well positioned to submit,” Slattery says. Start-ups can apply on the conference website.
It’s a conversation that regularly occupies the Australian start-up community. Despite several smash hit start-up successes, why do so many of our most successful and innovative start-up leaders take their talents overseas? Mick Liubinskas, mentor at Telstra accelerator Muru-d and Pollenizer, believes the Australian “brain drain” to abroad (predominantly America) is a result of limited resources and small populations. He suggests that while the accessible market in Australia is small in one sense, it ought to be regarded as an invite to lift our eyes to others. “Part of the problem with Australia is our home market isn’t big enough to build a massive company, but it’s not small enough to make start-ups realise they have to be selling globally from the beginning,” Liubinskas says. Limited population mass is never a death sentence. Liubinskas suggests Australia could learn a lot from countries such as New Zealand and Israel, where tiny populations have installed an accepted wisdom that start-ups need to roll-out their services internationally as quickly as possible. It is not difficult to understand then why “global from day one” has become a mantra for the Australian start-up community. But having the capital to establish local sales teams in large markets can be challenging. For many lean start-ups, relocating is the most achievable option. One example of this is online business development marketplace Elto, which launched here in 2011 and followed their customer core, moving to San Francisco early this year. Co-founder and chief executive Ned Dwyer told StartupSmart that despite Melbourne’s impressive track record with similar start-ups, it made sense to run their company from the country (and time zone) where 60% of their customers and all their major partners were. Another key reason behind the move was to avoid regulatory challenges. Dwyer says the regulatory environment in Australia “has made things a little bit complicated for us.” “We registered our company first in the US then created an Australian subsidiary for our local operations. We're meeting more and more companies who are doing this to make it easier to take US-based investment,” he says. There are many other factors behind why start-ups regularly leave Australia. One of them concerns accessibility of funding, and all too often involves investors with business expertise in the right fields. Nitro co-founder and chief executive Sam Chandler told StartupSmart many start-ups who have big ambitions have no choice but to leave Australia because the mid to later stage funding options simply aren’t available. Launched in Melbourne in 2005, Nitro turned over $25 million 2013. Like Elto, the company is now headquartered in San Francisco. “In the intervening period between when we moved in 2008 and today, later stage funding has basically fallen in total capital commitment,” Chandler says. Information released by the Australian Bureau of Statistics revealed this week confirmed this. The total amount of new money committed to venture capital industry has fallen significantly, by 77% in 2013. While Nitro were seeking skilled software marketers rather than capital when they moved, Chandler says the capital ecosystem is the biggest issue for Australia needs to fix, as soon as possible. “As long as there isn’t an effective capital ecosystem that helps start-ups transition from early stage into the larger scaling stages, the talent and the capital will flee the country,” he says. “The lack of government support for start-ups and early stage investors won’t hurt Australia this year, or even next. But over the coming 10, 15, 20 years, the nation will pay the price because it takes years for innovation to return on investment.” Catherine Eibner, lead start-up advisor at venture technology accelerator Blue Chilli, agrees that the exodus of larger tech start-ups to more welcoming markets is a significant concern. Albeit, she says, one Australia can overcome. “I strongly believe you can build a global company anywhere, especially at the beginning -- when you’re refining the idea and testing product market fit. “It’s not just about simpler regulation. The bigger issues are access to capital and resources. We’re seeing a lot of both of the latter at the very early stages now,” she says. Training, attracting and retaining technical talent to Australia are ongoing challenges. Convincing bright people to join emerging companies in a country still finding its start-up feet is another. Dilip Rao, outgoing chair of Asian-focused entrepreneurial network TiE, has been building tech businesses in Australia for 30 years. He is heading to Silicon Valley to launch his next start-up. “All start-ups look for three things in the market: markets, money and muscle,” Rao says. “The biggest challenge here is cultural. My mindset is not to look to the government to do anything, because frankly governments don’t have much to do with the success of start-ups.” Without significant action to bolster all three resources required for a vibrant, self-sustaining ecosystem of fast-growing and lucrative tech companies, Rao says rapid cultural change is unlikely, although he remains hopeful. “Changing attitudes and growing an ecosystem takes time, success and people coming back,” Rao says. “Maybe 2014 will be the year of inflection, and I’ll be very sorry I left at exactly the wrong time. Here’s hoping.” We're keen to keep covering this discussion. 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Six start-ups have been announced as the intake for the University of Sydney Union’s start-up accelerator program Incubate. Announced this week, the start-ups span a range of industries from medical technology to business software. Program coordinator James Alexander told StartupSmart they had deliberately sought out a more diverse batch of start-ups than previously. “We’re pretty excited about this round and especially about our first biotech start-up,” he says. “We wanted to diversify to include start-ups with high potential that were in industries beyond information services.” The start-ups are injectable medical gels Trimph; phone trackable eyewear Tzukuri; cash flow tracking and forecasting software Vistr; information management software for the construction industry Infrasis; intern recruitment platform OneIntern; and bluetooth analytics platform for retail Beak. Vistr has since been accepted into the Telstra-backed accelerator program Muru-d. Alexander adds they intend to suggest industry verticals or themes for future intakes to encourage a more diverse group of students to apply. According to Alexander, the most exciting pivot has been Beak, which entered the program as a fitness app and will emerge as a retail start-up targeting bricks-and-mortar retail. Beak co-founder Paul Veevers told StartupSmart abandoning their first start-up idea was actually quite exciting. “We learned a lot about how quickly you can change, build something and get real opinions,” Veevers says. “It took us three to four weeks that an idea we loved in early December was wrong and wouldn’t work. So to get to go to a new one and work out that this time we’re onto a winner was a bit of a thrill.” Beak is liaising with customers and finalising their app and plan to be in the market within the month. Most of the founders are in their 20s. Two of the six start-ups have a female co-founder. “We realised there is a gender imbalance in start-up land, and that’s something we want to help fix this year through a series of events targeted at female entrepreneurs,” Alexander says. The start-ups will pitch to investors, industry and their fellow students on March 12.
Telstra confirms talks with Google over Australian Chromecast launch: What app developers need to know2:16PM | Tuesday, 11 February
Telstra has confirmed it has entered into early stage talks about a potential Australian launch of Google’s Chromecast digital media player, which retails in the US for $US35. Introduced in the US alongside Android 4.3 JellyBean in July of last year, although yet to see an official Australian release, the Chromecast is a digital media device that plugs into the back of a TV and resembles a USB stick in its form factor. It allows users to view music and videos from selected online services, including YouTube, Google Play Movies & TV and Google Play Music, through their TV set. The Chromecast can be controlled from a compatible Android smartphone and tablet, and was originally introduced as a replacement for the company’s ill-fated Nexus Q set-top-box. A Telstra spokesperson told StartupSmart the telecommunications giant is looking at the device, while cautioning talks are still at an early stage. “We are always looking at ways we can bring brilliant and innovative entertainment experiences to our customers and so will always explore and consider new technology that can deliver that,” the spokesperson said in a statement. “There are no ‘secret talks’ with Google – we speak to Google all the time about all sorts of things. “As we have said we are taking a look at it – but very early stages – if it’s a product/device that we will stock we will let customers know.” The news comes just days after Google opened Chromecast up to developers, releasing an SDK (software development kit) for the device, which is available for download through the Google Cast website. In a post on Google's official developers' blog, Google engineering manager John Affaki explains some of the device's functionality for developers, in creating apps that play back audio or video, as well as for other potential purposes. "You have many options for displaying content on Chromecast. For simple media applications, you can use the default media player that can play back HTML5 media content. You can also customise it with your own branding and style using CSS. "For non-media applications, or for more flexibility and design options, you can build your own custom receiver application using standard web technologies. With a custom receiver you can build virtually any application while including support for many [video] streaming protocols, including MPEG-DASH, HLS, and Microsoft Smooth Streaming, all of which are available in the Media Player Library." Affaki is also keen to explain the developer kit contains a range of pre-written libraries, making it easy to stream content from pre-written apps to the device. “To make it easier for you to provide an optimized user experience on the TV screen, we have created sample apps for Android, iOS and Chrome. For Android, you’ll find a Cast Companion library to make your integration of Google Cast even easier. "The Google Cast SDK is simple to integrate because there’s no need to write a new app. Just incorporate the SDK into your existing mobile and web apps to bring your content to the TV. You are in control of how and when you develop and publish your cast-ready apps through the Google Cast developer console. The SDK is available on Android and iOS as well as on Chrome through the Google Cast browser extension.”
The Australian start-up scene has spawned several billion dollar online marketplaces. Just think Seek, carsales.com and realestate.com.au. And there’s a fresh crop, such as Freelancer, FlightFox and GoCatch coming through. But what is it about this particular kind of start-up that Australian entrepreneurs and investors find so sexy? Marketplace start-ups, those connecting two distinct groups of customers and managing their transactions, are relatively easy to build with little funding and to scale, providing the founder has identified a genuine pain point for both groups. But it’s finding the right problem and pair of customers that can be challenging for start-ups. Locating your market’s pain point Leni Mayo is an early investor at SitePoint, which launched website marketplace Flippa and world-leading multi-million dollar design crowdsourcing platform 99designs. He told StartupSmart the allure of the marketplace models is sustainability profitability and defensibility. “They’re popular because when you get them right, they make money in a sustainable fashion,” Mayo says. “Once you’ve got the scale and network effects, it becomes difficult for people to compete with. Because of that, you have pricing power and can maintain your prices.” With this in mind, start-up pitching events almost always include a marketplace or two, but Mayo says the key misconception about the model is assuming two sets of customers is all you need. “A marketplace isn’t a marketplace if it’s just two groups of customers. It becomes a marketplace when more of one kind of customer makes it even more valuable for the other, then you get network effects and it just grows.” Co-founder of the RecruitLoop Paul Slezak told StartupSmart the nexus between their two markets, recruiters and companies, was the engine of their growth. “Managing momentum is really important. If you’ve got a two-sided marketplace like we do, there is no point in having 200 recruiters if only five are getting work. And it’s not worth promising solutions to people in 100 countries if your recruiter base is only in one,” Slezak says. Launched in 2011, RecruitLoop connects recruiters and companies. The start-up now offers services in 10 countries, with offices in both Sydney and San Francisco. Ann Parker, coordinator of Telstra-backed Muru-D accelerator, told StartupSmart two-sided marketplaces were popular in Australia due to the legacy of companies like Seek, but also a smart choice because of Australia’s geographic isolation and small population. “Trying to be global first is the right solution for Aussie start-ups as a population of 20-odd million won’t make your start-up a colossal success. If you want to be a truly successful digital start-up, you need to be heading elsewhere pretty quick,” Parker says. Ned Dwyer is the co-founder and chief executive of small business solutions marketplace Elto, which launched as Tweaky in 2011 in Melbourne. They recently moved the company to San Francisco as 60% of their customers are in the US compared to 5% in Australia. “The great thing about most of these marketplaces, like RecruitLoop and Elto, is you get to connect people all over the world with different talent. The geographic restrictions in Australia doesn’t matter at all, provided you can connect those people efficiently and they can have a great transaction and experience,” Dwyer told StartupSmart. Elto’s pivot was to enable Dwyer and his team to add new suppliers to their marketplace, opening up new fields of revenue. “Marketplaces are sexy because it’s winner-takes-all, or at least most,” Dwyer says. “The biggest challenge a lot of new founders face is not picking a market that’s big enough.” Global scale thinking Attacking a problem with sizeable global market is exactly why DesignCrowd founder Alec Lynch and his investors are confident about his start-up despite his key competitor being 99designs, the largest design marketplace worldwide. “Globally the design market is over $44 billion dollars, so it’s very big and it’s also very fragmented. Six years into this and I’m confident if you added up the revenue of all the 30 or 40 crowdsourcing sites globally, we’d only have 1% of this market so there’s space for a few players,” Lynch says. Launched in 2007, Sydney-based DesignCrowd has grown to include 150,000 designers and have processed over $14 million worth of design jobs through their services. “Offering something different and building a brand around that is really important. Word of mouth is a big one because that dynamic is critical for growth. If you’re a newer brand, that can be tough. But once you’ve built both sides, a marketplace is valuable and defensible,” Lynch says. Once a big enough market is located, the make or break factors for marketplaces is building both sides sustainably. DesignCrowd recruited their designers first, by targeting design colleges and running their own competitions. Elto (then Tweaky) built their development capacity and market first, before reaching out to customers. RecruitLoop developed both sides at the same time, carefully and slowly. “There is no right answer about how to build a marketplace. It’s very context specific, so you need to really know your space. It boils down to relative sensitivity,” he says. Mayo says founders need to identify which market will be more excited about the solution they’re building. “If one side responds massively well, then it’s the other side you need to get first so it can take off,” he says. Now a start-up strong suit for Australia, the successful waves of marketplace start-ups have established an ecosystem of mentors and money with a passion for the dynamics involved.
Cloud technology platform Paloma Mobile has been announced as the first investment by female-focused angel investor network Scale. Paloma Mobile’s first product, Photo Chat, is a photo sharing application with voice and text notes. It’s specifically designed for slower internet speeds and apps such as Instagram and SnapChat, giving it a strong advantage in emerging markets. Scale has invested $655,000 in the start-up’s $1 million fundraising round. The funds will go towards new hires for the development team and marketing the app internationally. Scale partner Laura McKenzie told StartupSmart Paloma Mobile was an attractive investment option because of the significant market opportunity and founder Jennifer Zanich’s track record. “I presented a range of businesses at different stages to our investors, all across the start-up spectrum and this is the one that excited everyone,” McKenzie says. She says it’s an exciting first investment for Scale, as it communicates their vision and ambition as an investment group. “While women have a reputation of being risk averse this investment shows we do the background work, we make decisions and we do make investments. This is an important thing to demonstrate to entrepreneurs,” McKenzie says. The Melbourne angel network now includes 36 investors, two of whom are based in Sydney and four “Scale male” investors. There is also another start-up in the latter stages of Scale’s due diligence process and McKenzie says the pipeline is looking promising. Telstra veteran and investor Deena Shiff will represent Scale on the Paloma board. In a statement, deal leader Mary Beth Bauer said the Scale’s first deal had been a very rewarding exercise for the investors. “The collaboration and skills we had on the team, and the global network we brought to the table allowed us to complete a thorough diligence in a very short time.” Scale re-launches their investor forums on Monday with two start-ups presenting. They will begin to recruit a Sydney network later this year.
The International Monetary Fund has warned the world’s central banks against raising interest rates too quickly, pointing out global economic growth was still weak. “Strengthening global growth does not mean that the global economy is out of the woods (and) countries including the US must not respond to the prospect of rising growth by prematurely withdrawing monetary policy accommodation,” The Australian reports the IMF saying. The IMF also pointed to “fragile” improvements in southern Europe and imbalances inside China. Telstra caps mobile phone call costs Telstra is capping the amount of money many customers pay for mobile phone calls, The Australian Financial Review reports. It says Telstra is the last of the three big telecommunications companies to make the change. Telstra now charges a maximum $130 a month for customers on new contracts, regardless of how many calls are made. “The most customers will pay for excess calls to standard Australian numbers is $70,” a Telstra spokesman said. ACCC probes beer supply to pubs for anti-competitive conduct Australia’s competition watchdog is investigating the supply of beer to Australia’s pubs to discover whether brewers are using tactics to lock out rival brands. The Age reports the Australian Competition and Consumer Commission has written to brewers seeking a better “understanding” of the market to assess whether anti-competitive conduct was happening. ''The ACCC is making some inquiries to better understand the supply conditions within the wholesale draught beer market in Australia, and to understand how certain conduct may be affecting competition,'' the commission said in the letter. Markets The Dow Jones Industrial Average is down 0.27% at 16,414.44 points and the Australian dollar is buying US88.1 cents.
Telstra is building a multi-billion dollar war chest for acquisitions and to return funds to shareholders as it plans to sell a large stake in its Sensis directories business, The Australian Financial Review reports. It says US private equity firm Platinum Equity Partners is believed to be in final negotiations with Telstra to buy a controlling stake in Sensis, which publishes the Yellow and White Pages print and online directories. The AFR reports that analysts have valued Sensis at about $3 billion. Federal government targets red tape The federal government plans to abolish more than 8000 redundant federal laws as part of its plan to slash red and green tape by $1 billion a year, The Australian reports. “This is an area where previous governments have over-promised and under-delivered,” the parliamentary secretary to the Prime Minister, Josh Frydenberg, says. The government plans to hold a “repeal day” in March to overturn a raft of laws. Don’t outsource Australia’s financial markets: ASX The Australian Securities Exchange has warned against outsourcing its financial system overseas. The Australian newspaper says ASX chief executive Elmer Funke Kupper says in a submission that it’s important that Australia’s regulators keep a level of control over key markets and that investors can continue “to have access to financial markets that allow them to manage their risk and collateral under Australian law”. “To achieve the right outcome, it may require explicit measures and mandates to ensure that Australia does not find one day that it has ‘outsourced’ its financial markets to overseas financial centres – balanced against the reputation of Australia as an open and competitive economy,” he says in the submission to the draft terms of reference to the “Son of Wallis” inquiry into the financial system. Markets The Dow Jones Industrial Average is down 0.05% at 16,437.05 points and the Australian dollar is buying US90 cents.
How a start-up tweaked its investment pitch and brought in $1.2 million via a round planned to raise $500,00012:20AM | Wednesday, 18 December
Emergency Warning Systems, a tech start-up for emergency radio broadcasts, has raised just over $1.2 million in an oversubscribed round launched to raise $500,000. Chief executive Geoff Drucker told StartupSmart the three-year-old company had raised more than they planned to, thanks mostly to a significant restructuring of their investment seeking collateral. “We thought we’d raise $500,000, but if someone comes along and says ‘I have $400,000 to invest in you’, you don’t say no,” Drucker says. The funds came from several high net worth individuals. The company has also recently received $50,000 in grants from Commercialisation Australia. Emergency Warning Systems originally went into the investor market with a robust financial model and a 60-page long information memorandum. “It was very comprehensive, but we realised it was too long. We turned it into a few much shorter options including a one-pager, and this meant people knew who we were and if they wanted to know more about our competitors and strategies, they would ask,” Drucker says. “So our presentation changed from being a company with good tech to being a good investment option.” The software enables emergency services to locate and take over the radio broadcasts of every available radio station in an area to share messages about what’s going on, and what people should do. The team has recently done major demonstrations in Australia, Sweden, Abu Dhabi, Dubai and Qatar. They’re negotiating partnerships to cover most of the roads in Qatar, and most of Australia via Telstra’s emergency SMS network. The funds will go towards funding the start-up’s global expansion by hiring business development managers in the US, Europe, the Middle East and Asia. The software is able to be applied outside of natural disaster emergencies also. The Victorian Roads Commission is looking to use the software in traffic accident black spots to encourage drivers to rest. “A number of elements suddenly made EWS attractive to investors namely, the strength of our board, the progress we have made with sales and new opportunities that have arisen as word-of-mouth builds awareness of the capabilities of our system,” Drucker says. Prior to opening the round, the team of seven brought on board three new board members: Dr Ed Manners, previously a senior executive in Kerry Packer’s business empire; the chairman of Brumby’s Bakery, Bruce Esplin AM; and former Victorian Emergency Services commissioner and IP lawyer Michael McDonald.
Australian tech companies are well represented in Deloitte’s 2013 list of the 500 fastest growing companies in the Asia-Pacific region, with 66 companies making the list. Four companies made it into the top 20: planning company PlanB Logistics coming in at fifth, venture tech accelerator BlueChilli Technology coming seventh, wine deals company Vinomofo coming 13th and app developer b2cloud coming 14th. The top 500 companies had an average revenue growth of 356%. In a statement, the leader of Deloitte’s Technology Fast 50 Program, Joshua Tanchel, described the listing of the four companies as an outstanding achievement for Australia. “It is further evidence of the fact that the local start-up ecosystem is maturing and entrepreneurs are fast becoming Australia’s greatest natural asset,” Tanchel says. “In the traditional business world Australian company growth may have been constrained by the size of the domestic market. However, in the high growth digital economy that is no longer an issue. By utilising the internet and mobile technology, Australian tech companies are building businesses that compete and win globally.” Launched in 2009, b2cloud co-founder and director Luke Smorgon told StartupSmart their revenue had grown by 1680% over the past three years mostly thanks to their people-first approach. “We’ve been recognised as the fastest growing app developers in Asia-Pacific, and have gone from working with small start-ups to some of Australia’s largest corporate customers,” Smorgon says. The b2cloud team of 15 has worked on projects with Telstra, Virgin Mobile and law firm Minter Ellison. “We’ve really focused on investing a lot of time and effort into the team. We want to always be sure they’re the knowledge leaders in this industry,” Smorgon says, adding they send team members to international conferences, seminars and events often. “This has helped us become the leaders in the space, but another main reason for our growth is we forge really strong partnerships with our clients.”
Despite being kicked out of a Founder Institute entrepreneur training program in its early weeks, Pixc founder Holly Cardew wasn’t discouraged. “He didn’t like my pitch,” she tells StartupSmart of the reaction of a Founder Institute mentor to her idea for a business. But she refused to be discouraged by the feedback on Pixc, a web-based service that Photoshops the background out of pictures of products online retailers want to display on their websites within 24 hours. “I knew this was a big problem for shop owners,” she says. Cardew, 26, discovered a need for a service such as Pixc’s while running her Country & Co. marketplace website and finding retailers in country areas needed help with their sites, especially pictures. She launched Pixc in May and soon had an order asking for 800 images to be edited and, after relaunching around September/October, is now processing hundreds of images a week, with a goal to process thousands next year. Last month, Cardew pitched Pixc as part of the Telstra Digital Summit and won a scholarship to visit San Francisco and the SXSW festival in Austin next year. She says she’ll be visiting payments giant PayPal, as well as marketplace eBay and Google. Pixc charges $US2 for each image it edits, with designers around the world accessing them from the cloud to work on them and then return the image when it’s finished for the customer to access. Cardew says a product displayed on a contrasting background can increase sales online by 39%. She says she’s been selling products on the internet since she was 13, but this year feels like she’s solved a problem faced by retailers. “I’m really passionate about helping people sell online and get a thrill out of seeing sales increase.” Cardew has experienced the ups and downs of starting up in the online world. When she was 18, she tried to develop an online travel website and spent all her savings on a digital agency that couldn’t build what she wanted. As a result, she says she taught herself Wordpress to build her own sites. Cardew says her ambition for Pixc is for it to process thousands of images a day, create thousands of jobs in developing countries, and to one day be acquired by a larger online retailer.
Happy Global Entrepreneurship Week! Here’s the wrap of the stories we covered this week, so you can catch up on your reading over the weekend. Apple Inc has hit a roadblock in their bid to trademark “startup” in Australia, and Kogan got into a fight with Click Frenzy. We spoke to the local co-ordinator for Global Entrepreneurship Week about the 230+ local activities, new research revealed Australia is the third most entrepreneurial country in the world, and some of Australia’s leading entrepreneurs were celebrated at an awards night on Thursday. Meanwhile, Ireland is making a play to attract our best and brightest, announcing a start-up ambassador for Australia, a campaign director told us how to get more sales via Facebook, and Nina Hendy shared seven tips to make your business look bigger. Don’t give up The big theme of our stories this week is a perennial mantra for start-ups: don’t give up. Niki Scevak, serial entrepreneur, investor and advisor, shared why ideas don’t fail, teams that give up do. It was also a recurring theme in the Start-ups are Scary series we launched this week. We heard from the co-founders of 99designs, Canva, Thank You Water, Vinomofo and Seek about their toughest and most terrifying moments, and how they made it through. Investment and accelerator news We spoke to an investor and advisor who’s worked with some of the world’s leading start-ups about his top five tips for seeking investment, heard from a start-up that raised $2 million and got the inside scoop on what the plan is for the new Telstra-backed accelerator. The ANZ Innovyz Start program, one of Australia’s leading accelerators, announced they’ll be opening an intake in Sydney early next year. We spoke to managing director Dr Jana Matthews about why they chose Sydney, and how the program has evolved in the past few years. Entrepreneurs shared their plans Start-ups may be hard work, but they’re also rewarding and a lot of fun, especially according to this MBA student who’s chucked in her plans to get a corporate gig to work for a start-up instead. We heard the business plans, passion and growth strategy behind a nursery furniture company, a museum mapping tech company, a Melbourne beer company, and a start-up turning one-week-old this weekend. Also this week, find out how to boost your profits as we head into the traditionally quiet period of Christmas, why getting a handle on hyperbolic language will revolutionise how you do business, and how to find the perfect business partner.
Managing investors, especially major corporate ones can be a challenge for emerging businesses, but start-up veteran Mick Liubinskas says any concerns he may have had about Telstra reaching out to start-ups have been assuaged. The co-founder of start-up incubator Pollenizer and Muru D core team member told StartupSmart the team believe the combination had put the new accelerator program Muru D in a good position to make a real impact on start-ups in Australia. “Telstra has stepped out onto the start-up ledge in the right way, and been realistic and smart about what kind of support they’re giving,” Liubinskas says. Launched in Sydney in late October, Muru D is seeking 10 start-ups for their first intake. The selected companies will take part in a six-month accelerator program, and $40,000 in exchange for 6% equity. “They could’ve thrown a million at these guys, but I reckon this is just the amount of money to get your there but means you can’t quit your job and relax. And it’s for only 6% so it’s still on the founder to work really hard to make it work,” Liubinskas says. With another accelerator program announcing they’re opening in Sydney just this week, Liubinskas says the increasing amounts of accelerator program is Australia’s densest start-up city was a great sign for the ecosystem. “At the very least we’ll be able to start to create some competitive tension at the start-up stage. The more options and choice start-ups have the better,” Liubinskas says. “We’re hoping the competitive change will reach to the angel level, attract more capital and hopefully one day it might begin to influence the VC (venture capital) level too.” Liubinskas adds they’re hoping at least half of the 10 companies will progress, but they’ll view the program as a success if 10-20% of the companies survive and thrive in the long term. “We’re really aiming to keep the companies here. If they need to go overseas, they need to go overseas but we’re doing our best to make it happen here,” Liubinskas says. He adds while Telstra are the program investor and sponsor, their role is focused on enabling the program rather than dictating it, and the Muru D team, led by Annie Parker is looking forward to experimenting with the program as it develops.
As Australians increasingly access the internet through smartphones and tablet computers, it’s becoming important for small businesses to ensure their websites are compatible with the small screens of the popular devices. A recent report by Sensis, the business directory arm of Telstra, found just 17% of small businesses had a website optimised to appear on mobile device screens. The 2013 report on the online experience of small to medium businesses also found that in the past year 68% of Australians accessing the internet were doing so via smartphones and that half of the 41% of people who own tablets also used them to access the internet. Kelly Brough, executive general manager of digital partnerships and innovation at Sensis, told StartupSmart the report showed it was important for small businesses that their customers were able to find them where customers were looking. “Being found in those mobile search results is really important for small business to consider,” she says. Brough says businesses need to embrace responsive design concepts that enable their websites to be flexible to fit various screen sizes. She says websites optimised for mobile devices should also include features such as allowing people to call a business on their smartphone by tapping the phone number on the site and linking the address to the phone’s map application. Small businesses should always think about their goals and objectives and who their customers are, Brough says. “It forces you to consider how they’re (customers) going to be looking for you,” she says.
Prime Minister Tony Abbott has vowed to emulate New Zealand by signing a free trade agreement with China within 12 months, following a meeting with Chinese President Xi Jinping at the APEC summit in Bali. “Our intention is to move as quickly as we can. I would be disappointed if we couldn't conclude a significant free-trade agreement with China in 12 months,” Abbott says. “Let’s face it, the Kiwis, have had a series of agreements, including one with China, which have been very good for their economy. "They've managed to go from start to finish much more quickly than we've been able to manage over the last few years under the former government and I think we can do a lot better than that now.” Google urges political leaders to focus on NBN benefits Google Australia and New Zealand managing director Maile Carnegie has urged Australian political leaders to focus on the disruptive economic benefits the national broadband network is set to provide, rather than the costs of setting it up. “I look at the energy around the NBN. At the moment, it's focused around cost. I'd love to talk about the benefits and how we can change the rhetoric, from cost to disruption,” Carnegie says. “It feels like we could be on the cusp of renewal but I'm frustrated that we're not recognising the benefits.” Telstra reveals strong demand for 4G services Telstra has released new figures showing it has added 3.4 million devices to its 4G network since it launched two years ago. The figures show a 23% increase in demand month to month, with around one-fifth of its 15 million devices now on 4G. It is important to note that figure is the total number of devices, meaning a single customer with both a 4G tablet and a 4G smartphone would be counted as having two devices. “Since launch, we have activated more than 3.2 million 4G devices on our 4G network. This includes more than 360,000 4G smartphones since June 30 this year, or more than 25,000 per week,” says Telstra Mobile and Wireless group executive director Warwick Bray. Overnight The Dow Jones Industrial Average is down 0.9% to 14936.24. The Aussie dollar is flat at US 94.32 cents.
Social networking giant Twitter has filed papers with the US Securities and Exchanges Commission ahead of an IPO in which it seeks to raise $US1 billion. The company revealed that it had 218 million users as of June 30, compared to around 1.2 billion for Facebook and 240 million for LinkedIn. Twitter also revealed it lost $US69.3 million during the first half of 2013, compared to a $US49.1 million loss for the same time last year, but revenues grew to $US254 million from $US122 million. Turnbull names Switkowski as new NBN chairman Communications Minister Malcolm Turnbull has named former Telstra and Optus chief executive Ziggy Switkowski as the chairman of NBN Co. The German-born nuclear physicist replaces current NBN chairwoman Siobhan McKenna, while also temporarily replacing Mike Quigley as chief executive until a full-time replacement is appointed. “In appointing Dr Switkowski to the board as chairman, we're appointing one of the most experienced telecom executives in Australia ... someone who's been the CEO of not just Telstra but Optus as well, a very distinguished company director and chairman," Turnbull says. Retailers renew calls for GST threshold cut as online shopping figures are released The Australian Bureau of Statistics has released figures showing consumers spent more than $7.6 billion on online retailers on purchases below the $1000 GST threshold, prompting calls to remove the low-value threshold. Australian Retailers Association executive director Russell Zimmerman says the higher than expected sales point to an uneven playing field in the sector between local retailers and overseas-based online retailers. “The concern isn't that people are spending money online – either locally or overseas. The concern is that it's not a level-playing field,” Zimmerman says. “We believe that the firm of online [shopping] generally will grow, and as that figure grows, there will be a bigger loss of income to the states and territories if they don't do something about the low-value threshold.” Overnight The Dow Jones Industrial Average is down .9% to 14996.48. The Aussie dollar is at US93.96 cents.
Women on Boards has ranked Australia’s top 200 listed companies, finding that just 16% met gender diversity standards and 31 showed little interest in the issue at all. Aside from board and management representation, the survey also ranked companies on promotions for women, paid parental leave and gender diversity. Commonwealth Bank, Aurizon, Telstra, Stockland and Woolworths performed the strongest in the survey, with the mining and pharmaceuticals sectors performing poorly. “The largest percentage of companies that have the fewest women on their boards are headquartered in Western Australia,” says Women on Boards executive director Claire Braund. “It's really important for the country that when you have people and when you have trained them up that you don't simply lose them because they did something as simple as having a baby.” Abbott government’s Christmas ‘fracking’ pledge The Abbott government has announced it is intervening to fast-track coal seam gas projects in New South Wales, promising to get new rigs in place “by Christmas”. “We've got to sort this out quickly,” Resources Minister Ian Macfarlane says. "We've got to get the drill rigs going, where the farmers want them going, where the geology's safe, where the water's safe, where the environment's safe. We've got to get them going by Christmas if we can.” NAB announces small ‘smart’ branch plan National Australia Bank has opened the first of its smaller ‘smart’ branches in Melbourne, with a quarter less floor space than its traditional shopfronts. The branches use iPads, smartphones, wide-screen televisions and bench-sized tablet computers for transactions, which the banks claims will free up staff to have conversations with customers. However, the bank admits the rollout of its smart branches will mean a “small reduction” in staff. Overnight The Dow Jones Industrial Average is up 0.4% to 15328.3. The Aussie dollar is up to US93.67 cents.