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.
The Australian Communications and Media Authority has issued a warning to Telstra, accusing the telco giant of overcharging at least 260,000 customers a total of $30 million in international roaming charges. “While they had a very small number of complaints, they didn't try to look to see whether there was a systemic problem,” says ACMA full-time member Chris Cheah. “The circumstances were quite particular, and that was because Telstra itself had received incorrect information from its overseas correspondent carriers.” Westfield cashes in on US shopping centres Shopping centre giant Westfield has announced the sale of seven of its shopping centres in the US to private equity firm Starwood for $US1.64 billion ($1.75 billion). The sale comes on top of previous deals which saw Westfield offload $US2.6 billion worth of malls to the private equity firm during the past two years, with the global shopping centre giant continuing to own and operate 40 properties in the US. “We are focused on redeploying our capital into superior retail destinations in major cities through divesting non-core assets and introducing joint venture partners into our high-quality portfolio of assets,” says Westfield’s joint managing director Peter Lowy. Summers announcement leads to Wall Street rally US shares rallied after former treasury secretary Lawrence Summers withdrew his bid to become the next Federal Reserve chairman, with Summers seen as being more likely to wind back stimulus than rival candidate and Fed vice chairwoman Janet Yellen. However, the news was subdued by President Barack Obama’s warning that he will not negotiate with Republicans over an extension of the US debt ceiling. “We are still riding positively on the Summers announcement, however with the debt ceiling deadline less than a couple of weeks away, there will be heightened sensitivity to it," Janlyn Capital managing director Andre Bakhos told Reuters. "We are still up and the market is still riding a wave higher and until there is something tangible to create a sense of fear, the trend remains solid." Overnight The Dow Jones Industrial Average is up to 15494.78. The Aussie dollar is level at US93.23 cents.
Freelancer.com’s $US400 million takeover offer from Japanese recruitment company Recruit Co has attracted plenty of attention. It’s a hefty chunk of money for a company that grew out of chief executive Matt Barrie’s garage. If the $US400 million offer for the global online outsourcing platform is accepted, it’s likely to be one of the biggest technology company deals done in Australia this year. Here are some of the top technology deals in Australia in the past 12 months whose dollar value has been reported, from data compiled by Charles Lindop of KTM Capital: 1. M2 Telecommunications and Dodo Australia, Eftel In March this year M2 Telecommunications bought phone and internet provider Dodo Australia and telecommunications infrastructure company Eftel for $248 million. M2 said in a statement at the time Dodo and Eftel were highly complementary to its “sizeable” consumer division. “The acquisitions are an excellent complement to our consumer division and combined, our business possesses an excellent capability to grow our share of both the consumer and small to medium business market,” M2 chief executive Geoff Horth said. 2. Corporation Service Company and Melbourne IT Melbourne IT sold its Digital Brand Services division to US-based Corporation Service Company for $152.5 million in March. DBS provides online brand protection and consultancy services to global organisations. “While this was not a business that we had specifically earmarked for sale, given the value creation provided by the transaction, this was an opportunity which could not be ignored,” Melbourne IT chief executive Theo Hnarakis said in a statement. 3. William Hill and tomwaterhouse.com UK betting giant William Hill took a punt on bookmaker Tom Waterhouse’s online business last month in a deal that could be worth up to $104 million. Under the deal, William Hill paid $34 million up front, and a potential further $70 million if certain earnings targets are met. “International expansion is a key part of William Hill’s growth strategy and making Australia our second home is our priority,” William Hill chief executive Ralph Topping said in a statement. 4. iiNet and Adam Internet Internet provider iiNet offered to buy South Australia-based Adam Internet for $60 million in August. Telstra had tried to buy Adam but was thwarted by the Australian Competition and Consumer Commission. “We believe that this transaction provides real benefit to Adam Internet’s customers and staff as it aligns them with iiNet, Australia’s leading ISP in customer service,” Adam’s chief executive Greg Hicks said. 5. Webjet and Zuji Travel booking website Webjet snapped up fellow online travel agency Zuji for $25 million in December last year. Webjet managing director John Guscic told SmartCompany the deal represented a unique opportunity to substantially expand Webjet's marketing footprint, particularly in Asia. “We've known Zuji since its inception and we know they’ve built out a very attractive business in Asia and we have a desire to expand into the Asian markets and Zuji has given us the platform to achieve that,” he said. 6. SMS Management & Technology and Indicium In July SMS Management & Technology bought IT infrastructure and managed services company Indicium for $22 million. SMS CEO Tom Stianos said in a statement at the time: “The acquisition of Indicium supports our growing Managed Services and Infrastructure Consulting capability, and meets our strategic imperative to increase our annuity revenue. This is a high growth segment of the market and Indicium will accelerate SMS’ offer of managed services in the cloud market.” 7. Woolworths and Quantium The supermarket giant took a 50% stake in Quantium, Australia’s leading data consultancy, for a reported $20 million in May. Quantium said in a statement it would provide a “wide range of data, analytical, media and software services to Woolworths as well as help deliver customer insights to Woolworths’ suppliers”. And where would the Freelancer.com deal rank among deals in the world? Pretty highly according to data compiled by Australian investment firm Right Click Capital. While it’s nowhere near the $US130 billion deal Verizon Communications has made to buy Vodafone’s 45% of Verizon Wireless this month, or Microsoft’s $US7.2 billion takeover of Nokia, it’s not far off the €360 million ($US477 million) paid by French payment solutions provider Ingenico for online payment provider Ogone in January.
Earlier this year, the team at LegalVision gave us some helpful tips on the legal basics of starting a new business. Over the coming weeks, we’ll look at legal matters that can arise for a new business once it’s up and running. Here, Ursula Hogben, managing director of Hogben Group: Business Law & Consulting, and a member of the LegalVision network, considers what directors of start-ups need to keep in mind when it comes to their duties to the company. Many founders of start-ups become directors of the company without fully understanding the responsibilities and requirements of the role. As a director, your primary duty is to the company shareholders. You have duties under common law and the Corporations Act. Penalties for breaching these duties include a fine of up to $200,000 or five years in jail. This article briefly summarises seven key issues to help you understand your duties and have a successful career as a company director: 1. First, do no harm You must not use your powers for an improper purpose or to the detriment of the company. Right: Vote in the interests of the company. Help the company take advantage of commercially favourable opportunities. Wrong: Vote to give yourself an advantage, or (if you’re in the majority), vote to favour the majority over the minority. Example: If you’re a director who is remunerated on the basis of annual revenue, it is improper to approve a transaction that influences annual revenue to boost your director’s fee, but is not good for the company in the medium to long term. 2. Act in good faith You must exercise your powers and duties in good faith in the best interests of the company. You must use business judgement, which includes informing yourself about the topic and making decisions in the best interests of the company. Failing to inform yourself about the issue being voted on, not giving proper consideration to the company’s interests and acting dishonestly or in bad faith would be grounds for improper behaviour as a director. Example: Rodney Adler, director of HIH, was found to have breached this duty by lending money from one company to buy shares, without board approval, in another company (ASIC v Adler and Ors). 3. Care and diligence You must be informed about the financial affairs of the company, including whether it is solvent. You must review and discuss financial information and question whether it really represents the company’s position. You cannot simply accept the information provided to you by company staff, without question, review or analysis. Story continues on page 2. Please click below. 4. Avoid conflicts of interest You have a ‘fiduciary duty’ to the company. This means you must put the interests of the company ahead of your own. You must fully disclose any personal interest in a contract with the company. You must either vote on behalf of the company, or abstain from voting. Generally you cannot have a personal interest in a transaction with the company, unless the interest is fully disclosed, and you do not vote on it. 5. It’s all about the company – not all about you You have a duty to avoid conflicts of interest and not to make improper use of your position. You must not use your position with the purpose of gaining an advantage for yourself or someone else, or causing detriment to the company. 6. Top secret information – handle with care You have a duty not to make improper use of information (as outlined in Section 183 of the Corporations Act). It would be wrong if, as a director, you were to hear about a business opportunity for the company and, instead, pursue it yourself. Example: Steve Vizard, a director of Telstra, was convicted in 2005 of using confidential information about Telstra to buy and sell Telstra shares on his own behalf. He was fined and disqualified from being a director for some time. 7. Keep the books – don’t cook them You must be properly informed about the financial position of the company and ensure the company doesn’t trade if insolvent. You have a positive duty to prevent this. It would be wrong to: Agree to incur a debt if you have reasonable grounds to suspect that the company is insolvent or will become insolvent as a result of incurring the debt. Only reviewing the company accounts to sign off once a year. Your company must keep adequate financial records to correctly record and explain transactions and the company’s financial position and performance. You need to be constantly aware of your company’s financial position. In summary, there are consistent messages about how to fulfil your duties as a director, particularly informing yourself about the company’s affairs and acting in good faith in the company’s interests. If you want to speak to a lawyer about your duties as a director click here. Ursula Hogben, Managing Director of Hogben Group: Business Law & Consulting is a lawyer in the LegalVision network. Please contact LegalVision with any questions on 1300 544 755. Important: This information is a summary and an overview. It is not intended to be comprehensive and it is not legal advice. Your use of this information is not intended to create and does not create a solicitor-client relationship between you and Hogben Group Pty Ltd. © Hogben Group Pty Ltd 2013.
US hedge funds Centerbridge Partners and Oaktree Capital have accused Billabong of ignoring their rival debt-for-equity bid for the troubled surfwear giant, which they claim would have seen existing shareholders emerge with less debt and more equity. "Centerbridge and Oaktree are very credible, interested parties, and to not even have a discussion with them when they've flown in from the US was astonishing,” a source for the consortium told The Australian. Billabong chairman Ian Pollard rejects the accusation. “We gave [Centerbridge and Oaktree] ample opportunity to provide some indication, at the very least, of what their terms might be, but they indicated they couldn't put up a proposal until they had done due diligence. So we executed the only executable transaction we had,” Pollard says. Telstra threatens to sue Vodafone over 4G speed claims Telstra is threatening to sue Vodafone over claims its 4G network is the fastest in Australia and that its coverage now reaches 96% of the Australian population, claims the incumbent telecommunications giant alleges are untrue. "Telstra is confident of the claims that we make about our network. This type of action is not uncommon," a Telstra spokesperson says. "Vodafone customers in 4G areas with compatible devices will have access to speeds that are among the fastest not only in the country but in many parts of the world," Vodafone chief executive Bill Morrow said last month. Queensland government considering second Brisbane casino Queensland Deputy Premier Jeff Seeney has stated the question of a second Brisbane casino is an essential one for the state government, but it has not finalised a decision on whether or not Brisbane should be a one or two casino town. The news comes as both James Packer-led gaming giant Crown and Sydney casino operator Echo intensify their campaigns over a second Brisbane casino. “The casino operators have no need to be taking shots at each other in the public, in the media as we have seen,” Seeney says. Overnight The Dow Jones Industrial Average is up 0.12% to 15470.52. The Aussie dollar is up to US92.42 cents.
Industry Minister Kim Carr has denied reports Holden is seeking more than $200 million in additional subsidies from the federal government, claiming he doesn’t know where the figure came from. While calling the $200 million figure ‘”speculative”, Carr is also defending ongoing closed-door talks with the auto giant. “If a company comes to me with an issue they get the respect that they deserve and confidentiality,” Carr says. “To execute this next-generation program there are several milestones we must achieve – the two most crucial being reducing our structural costs and improving productivity in our factory, along with the implementation of a clear, consistent and globally competitive industry policy,” Holden says. NAB plants seeds for China food export harvest National Australia Bank has signed a memorandum of understanding with state-owned China National Agricultural Development Group Corporation (CNADC), with the bank hoping to cash in on Chinese investment in Australian agriculture. “For Australia's agricultural sector, our abundance of productive land and high food quality makes us an ideal strategic partner for China's growing food, beverage and agricultural needs," says Joseph Healy, the head of NAB's business bank and Asian operations. “Most Australian agribusinesses understand the opportunities in the region, but in some instances are not sure how to take the next step. Building relationships, understanding the market and exploring opportunities on the ground are crucial for longstanding and successful partnerships in China.” Telstra set to outsource 170 back office jobs to India Telstra has announced 170 customer service positions will be made redundant, with back-office network applications and services support positions set to be outsourced to India as part of the move. "This is about growth, this is about supporting our clients as they move offshore and supporting our international clients in those markets," Telstra NAS head David Burns says. "We want to be able to support that strategy. We need to be able to scale quickly, we need to be able to meet demand, we need to be able to support our customers as they move into that south-east Asian region and we need to be competitive as we do that." However, the communications divisional president of the Communications, Electrical and Plumbing Union, Len Cooper, claims the job cuts undermine Telstra chief executive David Thodey’s commitment to improved customer service. “The jobs they are cutting are in areas where hi-tech people are looking after IP networks, where people do design installation and maintenance of critical networks for big customers," Cooper says. Overnight The Dow Jones Industrial Average is up 1.11% 15460.92. The Aussie dollar is down to US91.79 cents.
Kevin Rudd has reclaimed the prime ministership after winning a leadership spill of the Australian Labor Party last night, defeating incumbent Julia Gillard 57-45, with Anthony Albanese replacing Wayne Swan as the deputy leader. In his speech following the ballot, Rudd emphasised the business community and young Australians will be key priorities for his government. "Let me say this to Australian business: I want to work closely with you. I’ve worked with you closely in the past, particularly during the GFC and there were some white knuckle moments there, as some of the heads of the major banks will remember," Rudd said. "But we came through because we worked together and I’m saying it loud and clear to businesses large and small across the country, that in partnership we can do great things for the country’s future." Julia Gillard announced she would not recontest her seat at the next election, also saying that while “[gender] doesn't explain everything, it doesn't explain nothing; it explains some things” in terms of the challenges she faced as leader. Carriers demand more backhaul access Competition watchdog the ACCC will begin an enquiry into Telstra’s charges to other carriers for use of its backhaul networks, following complaints from a group of carriers including iiNet, Vodafone and Macquarie Telecom. Backhaul fibre optic networks are used to send calls and data to and from mobile phone base stations and exchanges, with Telstra owning the only cables to some parts of the country. "We need the NBN to change some of its priorities to be able to help us bring competition to Australians," says Vodafone Australia chief executive Bill Morrow. “This is a huge impediment, and you're now going to get customers faster and faster internet access and taxing them if they use it. It ends up being a disproportionate tax as well because for companies like iiNet and Internode, our customers have much higher usage than Telstra customers or Optus customers,” says iiNet chief executive Michael Malone. ATO warning on profit shifting Tax Commissioner Chris Jordan has issued a warning to Australian companies hoping to emulate the tax minimisation strategies of tech giants such as Google and Apple, telling the federal government it needs to do more to stamp out the practice. "They can see what is happening as a result of these international companies taking profit out of the country. They are thinking: 'What functions can we move offshore, what functions can we disconnect and have third-party providers fulfil to put the profit in a low-tax jurisdiction and receive an exempt dividend coming back into the system?'" Jordan says. “That might be their assertion, but we are going to test every single aspect of those structures. We will want to know whether what purports to happen actually happens on the ground… It is one thing to put in place a fancy structure, but it is another to have it tested five years later, because by their nature these schemes are quite, sort of, artificial. “We will be taking a leadership role internationally in addressing the problem, but we need to also look at how changes can be made here. The corporate tax base is under threat. What's happening is unacceptable to the community, the government, and to regulators.” Overnight The Dow Jones Industrial Average is up 1.02% to 14910.14. The Aussie dollar is up to US92.81 cents.
The federal government is set to consult with Australian industry over the tax treatment of employee share option schemes, which start-ups say needs to be overhauled to promote growth. The government is aware the current tax situation around employee shares creates difficulties for some sectors of the economy, especially start-ups, and will consult with industry on the impact of tax and administration requirements for the schemes, StartupSmart has been told. Revamping the tax treatment of employee share option programs is fundamental to growing the start-up sector in Australia, says Malcolm Thornton, investment director at venture capital fund Starfish Ventures. “It’s a key currency that people employ to keep highly talented people on board while conserving cash,” says Thornton. The start-up sector can expect consultations with the relevant federal government departments in the future, with sources telling StartupSmart the government is aware the current tax situation around employee shares creates difficulties for some sectors of the economy, especially start-ups. Employee share option programs enable start-ups to attract and retain leading talent to their company by offering staff a proportion of the future company on top of the (often low) wages they are able to pay. The complexity of the current system has held Australian start-ups back from embracing the system. A key drawback is that employees can become liable for significant amounts of tax based on the asset’s value, even if it’s not currently earning any capital. Thornton says an update of taxation rules around the program is “imperative” for the start-up sector. “It’s completely complicated and convoluted in Australia, compared to when our companies are US-based, and we can just take a program off the shelf and every lawyer in San Francisco knows how to manage the process.” Thornton says the current system fails to grasp the variety of companies that would benefit from the implementation of such schemes. “Start-ups and high growth companies have very different characteristics to large, mature multi-decade companies,” he says. “One of the key elements to appreciate is that there is little to no value in the options until the company has grown and either lists or is acquired.” Alan Downie, chief executive and co-founder of BugHerd, a visual bug tracker for web developers, has recently implemented an employee share scheme for one of his six staff and is working on setting the scheme up for another employee. “It’s a critical issue for start-ups,” says Downie. “As a start-up you don’t have a lot of cash so it’s the way to keep talent. If you have to compete with guys like Telstra and Atlassian for developers, all you’ve really got is the growing company equity.” Downie and his co-founder Matt Milosavljevic spent 12 months working out how to implement the scheme for their first hire, a developer. “It was a very long and tedious and expensive process,” he says. “There is no standard way to do it and that’s the problem.” “When our developer started with us, he was on a third of what he could make as a developer. But he was so engaged and he got we didn’t have the money, so it was really important to him to get a piece of the company.” Downie says he spoke to four accountants, a few lawyers and several entrepreneurs about how to implement an employee share scheme, and they all had different answers. “It’s still not ideal for the employee, as they still have a bit of uncertainty. From the employer’s point of view, you want to have solid understanding of what the government wants, rather than jumping through hurdles.” He says the Australian Tax Office hasn’t spoken to any of the parties involved, so it’s still untested. According to a report by the ABC, the employee share options scheme will be explored in the next update to the National Digital Economy Strategy.
New reports from the Parliamentary Budget Office and the Treasury have called into question key figures in the federal budget, with the reports raising the prospect of a blowout in the 2016/17 budget. According to the reports, the federal budget assumes a short term increase in commodity prices followed by a steady decline, leading to a budget surplus of $5 billion for fiscal year 2017. Weaker commodity prices, however, would lead to deficit of between $5 billion to $22 billion, with significant tax increases or budget cuts needed to make up the shortfall. This shows there is a coal and iron ore bubble that has made the Australian budget numbers look much better than they really are. As the miners keep digging, and more hot air comes out of commodity prices, that drives most of that massive gap,” says Deloitte Access Economics director Chris Richardson. Telstra prepares staff for job losses as part of restructure Telstra has warned of potential job losses as part of a restructure, according to an internal memo to staff from chief operation officer Brendon Riley. Under the proposed changes, which will be rolled out between now and July 1st, the telecommunications giant is set to redirect resources to high-growth businesses such as wireless and network services and away from loss making divisions such as its Sensis directories business. “Our traditional businesses are coming under increasing margin pressure and the largest portion of our budget is spent supporting them. This is not a sustainable business model and we have an obligation to redefine our contributions to Telstra,” Riley says. Myer to chase discretionary sales after releasing strong quarterly results Myer chief executive Bernie Brookes has announced the retail giant is set to launch an aggressive stocktake sale in attempt to lure customers from competitors such as Target, in a bid to grow its share of consumer discretionary spending. “The pleasing part for us is that it will coincide with our very aggressive stocktake sale, which will make sure we're still in play in an active way over the course of the next couple of months,” Brooks said. The news came as Myer reported sales were up 0.5% to $652.5 million for the quarter ending April, up 0.4% on a same store basis. Overnight The Dow Jones Industrial Average is down 0.53% to 15,306.40. The Aussie dollar is down to US97 cents.
Sydney-based restaurant booking website Dimmi has signed a three-year deal with much-loved reality cooking show MasterChef Australia, just one month after partnering with TripAdvisor. Founded in 2009 by Stevan Premutico, Dimmi is a real-time restaurant reservation and review website, which has partnered with more than 2,500 restaurants nationwide since its launch. Backed by Telstra and Village Roadshow, Dimmi has entered into high-profile partnerships with Google and TripAdvisor, the world’s largest travel website. The deal with Google allows Dimmi users to make restaurant reservations in Google Search and Google Maps for mobile, while travelers using the TripAdvisor website or app have access to real-time restaurant bookings. Dimmi has now added Channel Ten’s reality cooking show MasterChef Australia to its list of partners, after revealing it has entered into a three-year exclusive agreement with Shine 360. Shine 360 is the rights and brand management arm of Shine Australia, which produces MasterChef Australia. Viewers of MasterChef Australia 2013 will be able to make real-time reservations at restaurants featured on the show using Dimmi’s technology. Access to restaurant bookings via Dimmi will be integrated into the MasterChef website, which will act as a year-round online dining guide, allowing consumers to find and book restaurants. Dimmi saw an opportunity to partner with MasterChef following a surge in demand for restaurants featured on the show, which Premutico has dubbed “the MasterChef effect”. “What we were seeing was a spike in bookings for restaurants that went on air,” Premutico tells StartupSmart. “As soon as they’re on air… on TVs across the country, the results are a pretty phenomenal uplift in demand.” According to Dimmi, a number of restaurants featured on the show last year saw a 1,000% spike in bookings “literally within minutes”. “That’s not good for the restaurants because they get slammed and they can’t handle the bookings, and it’s not good for the diners,” Premutico says. “This partnership will ensure a much better experience for viewers and for restaurants by helping them better manage this demand.” Signing the deal with Shine 360 happened pretty quickly, says Premutico, who believes Dimmi has earned a name for itself by being “the number one player in the market”. “It was a 12-month process. We were able to start discussions as soon as MasterChef got off air [in 2012],” he says. “There’s a track history here in terms of brand reputation, and the fact that Telstra and Village Roadshow are shareholders in the business [helped us sign the deal].” Nick Love, managing director of Shine 360, said his company is “delighted” to partner with Dimmi and Network Ten. “[This partnership will] extend the MasterChef brand and experience beyond the television program, linking fans of the show, masterchef.com.au and diners with the restaurants and their chefs that help make MasterChef Australia great,” Love said in a statement. But Dimmi isn’t stopping there, with Premutico revealing the company is on the cusp of announcing another major partnership, although he refused to offer any details. “The big one we’ll be announcing next month. It’s the big patty of them all – it’s taken us four years to wrap this one up,” he says.
Myer chief executive Bernie Brooks has warned the Gillard government its proposed increase in the Medicare levy surcharge, which will fund the government’s national disability insurance scheme, could hurt retailers. “Another 0.5% on the Medicare levy is not good for our customers and not good for the discretionary income world, and ideally that's another one that may have an impact,” Brooks says. “Remember, a lot of our customers have equity portfolios, they've got superannuation and they get the bills each week, and suddenly the Medicare levy costs them another $300 from July next year. That's $300 they might have spent with us.” Vodafone nearly breached $3 billion loan agreement, was bailed out by UK parent Vodafone Hutchinson Australia came close to breaching a $3 billion loan agreement earlier this year, amid an exodus of subscribers, with the company bailed out by its UK-based parent, Vodafone Group. According to filings with the corporate regulator, VHA is in ongoing negotiations with the international banking syndicate after Vodafone Group paid $173 million. VHA also reported losses of $899 million for calendar year 2012, up from $420 million in 2011, with current liabilities now at $3.9 billion. Telstra adds 600,000 devices in less than one quarter Telstra has announced it has added 600,000 new devices to its 4G mobile network since announcing its half-yearly profit in February, with the total growing 1.5 million to 2.1 million devices in less than a quarter. The total includes 1.4 million handsets and 150,000 tablets, with the company counting each device as a “customer”. “We have continued revenue, profit and customer growth. Our strategic focus remains unchanged, and, most importantly, we are on track for full-year guidance,” says Telstra’s chief financial officer Mark Hall. Overnight The Dow Jones Industrial Average is down 0.9% to 14701 points. The Aussie dollar is down to US102.76 cents.
The Gillard government is set to unveil a multi-million dollar taxpayer-funded advertising campaign, along with a new ‘Medicare-style’ levy to help fund the government’s $14 billion national disability insurance scheme. The new levy, set to begin next year, is expected to be set at 0.5% of income and raise $3.5 billion towards the federal government’s share of the scheme. Meanwhile, using the tagline “stronger, smarter, fairer”, the government’s new advertising campaign, in the lead-up to the September 14th election, will promote the Gonski school reforms, Medicare, the NDIS, Child Care Assistance, the NBN and 12% superannuation increase. BCA warns government has “lost control” of the budget Business Council of Australia chief executive Jennifer Westacott has lashed out at the federal government following the revelation earlier this week by Prime Minister Julia Gillard of a $12 billion black hole in the federal budget. “Let's be clear here – we don't have an economic problem, our economy is fundamentally strong. What we have is a budget management problem and it's a problem the government has had four years to address,” Westacott says. “Australia's fiscal problem was not created by the community. It was created through loss of control of fiscal strategy.” Telstra rolls out net promoter system to resellers Telstra has rolled out a net promoted system (NPS), which uses surveys to measure customers’ willingness to promote its brand, across its retail partner network. Under the system, Telstra franchisees are offered bonuses for reaching key customer satisfaction targets. “We've had a company-wide rollout of the net promoter system. Now NPS is both a system but also a cultural change and this has been one of the largest change programs that we've really ever undertaken in the country,” Telstra chief executive David Thodey said. Overnight The Dow Jones Industrial Average is up 0.1% to 14839.8 points. The Aussie dollar is up to US103.7 cents.
Prime Minister Julia Gillard has announced plans to boost school funding by $14.5 billion over the next five years, with the federal government to contribute $9.4 billion while the states contribute the remaining third. However, while New South Wales appears keen to support the plan, the federal government has met opposition from the state governments of Victoria, Queensland and Western Australia. “This model would see Western Australian students penalised because of this state's high level of investment in our schools. This investment in part recognises that some of our students are among the most vulnerable in the nation," WA Premier Colin Barnett said. Turnbull confident of Telstra deal Shadow communications minister Malcolm Turnbull says he is confident a Coalition government would be able to reach an agreement with Telstra over its alternative broadband policy. Announced last week, the Coalition’s policy would see fibre optic cables laid out to street cabinets, or nodes, with Telstra’s existing copper covering the final mile to subscribers’ homes. “Tension with government has never been good for Telstra shareholders. I am very confident that we'll achieve speedily the slight rearrangements to the agreements we're talking about,” Turnbull said. Private insurer attacks comparison sites over affordability Medibank Private managing director George Savvides has attacked health insurance comparison websites, claiming brokers drive up costs for consumers, ahead of a potential public listing. “[Comparison sites] haven't really changed the dynamics of affordability. In fact, I'd argue they're adding to costs because of the commission,” Savvides told Fairfax. The claim is disputed by iSelect chief executive Matt McCann, who believes the services also benefit insurance providers. “Those [funds] that don't participate in the comparison channel have found it hard to grow in this market. And for us, funds wouldn't use us if we weren't an efficient form of distribution for their products,” McCann said. Overnight The Dow Jones Industrial Average closed down 0.08 points to 14,865.06. The Aussie dollar is down to US105.05 cents
Former Ford boss and BHP Billiton chairman Jac Nasser has lamented Australia’s lack of patriotism in the auto industry, claiming the closure of the Australian operations of either Holden, Ford or Toyota could spark a “domino effect” in our local auto industry. “The signs aren't good, and particularly when the car industry is reducing the number of engineers they have in the workforce. That's a leading indicator of a reduction in future programs and future technology,” Nasser said. “Let's assume one of the three decides to exit Australia in terms of manufacturing, then you end up potentially with a sub-scale supplier infrastructure and, once that happens, I think it's a domino effect. It would be a very sad day for Australia, but unfortunately it looks like it could be inevitable.” Coalition flags possible industrial relations changes Shadow workplace relations minister Eric Abetz has raised possible limits on the conditions unions could place in enterprise bargaining agreements as a possible Coalition industrial relations reform, with agreements limited to matters directly relating to the employment relationship. Senator Abetz has also attacked recent and proposed amendments to the Fair Work Act, including a proposal to introduce compulsory arbitration in long-running disputes. “You've got to wonder, if it was so important that compulsory arbitration not be a hallmark of the Fair Work regime in 2007 and 2008, what's changed? Unions threatening to withdraw election funding unless this extra change is fast-tracked?” Abetz said. Telstra to cut up to 55 jobs from its online media unit Telstra’s chief marketing officer Mark Buckman is heading up a review of the company’s digital media division that could see up to 55 jobs cut, according to The Australian. The aim of the review is to streamline the company’s focus around its three key media assets, including T-Box, exclusive digital music and sports content, as well as Foxtel, of which the telco giant owns 50%. “We think that if we focus on being a core partner for Foxtel in reselling Foxtel through Telstra, if we become the number one IPTV provider in the country and if we deliver the best and most compelling content in the digital content services business… we have the opportunity to be a leading player (in this space)," Mr Buckman said. Overnight The Dow Jones Industrial Average is up 0.42% to 14,865.14. The Aussie dollar is up to US105.3 cents.