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We’re off to Texas! Why this Central Coast startup chose Austin over Silicon Valley

4:55PM | Wednesday, 16 April

Entrepreneur Helen Mitchell is getting ready for the “world’s biggest commute”, splitting her time evenly between her startup’s office in the Central Coast and its new one in Texas.   Mitchell’s startup Busivid, a corporate video management system, has set up a subsidiary in Austin and hired their first two US employees.   This is the second time Mitchell has set up a startup in the US. She moved to Dallas, Texas in the late 1980s to raise funds for engine management system startup Haltech.   Mitchell told StartupSmart they almost picked San Francisco.   “I’d sworn never again about Texas. It was quite an adjustment to go from a beautiful high nature environment to a huge city in the desert,” she says. “We were almost committed, boots and all to San Francisco. It’s easier to fly back and forth to Australia, and the culture is more similar.”   But after chatting to a startup at a Cleveland trade show that was moving from Silicon Valley to Austin, they decided to check out the city.   They were swayed by the creative culture of Austin coupled with the can-do attitude, as well as the better tax arrangements for local employees.   According to an infographic published by Austin Business Journal, the city is ranked fifth in the US based on number of tech startups per capita with over 2500 tech companies.   Australian startups such as BigCommerce have also opted for Austin over Silicon Valley, employing over 200 people there, and have only recently opened an office in San Francisco.   Mitchell says they’re following the 99designs model of having their tech and product teams in Sydney with their sales and marketing team based in the US.   “There level of customer service expectations from the day Americans born inspires us. They expect a bit more and just don’t tolerate anything less. We want lift our game to that level.”   They also intend to raise funds from US investors.   Launched in 2011, the 11-person team has built a business they believe is ready to start really scaling.   They’ve recently signed a cobranding agreement with Telstra and deliver their app to over 30,000 corporate phones.   Busivid has thrived so far on angel investments and bootstrapping, but will be doing a small series A round in Australia as “top-up” before they begin pitching to US funds for millions.   “We don’t want to come from a position of hunger so we can pursue a partnership centric approach to funding,” Mitchell says. “We’ve attended so many summits in the US, and learned the hard way that you need to be very, very prepared to pitch over there.”

Malcolm Turnbull places $29.5 billion cap on NBN spending, new multi-technology mix including HFC

4:43AM | Wednesday, 9 April

Communications Minister Malcolm Turnbull has issued a new statement of expectations to the NBN Co, placing a cap on public investment in the project of $29.5 billion and mandating that a mix of technologies be used to deliver the project.   The new statement gives NBN Co the discretion to act within the $29.5 billion public equity capital limit, with the balance of the $41 billion project to be funded by the private sector.   At this stage the NBN will remain a wholesale-access network operating on the lowest level of the network stack and will continue to make the network available to all access seekers on equivalent terms.   The government still expects the project to result in the structural separation of Telstra when the network is complete.   The letter also sees NBN Co formally adopt the Coalition’s multi-technology mix model, rather than only rolling out fibre-to-the-premises in wired areas.   The rollout will include sections of existing Optus or Telstra hybrid fibre coaxial (HFC) cable networks, trials of fibre-to-the-node (FTTN) technologies, and other technologies that can deliver at least 50 megabits per second to 90% of fixed line premises as soon as possible.   The government claims the use of the multi-technology model will save the NBN Co. $32 billion in delivering broadband services.   Areas identified as lacking in adequate broadband services in the government’s Broadband Availability and Quality Report will be prioritised for upgrades.   The statement of expectations will also require the NBN Co to have a higher level of transparency to Parliament.   Later this month, the government will receive a report from the second phase of its Strategic Review looking at the provision of services outside fixed wire areas, with the government also conducting ongoing negotiations with both Telstra and Optus.   Once those negotiations are complete, the government will deliver a Corporate Plan for the company.   Rodney Gedda from Telsyte told SmartCompany this morning new statement of expectations formalises many of the government’s existing plans on the National Broadband Network.   “It seems as though it’s a summary of the government’s existing policy changes since the last election, like the multi-technology model.   “In many cases it makes sense to utilise existing HFC networks as part of the rollout, which can currently run speeds of up to 100 megabits per second, and up to a gigabit per second in the future.   “Likewise, with fibre-to-the-basement, linking a multiplexer on a multi-apartment dwelling is more efficient than running fibre optic cable to every single apartment.   “However, when it comes to fibre-to-the node, we’re still stuck with the same speed degradation problems we get with ADSL copper.   “Really, it’s about how the government manages the process. There’s nothing wrong with using existing infrastructure to speed up the rollout, but it’s prudent strategy to also have an upgrade path for the future.”   Alongside the statement of expectations, the government has upgraded its MyBroadband website, adding more details about broadband availability and quality in their area, as well as line speeds.   In a statement, Turnbull says results from the speed test will be used to guide future rollouts.   “The results from the speed test will be collected and analysed by the Department of Communications and will help map internet speeds across Australia.   “I encourage all Australians to join the conversation at MyBroadband to help map internet speeds across the country.   “Once you click on the speed test tab, you will be asked to enter a valid address and answer some basic questions about your internet connection. You can then take the test and see your results.”   This article first appeared on SmartCompany.

The News Wrap: Telstra set to roll out fibre-to-the-node pilot for NBN

3:45PM | Sunday, 30 March

Telstra looks set to have a big role in the construction of the national broadband network, with negotiations on a fibre-to-the-node pilot due to be completed within a month.   It would involve more than 300 node cabinet units, each capable of connecting about 300 homes and businesses to the NBN.   If successful, Telstra's pilot could become one of Australia's biggest fibre-to-the-node rollouts and a blueprint for any increased partnership with Telstra in the construction of the NBN.   Bitcoin tax ruling   The IRS has spoken: Bitcoins are property, not currency. The US Internal Revenue Service made the ruling last week, saying that bitcoin should be classified as a tradable commodity such as stock or property rather than as a currency.   Charles Allen, chief executive officer of online marketplace BitcoinShop Inc, told Bloomberg he’d like to see the IRS reconsider its decision as virtual currencies develop.   “The implications this decision will have on the bitcoin ecosystem are far reaching, and will be burdensome for both individual users of bitcoins, bitcoin-focused business and for the general adoption of virtual currencies,” he said, adding that bitcoin users will adapt to the rules.”   This was hardly a surprise, but it has some important implications that tell us a lot about what it takes to make a currency work.   Turnbull lays down the law to ABC board   Communications Minister Malcolm Turnbull has warned ABC board members that if they are not willing to ensure the accuracy of content on the national broadcaster then they should resign.   Turnbull says the “law of the land” couldn’t be clearer and the board needs to take responsibility for accuracy and impartiality.   Aussie Dollar   The Aussie dollar is trading at 92.42 US cents, down from 92.66 cents on Friday.

Googlers, Beliebers, Magicians, Little Monsters, Droogies or Yahoos: Naming your employees or user base

3:44AM | Friday, 28 March

It seems almost every singer, band, and popstar out there these days comes up with a name for their fans.   For example, Justin Bieber has Beliebers, Lady Gaga has Little Monsters, Katy Perry has Katy-Cats, One Direction has Directioners, and Mariah Carey has Lambs.   Now, Old Taskmaster’s natural instinct in response to this insanity is to yell out: “Kids these days! It didn’t used to be like this in the good old days, Sonny Jim Crockett!” Except even in the days of yore, when music was ever so slightly more tolerable, some artists insisted in employing such shameless marketing tactics.   The classic was the Grateful Dead’s Deadheads, but there were others. For example, Barry Manilow has Fanilows, Jimmy Buffett has Parrotheads, Aerosmith has a Blue Army, KISS has a KISS Army, Phish has Phans and Megadeth has Droogies or Rattleheads, amongst others.   According to the comments on a recent column, there’s even a term for fans of the king of trucker rock, the certainly-not-a-one-hit-wonder who came up with Convoy, CW McCall: Crispy Critters.   (See kids, yours truly does read your comments, so keep ‘em coming!)   Of course, it’s not just musicians inventing collective nouns – many Silicon Valley tech companies have terms for their employees.   For example, Google has Googlers, Atari had Atarians, IBM has IBMers, Yahoo! has Yahoos, Tropo has Tropons, Xerox has Xeroids, Subway has its Sandwich Artists, Disney has Cast Members, and Starbucks has Partners.   Your humble correspondent has it on good authority that the editorial staff of SmartCompany and StartupSmart are known as smarties.   Some of the employee names are admittedly rather witty. For example, General Magic had Magicians, Lockheed Martin apparently has Martians, and Telstra has “future redundancies”.   Now, what about your startup? Do you have a term you’ll use for your current or future employees? Or your user base?   If not, it might be a fun thing to think about as you plan or grow your business.   After all, you couldn’t call yourself a proper Taskapprentice (or StartupSmarter) if you didn’t, now could you?   Get it done – today!

Box: A capital raising journey

3:30AM | Friday, 28 March

Box, the online storage company, filed to go public. More than most startups, Box reveals the awe inspiring Silicon Valley capital machine at work. Although some have focused on the seemingly small ownership stake of co-founder and CEO Aaron Levie, by going deeper into the S-1 filing we can see in immense detail of how the Silicon Valley sausage is made.   By reconstructing some of the equity data available in the filing we can see the progression of 8 rounds of financing over 7.5 years (there was also an angel round before the series A but that is not disclosed). From the $1.5m series A lead by DFJ on a $4 million pre-money in late 2006 to the $100m pre-IPO Series E-1 that Australia’s own Telstra participated in at a $1.8 billion pre-money in January, Box has raised and consumed capital at a magnificent rate.   So what did venture capitalists pay to invest in a startup like Box?   Series Capital Raised (millions) Pre-money (millions) Round Date A $1.50 $4 October 1, 2006 B $13.39 $17 April 1, 2009 C $18.26 $60 April 1, 2010 D $37.80 $199 April 1, 2011 D-1 $31.50 $602 September 1, 2011 D-2 $32.00 $727 March 1, 2012 E $150.00 $1,027 October 1, 2012 E-1 $99.98 $1,845 January 1, 2014   And what progress had the company made when investors parted with their hard earned cash? Unfortunately, Box’s financials are only disclosed back to 2011 and so perhaps the most interesting data (how much revenue does a startup have when they raise a Series A or B?) stays unanswered in the case of Box.   We do know that at the time of the $38m Series D financing the company was doing about $5million/quarter in revenue, or $1.5 million a month.   Would you have invested in a company doing $1.5 million in monthly revenue at a $200 million pre-money valuation? If you did in the case of Box, that $38 million investment has appreciated nearly 7x in just under 3 years and is now worth $215m at the Series E-1 price (the IPO price is likely to be even higher).   Why do VCs obsess over large ownership percentages in earlier rounds? Well the $1.5 million Series A investment by DFJ represented around a quarter of the company when it was made in late 2006. Through the torrid years of further capital raisings since, that Series A investment now represents just 5% of the company after it has been diluted. Don’t feel too bad about the diminished influence of those Series A shares, they are still worth a little over $95m at the most recent financing price, for a gain of roughly 63x.   The fate of Box is still incomplete. It’s unclear whether hiring expensive sales people to sell customers on $3653 annual storage plans proves to be a wise one. It may very well be if those same customers are coming back in year 10 and paying 100x the amount. Or it may be riding a wave of desperate grasping for growth in a low interest rate environment and hiding horrible unit economics. As Warren Buffet famously said, you only find out who the naked are when the tide goes out.   Note: You can see the full spreadsheet calculations here. The calculations won’t be exactly right because the option pool in the early years has been estimated and in the later years crude assumptions have been made (the option pool size at the particular round is assumed to be the option pool size at the start of the year).   Niki Scevak is a Managing Director at Blackbird Ventures.   This post originally appeared on the Blackbird Ventures blog.

Meet the finalists for the Best Startup Idea award at the 2014 StartupSmart Awards

3:29AM | Wednesday, 26 March

All startups begin as ideas and, sadly, the vast majority stay that way. This award celebrates those who have started to turn their idea into something.   With over 400 applications for this round, judges were seeking innovative and promising ideas.   The winner will be announced at the StartupSmart awards night. You can follow the awards night with the hashtag #susawards.   JobAdvisor   JobAdvisor is a marketplace seeking to stop companies from being deluged with applications after posting a job ad and aspiring employees from lurking about the recruitment boards of their dream company.   Employers still pay, but rather than listing jobs, they create a profile about what it’s like to work with them, including anonymous employee reviews. Clients include Telstra and Westpac.   Founded by Justin Babet, they’ve recently raised funds and grown the team to five people. They launched version three of their product two months ago.   StartupSmart covered JobAdvisor when it first launched here.   Musio   This platform connecting amateur musicians to professional reviewers burst onto the startup scene late last year after winning Startup Weekend Adelaide.   With more music being produced than ever before, accessing expert mentoring or even one-off feedback is challenging. Promos and demos are usually sent via email with attachments and download links or CD mailers, all of which become unwieldy to manage.   Musio co-founders Mal Chia and Oli Young describe the platform as a hybrid of LinkedIn and Gmail applied to the music industry.   Chia shared his plans for the app with StartupSmart the day after they won Startup Weekend.   CareMonkey   CareMonkey is a software for schools, clubs and businesses that enables these groups to access parent-controlled emergency and medical forms. From permission slips to serious medical information, the app is designed to ensure carers have access to the information they need to make the right decision for children.   The app was part of a Startup Leadership Program and has rolled out into 21 schools in 2013.   Launched by Troy Westley and Martin Howell, they’ve been building their sales team and are looking to expand into the UK and US later this year.   Epark   While this idea is still only that, it’s a promising one to solve the constant clutter of cars trying to get out of car parks.   Epark will be a software, possibly deployed as a mobile app, that scans sensors as vehicles enter and exit car parks to calculate the right fee. The amount is then deducted from the credit card or pre-paid account linked to the scanned vehicle.   Alphatise   This online marketplace aims to help sellers assess actual market demand for their product through a series of wish lists with a twist. For each item listed, the buyer also indicates how much they would be willing to pay.   Sellers on Alphatise can then use the data shared and offer deals to pre-qualified buyers, or target new buyers with push advertising. The app also allows time-based deals, geo-targeting and competitor targeting.   Co-founded by Paul Pearson and Richard Frey, the team has now grown to four including chief technical officer Linus Yong and chief operations officer Kent Hume.   They recently raised $1.5 million and spoke to StartupSmart about their plans.

Introducing our Best Startup finalists for the 2014 StartupSmart Awards

3:48PM | Thursday, 27 March

With so many excellent and diverse startups out there, picking only five startups to celebrate as candidates for the big title this year was never going to be easy.   The following were picked based on the strength of the idea and how well the company has performed on their early goals.   The winner will be announced at the StartupSmart awards night. You can follow the awards night with the hashtag #susawards.   b2cloud   Mobile app development is a booming industry, with this startup well placed to make the most of it, already working with major brands such as Virgin Mobile and the official Sydney New Year’s apps for Telstra.   Founded by Luke Smorgon and Josh Guest, b2Cloud brought in over almost $100,000 last year. The team are keen to stay ahead of the crowd and are already experimenting with apps for wearable technology such as Google Glass and Galaxy Gear.   Tommy Swiss   Online furniture retailer Tommy Swiss launched with a new way of buying furniture.   Founder Jimmy Du says there appeared to be only three options: aggregators and drop shippers; local focused offerings; and importer focused stores. All had their pros and cons, especially around delivery.   Du’s hybird model, where 50% is exclusive to his brand, is working for him: the company brought in over $2 million in revenue last year.   Paws for Life   Pet supplies may not sound like a rich opportunity for startups at first, but when you consider the prevalence of pets and how much their owners are willing to spend on them, it becomes a very attractive industry quickly.   For the Paws of Life cofounders Mike Frizell and James Edwards, it was too good an opportunity to miss, as they saw the millions of venture capital dollars being poured into similar online offerings in the US.   The company made $5 million in revenue last year and is growing rapidly.   The founders spoke to StartupSmart about their $1.5 million raise and growth plans last year.   Bugcrowd   Online security is a multibillion-dollar industry set to keep growing for years to come. Crowdsourcing is also a burgeoning phenomenon. This startup is right in the sweet spot to ride both waves. Founded by Casey Ellis and Chris Raethke, BugCrowd runs competitions, known as bug bounties, with professional hackers and testers for big clients who want to make sure their websites are as safe as possible.   Built on a marketplace model, the company made over $250,000 in revenue last year.   Ellis spoke to StartupSmart about their $1.6 million fundraising round, moving to the US and learning to speak American in September last year.   Wine Cru (Vinomofo)   After a couple of years trying to find the right business model to monetise their passion, wine deals site founders Andre Eikmeier, Justin Dry and Leigh Morgan have settled on one that brought in over $10 million in revenue last year.   Taking on the two biggest grocery sellers in the country, Vinomofo connects wine consumers to deals and a wider range of winemakers.   In the past six months, the user base has almost doubled, and their e-commerce rates have skyrocketed.   Eikmeier spoke to StartupSmart about the struggle to find the right business model and the risks they took to make it work in November last year.

Why and how Australian start-ups must overcome their fear of failure

3:22PM | Wednesday, 12 March

When a home-grown entrepreneur returned from Silicon Valley recently to run a series of events in Brisbane, he was struck by a strong sense that Australia’s fear of failure was holding the community and technology sector back.   Adrian Turner cited the poor returns of the tech venture capital industry so far and the cultural background of the country as contributing factors.   To get to the bottom of the issue, StartupSmart spoke to a range of community leaders across the country.   Aaron Birkby is a serial entrepreneur and a co-founder of Gold Coast start-up incubator Silicon Lakes. He told StartupSmart cultivating a culture that embraced failure should be a priority for the start-up ecosystem.   “I absolutely agree that Australia has fear of failure and that it’s holding us back. It’s causing so many lost opportunities,” Birkby says. “We learn it in school where the focus on grades and scores discourages people from trying new ideas, taking risks and messing up.”   Birkby believes the key to creating a more robust culture is for successful entrepreneurs to share candidly about their failures.   To this end, he seeks out mentors for the incubator who have not only successfully exited start-ups, but also stuffed a few up.   “Mentoring, and entrepreneurship really, isn’t just about the business. It’s all the emotional aspects around it too,” Birkby says.   Beyond sharing the gory details of smashed start-ups, bankruptcies and broken relationships, Birkby says the start-up community embrace the fact failure is best way to learn.   “The time I’ve spent in Silicon Valley, people talk about failures as badges of honour. There are rumours some angel investors won’t even look at your idea if you haven’t failed at something first,” Birkby says.   A survey of over 1000 Australians conducted in 2013 found more were planning to launch their own businesses than ever before. But almost a third said they had a pronounced fear of failure and over a quarter feared giving up the security of full-time work.   Ann Parker is a co-founder of Telstra’s Sydney-based accelerator program Muru-d. She’s run accelerators across the world and says the fear of failure is more pronounced in Australia than the United States and Western Europe.   But she’s positive about Australia’s chances to create a more enabling culture, attributing the heightened concerns about failure as a growing pain of fledgling start-up communities.   “I think the best way to describe this fear of failure is a learning curve that we need to overcome, as we’re taught it from a very young age,” Parker says. “I’m not convinced that Australia is worse than all other countries, it’s just a bit behind on the curve.”   According to Parker, failure for tech companies is getting cheaper and easier to fix so start-ups can fail quickly and relatively painlessly.   “We need to keep celebrating that failure is good. The only thing that’s bad is if you try the same mistakes again,” Parker says. “If we can embrace the culture of fail fast and embrace the lessons learned and if we can get that across more parts of the ecosystem then we’ve done a good job.”   Fear of failure doesn’t exist in isolation. Parker says the best antidote and action start-up communities can take is encouraging an open and collaborative culture.   Businesses fail for a range of reasons. According to a study published in 2013, the most common reasons were management issues.   Of the 1000 business owners surveyed, 61% of S said small businesses failed because of an inability to manage costs, 50% said inexperienced management, 50% said poorly designed business models or no business plan, 49% said insufficient capital, 37% said poor or insufficient marketing, and 35% said insufficient time managing the books.   But attitude also plays a powerful role, says Harry Schiff, the founder of Adelaide-based errand outsourcing start-up Agent Anything.   Originally from Canada, Schiff told StartupSmart both countries, but especially Australia, needed to get comfortable with the arrogance break-out start-ups require.   “I don’t think anywhere, besides Israel so far, has had the balls of the Americans when it comes to totally disregarding what people say. But that arrogance and bravado helps a lot in the fake-it-till-you-make-it tactic that truly innovative start-ups need to be the next huge thing,” he says.   The impact of a chronic fear of failure isn’t just about people not trying their ideas. Schiff says it is also shaping how our entrepreneurs work.   “There is a lot of momentum here to go and work, but people focus on activities rather than on getting stuff done. Because setting a firm goal with a due date makes it far more likely you’ll have to admit, even just to yourself, that you’ve failed.”   He recently ran an event in Adelaide in which start-up community leaders shared their biggest mistakes so far and what they’ve learned.   “This event is not about celebrating failure. It’s about celebrating actually doing things, not just trying. When you do things, when you get out there and try stuff, you’ll fail. It’s just how these things go.”   In the coming months, the event team are launching a website to track the failed product releases of tech powerhouses such as Google, Apple and Microsoft to demonstrate innovation and failure go hand-in-hand, even for the biggest and best companies.   After the failure of Google’s Wave, Australian head of research and development Alan Noble told StartupSmart there while it was a failure, it was worth it.   “Australians can be too quick to judge our failed entrepreneurs. We should be giving them the credit to acknowledge they took a chance and they can try again,” he said.   “By almost any other criteria, there are incredible lessons that we learned from Wave – including technology lessons and execution lessons. The individuals from that project have gone on to do good things… It was a great undertaking for us and something we learnt a lot from.”   Schiff, who studied science in university, adds it takes a long time to normalise and embrace failure, but adds substituting a call to get comfortable with failure for a call to implement a culture of experimentation, may be the key to change.

THE NEWS WRAP: Business conditions and confidence weaken

3:25PM | Tuesday, 11 March

Hopes of a post-election economic boom have faded further, with business conditions and confidence now both falling, according to NAB’s latest monthly business survey.   The survey shows business conditions fell from a score of five in January to zero last month, with a score of zero being neutral, while business confidence fell to seven, down from nine a month earlier.   “As expected, the sharp turnaround in manufacturing recorded last month was largely unwound, and is now more consistent with the difficult environment that continues to face Australian manufacturers,” the report states.   “Employment conditions are sobering – having reversed nearly all post-election gains and pointing to further labour market deterioration.”   Zahra changes his mind over David Jones exit   David Jones chief executive Paul Zahra has reversed a decision to stand down from his position, following the appointment of Gordon Cairns as chairman of the retailer on Monday.   Cairns, who joins the board after the resignation of former chairman Peter Mason and two non-executive directors, says the company is yet to appoint external advisors to assess any takeover offer by rival Myer.   “Anyone we appoint from the outside would evaluate the standalone value of David Jones and compare it to the alternatives, which will leave us in a better position to judge the Myer proposal,” Cairns says.   ACMA investigation finds Telstra breached the privacy of 15,775 customers   A joint investigation by the Office of the Australian Information Commissioner (OAIC) and the Australian Communications and Media Authority (ACMA) has fined Telstra after the personal details of 15,775 customers leaked on to the internet.   The investigation found that between February 2012 and May 2013, the personal information from more than 15,775 Telstra customers, including 1257 active silent line customers, was accessible on the internet.   The investigation was launched following a complaint that the names, phone numbers and addresses had been accidentally made available to be viewed on the internet.   Overnight   The Dow Jones Industrial Average is down to 16351.2. The Aussie dollar is down to US89.77 cents.

Australia’s oldest start-up incubator Pollenizer turns six: How it’s evolved

3:30PM | Tuesday, 4 March

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.

THE NEWS WRAP: John Singleton looks to invest in TV broadcaster

3:29PM | Sunday, 2 March

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.

The eight biggest announcements from the 2014 Mobile World Congress

2:47AM | Friday, 28 February

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.

Start-ups sought to pitch to enterprises at Australia’s largest agile development conference

2:54AM | Monday, 24 February

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.

The Australian tech start-up brain drain: Why are our founders heading overseas?

2:27PM | Wednesday, 19 February

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. If you have ideas and opinions to share on this issue, please get in touch: rpowell@startupsmart.com.au

Sydney University accelerator announces summer intake and demo day

2:11PM | Tuesday, 18 February

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 know

2:16PM | 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.”

Why Australians love marketplace start-ups and why they work well here

2:18AM | Saturday, 8 February

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.

Scale angel investor network announces first investment: $655,000 in Paloma Mobile

1:13PM | Wednesday, 29 January

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 NEWS WRAP: IMF warns central banks against raising interest rates too quickly

1:27PM | Tuesday, 21 January

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.

THE NEWS WRAP: Telstra building financial war chest as it prepares to sell off Sensis

1:36PM | Sunday, 12 January

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.

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