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Australia vs the US for start-ups

Tuesday, 11 December 2012 | By Rebekah Campbell

I'm writing today from the plane travelling between San Francisco and New York.

 

I'm in the US for six days and it's the third time I've been here in five months. Last time I was out, I had some great meetings with a bunch of investors.

 

The problem is – after I pack up my PowerPoint deck and leave the room, no matter how excited everyone is, it's hard to close deals from the other side of the world.

 

It's important for investors and entrepreneurs to spend time together before making a commitment, so everyone is comfortable that the relationship will work. So I keep travelling back and forth until our product and team is in a position where I can move over here full-time.

 

We're still at the fairly early stage of our start-up but the more time I spend here the more obvious are the advantages and disadvantages of starting a tech company in Australia as opposed to the US.

 

Other than the clear market size difference, here are some of my experiences:

 

 

Funding

 

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Above: The view I spend the most time admiring in New York: Starbucks coffee and my laptop.

 

Negatives

 

It's harder to raise early stage capital in Australia.

 

If you've seen an episode of the new 'Silicon Valley' TV show you may be scratching your head wondering how such terrible ideas gain funding. It doesn't just happen on TV, either.

 

There's a culture of backing new ideas and entrepreneurs and not expecting them all to work out. This doesn't happen in Australia where a handful of funds back proven businesses who need to grow, rather than new ideas.

 

US funds don't like backing early stage Australian companies; many have a policy against seed investments outside the US. This is because they like to add value by getting involved and think it would be hard to do this beyond the US.

 

Positives

 

But Australia has an awesome government grant system that backs start-ups like ours. We've been fortunate to receive assistance from Commercialisation Australia as well as the Export Incentives and R&D Concession schemes.

 

The level of support the Australian Government gives start-ups amazes our US directors and investors; there's nothing like this for companies out here.

 

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Product development

 

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Above: Me on the plane, writing this blog.

 

Negatives

 

Every time I travel, I meet someone who talks me through how another company did something great that I could apply to Posse. This week I heard about a clever trick LinkedIn used to grow their user-base, which I'm going to copy. If I hadn't been here, I wouldn't have heard the story and it would have taken me longer to figure out.

 

No matter how many tech blogs you read, nothing compares to being in the middle of the community where the best companies are being developed and learning from everyone else's success. Everything is moving so quickly that not being here means it can be all too easy to waste time solving problems that someone else has already figured out.

 

Positives

 

The plus side of being in Australia is that you can develop your product under the radar, testing and evolving without the scrutiny of US tech media or investors.

 

When we launched our first beta in June, it offered a dismal user experience and didn't make a lot of sense. But we could launch early, learn from users and evolve to the point where we now have impressive engagement metrics and are about to launch V2.0.

 

This would have been much harder in the US where I'm sure our beta would have attracted coverage in TechCrunch, many influential people would have signed up and written us off. The cool thing about being in Australia is you get another shot at launching a product that's been through months of iterations and is working.

 

A similar phenomenon happens in music, where a disproportionate number of top bands come from small towns. Hardly any come from Sydney, because industry types will often check out and write off a band when they've only played a handful of gigs.

 

Out in the country, the same band could spend years playing at local clubs, testing and refining their music with audiences before attracting the attention of the city industry and media.

 

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Talent and culture

 

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Above: The fun part of travel: Lars and I at the Facebook Christmas party.

 

Positives

 

It's hard to build a great tech team no matter where you are, but we found it easier to attract top engineering talent in Australia. I looked into recruiting a development team in the US when we closed our first funding round, but we found much higher quality candidates in Sydney.

 

There's a certain type of engineer who likes the crazy challenge of a start-up. Australia has some great universities that turn out the talent, and there aren't nearly as many ambitious and interesting start-ups to compete with.

 

Negatives 

 

One negative (and I appreciate this comment may draw some criticism) is that our culture isn't as hard working as in Silicon Valley. When you walk down the back streets of Palo Alto late at night you see offices packed with team members bashing away at a new product.

 

I've been at the Facebook office at 10pm and it seems that half the people are still there. I don't sense the same level of competition and urgency in Australia, so working at this level isn't normal. Of course, our team at Posse is an exception – they're often on board at 10pm and on weekends, especially at the moment. We're fighting to get the next version of our product out for Christmas!

 

 

Travel

 

Negatives

 

If you want to launch a global company out of Australia, then for the reasons I've listed you better be prepared to travel a lot. And I'm not talking business class flights and five star hotels!

 

When I travel, I take the cheapest flights available and stay with friends or use Airbnb. It's exhausting, lonely and hard spending so much time away from loved ones at home.

 

Positives

 

But through travelling for Posse, some of the most inspiring and wonderful people in the world have become close friends. I've learnt so much that I wouldn't swap a minute of it for a safe job at home, and sometimes it can be super fun - like this week when I scored an invite to the Facebook Office Christmas Party!

 

I'd say that for Posse, starting in Australia has been more positive than negative. It's hard to balance running a team and developing a product in Australia with the need to constantly spend time halfway around the world.

 

I've found it vital to travel a lot, involving investors and directors from Silicon Valley. That way, we still reap the learning benefits available to companies based in the US.

 

Raising money is much harder from Australia, which is frustrating at the time but I think in the end it's healthy for start-ups to struggle a bit. The entry bar is much higher so you have to get clear about what you're doing and focus. Nothing is more motivating than knowing the next raise will be harder than the last, so you better show some progress!

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