Founders of Australian tech startups should be planning their exit early on, according to the founder of 1Form. Chris Koch and his co-founder sold their startup to realestate.com last year for $15 million after launching the business in 2006. The software is used by essentially every real estate company in Australia. “When we started 1Form we didn’t have that mentality, we were just two guys in our living room,” Koch says. “After hearing that experience and doing a heap of research our strategy this time is very much different. It’s really about being razor-sharp with our strategy and dealing with it from day one.” Koch says he would encourage other startup founders to consider what their plan would be for an exit right from the get-go. “If you don’t do that from day one it’s too late when it comes time to exit to knock on the door of one of these businesses and say, ‘you haven’t heard of me before but this is what I do’,” he says. “It’s an uphill battle because you have to sell the entire story from that moment forward, rather than them coming to that conclusion by themselves.” Koch is now working on Pop! – a startup aimed at being “auto-fill on steroids” so users can synch their personal information with relevant third parties and keep their details up-to-date. He says he and his co-founder Chad Stephens went straight from 1Form to Pop!, though in hindsight a one or two month break “would have been nice”. “Some people might have a big emotional attachment to what they are doing, so they might want to be part of it going forward for a few years and stay on to make sure their baby flourishes in its new hands,” he says. “And then there are those who might want to take some time off for two or three years… it’s different for everyone.” Phil Morle, co-founder and chief executive of Pollenizer, told StartupSmart it is important to plan ahead for a potential acquisition but not in a way that is counterintuitive. “That helps founders to focus on their business in a certain way,” he says. “Every business we start could go in an almost infinite number of directions, so it’s worth understanding where the startup fits in an ecosystem of related products and services and who it would help the most. And that tends to be people who would benefit from your customers – but those people might not be an exit in the end, they might be a partner for example.” Morle says things rarely align in the Australian startup ecosystem, so his advice is for founders to be “hyper aware” of the market. “If there’s an opportunity or direct offer then I think founders should be encouraged to jump on that conversation and explore that opportunity actively, because it might be a door that is opened momentarily that will be quickly closed,” he says. “It doesn’t mean you have to say yes, but don’t assume a bigger offer will come next year because it might not – the market might go off the boil.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Increasing access to venture capital for startups should be the goal of changes to the Significant Investor Visa, according to OneVentures managing partner Dr Michelle Deaker. The government’s National Industry Investment and Competitiveness Agenda is set to be released on Tuesday, and as the Australian Financial Review reports, it’s expected to recommend changes to the visa, which is available to overseas high net worth individuals who invest a minimum of $5 million for at least four years. The visa conditions are expected to be altered to encourage investment in areas the government deems most important. Exactly what areas those might be, won’t be known until the report is released. Deaker says they should include the venture capital industry and startups. “I think it would be a great opportunity to channel capital into those funds generating economic investment in Australia,” she says. “Exactly what I’d be doing is to trying to channel capital into those areas where there are structural market deficiencies, and one of those areas is venture capital.” OneVentures released a white paper on Monday titled ‘Startup…and then what’ which pointed out Australia’s strong record of starting businesses and a high calibre of early stage venture capitalists. It also noted that according to the 2014 Global Innovation Index Australia ranks 17th of 143 countries, up two places from last year. However, the paper says Australia “is not yet putting the runs on the board as an innovative centre for VC and PE (private equity)”. Deaker says lack of capital, plus the fact Australia struggles to commercialise its innovation, is holding Australia’s startup ecosystem back. Another sore point for Australian startups over the past few years have been changes to employee share schemes by the Labor government in 2009, which meant employees were taxed when they receive share options from their company, rather than when they are sold or become full shares. The government is expected to reverse the 2009 changes so that share options will be taxed when they are converted to shares. The move’s been on the cards for some time, given the considerable pile of evidence of the benefits of such reform. “The implementation of the changes in such a thoughtless way was a disaster for the early stage community,” Deaker says. “We all spent a lot of money and time working out how to deal with it. When they came in they didn’t sit down and look at the impact it would have. This will go a long way to getting our startup economy really rejuvenated.” Legal product manager at LawPath, Dominic Woolrych, says it’s a big help to startups and their employees, but doesn’t necessarily mean it will be any cheaper or less complex for them to use the scheme. “These reforms cannot come quickly enough for Australian startups who are losing potential employees to overseas markets,” he says. “The reforms are expected to mirror the English ESOP program known as the Enterprise Management Incentive Program. The advantage of this program is that it does not require employees to pay tax on shares granted by an employer under a certain threshold. “Solving the tax issue for the employee is crucial. However, the reforms may not solve the complexities and high costs involved for bootstrapped Australian startups. “For Australian startups to be competitive globally, we need to be able to retain our talent and attract more of it from overseas. The reality is the reforms are a step in the right direction but likely won’t go far enough to stop Australia haemorrhaging talent to London and the US.” Pollenizer chief executive officer Phil Morle says the proposed changes are great news for Australia’s startup community. “The current system has in some cases prevented us recruiting the founder talent we need to build Australia’s next generation of businesses,” he says. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
One of Australia’s first startup incubators Pollenizer is shifting its focus from helping individuals create startups, to assisting big corporates like Optus spin out their own startups. Pollenizer co-founder and chief executive officer Phil Morle says the most valuable asset is what it called its “startup science”, its knowledge of how to build and support startups. With more and more big corporates becoming interested in disrupting themselves, rather than waiting to be disrupted by others, Pollenizer is now focusing on offering them the know-how required to do just that. “Startups are still the heart of what we do,” Morle says. “We’re not putting suits on and going into Singtel and drawing things onto the whiteboard, we’re bringing the essence of what startups do to those sorts of companies. “Turning employees to entrepreneurs and helping companies that are exceptionally good at scaling things that are known, create and scale the unknown.” Pollenizer is helping Optus run a new innovation program which will see the company run a competition where 200 of its employees from around the world will compete to create their own startup. The best team will then spend three months with Pollenizer where they will attempt to create a successful business. Morle says it’s a “commercial agreement” with Singtel, and Pollenizer will have the opportunity to invest in the startup during the incubation process. The employees will retain ownership of the startup and Singtel will ultimately decide whether to invest. “We do look for and have the opportunity to invest in the businesses incubated out of the program, that’s very important to us because we are very entrepreneurially minded.” In addition to targeting big corporates, Pollenizer is also casting its eye to opportunities in south-east Asia. The company is currently active in Myanmar, the Philippines and Singapore. It has partnered with Kickstart Ventures in the Philippines, and has designed a program called ideabox in Myanmar in conjunction with international telecommunications company ooredoo. Morle says Myanmar is a good example of the size of the opportunity that’s becoming available in developing economies in the region. Thanks to increased access to the mobile internet, the nation is moving from less than 1% of its population having access to the web, to over 80% in the not-too-distant future. “We’re very excited about south-east Asia as a burgeoning economy and a burgeoning startup ecosystem,” Morle says. “We’re excited by the pace of change and the opportunity that’s there to make internet companies for populations of 10s of millions of people.” And it’s for this reason that Morle sees other Australian incubators and accelerators looking to the region as a potential source of growth. “There’s a vast market for us all to join,” he says. “We’re already (in Asia) as a nation of entrepreneurs, and that’s only going to get more robust over the next few years.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Startup incubators Pollenizer and BlueChilli have, unbeknown to each other, both launched new online courses which they hope make their advice more accessible to time-poor and cash-strapped entrepreneurs. BlueChilli chief growth hacker Alan Jones says it’s no surprise that the two incubators are on the same page. “Like Pollenizer, BlueChilli has a supply problem,” he says. “Here at BlueChilli we see 200 to 250 ideas each month and on average say yes to two. We’re looking for a way to give people not yet ready for BlueChilli a chance to learn how to be a great startup founder. “It’s also to help people that are considering to be a startup founder, but aren’t quite ready to chuck in their full time job yet.” BlueChilli’s 99toLaunch program runs for 90 days and costs $199, but will eventually move to $299. For $US199 entrepreneurs can take part in Pollenizer’s 60 Day Startup program, which has been designed to help them go from “idea to action as quickly as possible”. Both set out a schedule for participants to follow and help guide entrepreneurs through the early stages of creating a startup. “Pollenizer and BlueChilli have been around for about the same amount of time, and each have been developing a knowledge base, a curriculum, and both are at the point of maturity, where we can take a chunk of this stuff and make it available,” Jones says. Pollenizer chief executive officer Phil Morle says the 60 Day Startup program is a way to make the incubator’s startup advice available to many more people. “The genesis of it comes from the last three years of Pollenizer where we’ve needed to develop waves of startups and rapidly get all of our teams and entrepreneurs up to the same level,” he says. “About three years ago we developed a training program internally and a year after that made it available for other people, all over the world for the last couple of years. [We did this] both ourselves and as part of the muru-D program. “The challenge has always been, as a business model how do we make this available to as many people as possible, make sure they’re not redeveloping the wheel, and how do we not charge them money they don’t have. “And yet we need to make a profit from it, so we moved it into this online format.” The 60 day program includes 12 modules, which each focus on a specific aspect of founding a startup, including developing a strong idea, designing a minimum viable product, and finding a co-founder. The program can be taken anytime, and entrepreneurs can complete it at their own pace. “The biggest questions for entrepreneurs starting out are: What’s normal? What should I be doing? Some days it feels too hard so you don’t want to do anything, you feel like you’re never going to get anywhere,” Morle says. “This program tells you what to do, based on our experience. “Entrepreneurs can have a self-motivated program, but something happens every single day to take them out of procrastination and help them create a business that has been proven, been launched, has customers and evidence, and that they can starting talking to people about.”
We asked a number of well-known Australian entrepreneurs to share their stories around “faking it ‘til you make it”. Here’s what they had to say: “When I was 17 my friend and I got asked to install a 10 computer network at a local business. It was 1991 and the product they wanted was Lantastic with a 10 kilobyte coax bus network. We said we had done that a number of times and got the job. On Friday at 5pm they packed up and left. We opened the boxes and started reading the manuals. Monday morning at 4am after about four hours sleep all weekend we got it running. Scary. But fun.” – Mick Liubinskas, head coach at Muru-D. “One day I find myself onstage in front of hundreds of tech people. I'm supposed to be sharing stories of building (and let’s face it – fucking up) a life and a business. Suddenly, I realise that I am an imposter. These folks know their shit. They sit tapping on their keyboards with furious determination, simultaneously tweeting, coding and I dunno, maybe internally figuring out some epic longstanding algorithmic problem in their head. These guys eat books of code for breakfast. I on the other hand can barely figure out how my iPhone works and have still never managed to successfully download a movie without my computer, or my face, exploding. “The MC reads out my bio, who is this mythical creature he speaks of? Oh yeah, me. I think to myself, yep I've done all those things. I belong here. But still I feel like a fraud. Am I on glue? How the hell did I get here? Why the fuck did I agree to this? I'm so nervous I almost vomit on my shoes. But here’s the thing, half of them look bored anyways and it’s too late to back out now, so I just roll with it. Instead of telling them what they should do, I just rock up on stage, am more vulnerable than I ever thought possible and I simply tell these folks a story or two. “And what do you know? They like it, they learn something, they laugh, they're inspired. I breathe a silent sigh of relief. But that doesn’t mean that it became easier. But I keep doing it. Constantly. With false bravado. People believe I'm a speaker. They believe I'm an entrepreneur. And one day I wake up and realise that all of a sudden, I am both.” – Avis Mulhall, serial entrepreneur and founder of Think, Act, Change. “When I joined 99designs in January 2009, I was pretty much a one-man show. I worked out of my living room in San Francisco for over a year, building and moderating our designer community, meeting with potential partners, helping customers via a basic online chat system, writing press releases…you name it, I did it. Though 99designs launched in Melbourne, the company was focused on the US market from day one, with an American-English site and all transactions in US dollars. Little did our early customers know that the company’s US presence consisted of just one person working around the clock in a tiny San Francisco apartment! Patrick Llewellyn, our CEO, relocated to join me in 2010, and now I’m one of more than 50 staff in our SF office, with over 100 employees worldwide." –Jason Aiken, product manager, 99designs. "If you sell a product or service to US companies, you need to look like a US company otherwise you'll have a lot of friction. Incorporate a US sub and print business cards with a US address and phone number and route the number to either voicemail, an answering service or your local mobile number. Just be prepared to take a few early morning calls!" – Matt Barrie, CEO Freelancer.com “When I was a theatre director, I would design the brochure before the show. I would get thousands of them printed and tell everybody that this was what they would come and see in a few months. Because I did so, I needed to deliver. Because I did so, I defined my focus and something to target. Because I did so, people know what I was working on and knew how to help. I sung the world into existence.” –Phil Morle, CEO Pollenizer.” And here’s a different perspective on the idea that we should “fake it ‘til we make it” from a blog post by The Fetch CEO Kate Kendall, who declined to share a story saying she didn’t think we should encourage the idea: “I had a micro-epiphany the other day when it came to looking at how I tell the story of my company. For a while, something in my gut wasn’t quite right – I also couldn’t get my head around how to play the game. Then it hit me – that’s because 80% of startup land is bullshit and I hate bullshit. I just can’t do it. I can’t lie (well, not express my version of reality). It’s all vanity metrics, bloated achievements and boring same same. I was viewing a stream of old accelerator pitches the other day and was mesmerised by how impressive each founder was. It was like watching magic. But then I stood back and realised I’d heard of none of the companies and upon a Google DuckDuckGo search, found minimal product or press trails on the web. I questioned if many were still around. “Remember: you can progress and tell it like it is.” – Kate Kendall, CEO The Fetch
Even a brilliantly creative idea is not enough on its own to build a booming startup. The first major challenge many founder fails at is validating their idea. Startup mentor and Pollenizer cofounder Phil Morle shared his tips on how to actually check if there is market demand for your product with us last week. “Validating assumptions is important in a startup because it is ALL conjecture at the moment of inception. Nothing is proven. Startups are statistically likely to fail and the reason they fail is because one/all of the 100 initial assumptions are wrong. A validated business model is one that has moved assumptions in the model from hypothesis to fact,” Morle wrote. Below, Ed Onggo from one-year-old music ticket booking app GiggedIn shares his journey to discover if his idea was as great as he thought it was.
The author of the book Running Lean and successful startup founder Ash Maurya says “the true product of an entrepreneur is not the solution, but a working business model. The real job of an entrepreneur is to systematically de-risk that business model over time.” Validating assumptions is important in a startup because it is ALL conjecture at the moment of inception. Nothing is proven. Startups are statistically LIKELY to fail and the reason they fail is because one/all of the 100 initial assumptions are wrong. A validated business model is one that has moved assumptions in the model from hypothesis to fact. Validation in a startup is proof that a business model has been de-risked appropriately for the stage it is at. Some commonly articulated stages are emerging from startup practice. The initial stages are: ● Problem/Solution Fit: prove that others agree there is a problem to solve and that your idea can solve it. ● Product/Market Fit: prove that there is a working business model. Customers discover the business, use it and come back. All this makes money. As a startup moves through the stages, more risk is taken. People leave jobs, stake their reputation and invest capital in increasingly large chunks. I like to look at validation against this. Against the pain that happens if we are wrong about validation. Ask yourself, what do you want to know is true (not just a hypothesis) before you take on this next level of pain? Problem/solution fit Before problem/solution fit, the goal of an entrepreneur is to prove that there is a real problem to be solved with a low cost of failure. This means that it is ideally possible to achieve it without investing too much capital, without quitting a job, without taking any investor money. This is completely possible. Here is an idea for what you might do in a single day, for example. Some principles: ● Every validation should have a strong signal from BOTH the feeling in your gut AND actual numbers. Numbers can become a crutch used to support crappy ideas on their own. And your gut? Malcom Gladwell is right that it can tell us a great deal in a blink, but it is also the greatest liar when you want something so badly to be true. ● You should define what you want to see in the numbers BEFORE you start trying to get them. This is to stop you changing the rules along the way. In problem/solution fit, it is quite possible to run this phase (without creating a custom web application). I like to see a small number of people do something that proves they value what I want to build as a business. Problem/solution fit quick benchmark Every business is different. So apply these suggestions to what your gut tells you. Customers 50 Activated customers 70% Visits / customer / month 3+ Payment More than $1 (it’s the hardest $) Here, you have a decent number of customers trying your prototype. 70% of them are ‘activated’ which means they have performed the steps you need them to perform to truly engage with the solution rather than bounce. Users are coming back three times per month or more and someone somewhere has given you some money because they value what you are building. If you hit these numbers, and your gut told you that the people behind the numbers were valuing it, would you quit your job or invest $50K? Imagine the ’pain’ and then decide if it is validated enough. This validation can be done in under three months and you would be a bit worried if you could not do it in that time. Product/Market Fit This is harder. Product/market fit can take six months to a couple of years and is challenging because there are so many parts to a working business model. One of them can be a point of failure and send ripples through the rest of the model that can send a team back to the whiteboard. The main metric to track in product/market fit is ‘traction’. Traction shows that the business is going somewhere. Customers value it. Customers keep coming back. Customers tell their friends. Andrew Chen gave a helpful talk last year that started to define some benchmarks for what product/market fit looks like (slides 7-8) in the numbers. Usefully, he suggests different benchmarks for SaaS and consumer products as the business models can be quite different. I would be surprised if many startups outside of Silicon Valley get that kind of traction in this phase. My suggested benchmarks are below. Product/Market Fit Quick Benchmark Consumer SaaS Customers Clear path to 50,000 Clear path to 10,000 Activated customers 50% 50% Visits / customer / month 4+ 20+ Payment Break even or trials to show business model at scale is profitable. Clear path to $100K MRR. 3x CAC to LTV. 5% conversion from free to paid. Consumer products need to be growing with reproducible, organic growth. If you can hit Andrew Chen’s 100K users then go for it, but I would personally be happy with 50K as long as traction is there and there is proof that an investment in growth will have predictable results. SaaS products will likely have fewer customers paying more money after a longer sales cycle. The payment benchmarks are becoming fairly standard. $100K MRR (monthly recurring revenue) through 5% of the customers converting to paid accounts. SaaS startups should aim to show that the lifetime value (LTV) of a customer is more than 3x what it costs to acquire the average paid customer. If you hit these numbers, do you think investors would give you $2-5m? Remember, imagine some pain and gut check that the risk/reward potential is balanced. Phil Morle is the CEO at Pollenizer, a venture builder working across Australia and Asia building new startups. Follow their weekly insights for pro-entrepeneurs here.
There have been several attempts at creating a snapshot of the Australian startup scene, but when startups launch and fail on almost daily basis it’s a hard thing to capture in a useful format. There’s also no up-to-date info on what the industry means to the overall economy. The most detailed report on the industry, the Startup Economy Report, was completed in April 2013 when Google Australia stated that “The Australian tech startup sector has the potential to contribute $109 billion or 4% of GDP to the Australian economy and 540,000 jobs by 2033”. In order to help facilitate growth and understand how the industry impacts the economy it’s important to have accurate information. Enter the Startup Wiki, a new initiative launched by Philippines-based entrepreneur Bowei Gai to try and build a comprehensive global guide to the startup world, with emphasis on regional stats and data. Originally, Gai set out to create a number of regional reports on his own, but found the task arduous along with the fact they became quickly outdated. To give an example of how the wiki can be populated, the Philippines entry has been created with up-to-date info. Australia’s entry remains sparse on information and it will be up to someone in the community to embrace the idea and start populating and editing it as things change. There’s some disagreement among Australia’s startup leaders as to whether the Wiki could amount to any value for the local community. Pollenizer CEO Phil Morle says surfacing what is normal for investors and entrepreneurs is an important part of helping us plan and grow. “There are lots of initiatives like this and they are quite an investment of effort,” Morle says. “The Wiki format will help share that load, but who’s going to start in Australia?” Adventure Capital managing partner Stuart Richardson says an independent, crowd-sourced, and verified record of fact, such as that Bowei is attempting to create and sustain, will be valuable to the rapidly growing Australian entrepreneurial ecosystem. But Startup Victoria cofounder and director Scott Handsaker is slightly sceptical of how useful the wiki could be. “The underlying motivation behind this is laudable, but it remains to be seen whether a single global repository like this will be useful,” Handsaker says. “The problem with anything like this is that unless it is institutionalised at multiple levels, effort will fade away and people will move onto other things. I would want to see evidence that the founders of the wiki were in it for the long term.” Handsaker believes when it comes to anything to do with a startup ecosystem, the answer is always local. “The best resource for this kind of information is going to be generated and held locally, and it is not clear that attempting to put it into a global repository as well will have any extra benefit,” he says. “Ecosystems are grown by local people, doing local things, for local returns.”
Australia’s first startup incubator, Pollenizer, will be moving its Australian operations to Hub Sydney, forging a relationship with one of Australia’s largest communities of entrepreneurs. The move means Pollenizer will have group regional (both domestically and Asia-Pacific) access to embedded communities. Pollenizer CEO Phil Morle said the move was a strategic one to fit in better with their higher purpose of “growing a guild of entrepreneurs across borders”. He says this fits well with Hub Sydney, which has a goal of growing a wondering brand of entrepreneurs. “It’s not a case of just moving our desks in,” Morle says. “We have our own dedicated office and within that we can elastically adapt as we grow new companies.” The new companies will also be established in the hub. The move aligns with the changes in Pollenizer over the last six years. Two years ago, the Sydney Hive was very much its core base and had 36 employees. The company is now distributed across Adelaide, Perth, Brisbane, Melbourne as well as Asia. “These days we are based as much in the region as we were in Sydney,” Morle says. Pollenizer will embed its program into the community of 1000 like-minded entrepreneurs with the common goal of supporting entrepreneurship. This partnership opens opportunities for mentorship and alliance within Hub Australia. Pollenizer makes the move in May. Disclaimer: I am a former employee of Pollenizer
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.
Happy Startup Spring Festival! What we’re celebrating and what’s next for the Australian start-up community9:22PM | Thursday, 19 September
The Australian start-up community is one week into a three-week celebration and outreach festival, Startup Spring, with over 100 events taking place across the country. The communities in Sydney and Melbourne continue to thrive, with younger ecosystems in Brisbane, Perth, Adelaide, Canberra and Tasmania taking off. StartupSmart spoke to a range of community leaders to find out what they were celebrating, and how the national start-up ecosystem could keep moving forwards. Kim Heras, investor and founder of start-up community PushStart told StartupSmart the ecosystem had seen a lot of positive change in the last few years. “Everything from education, to the number of people starting up, to the amount of investment available and successful businesses built has increased in scale. Dramatically,” Heras says. “I've often said that the strength of a start-up ecosystem is the number of people who can make a living off it and we're seeing more and more people fit into that category.” Heras says the start-up community needs to focus on transforming its rapid growth into a sustainable ecosystem. “That involves short-term things like keeping the number of start-ups growing, getting more investment dollars into start-ups and getting more people making a living in the tech start-up industry,” Heras says, adding this will include education reform and policy changes, especially to make innovation and the tech start-up industry a priority. “We're competing with a flood of nations who are all positioning themselves to be global innovation hubs, but I honestly think we have a shot of making it happen,” Heras says. Laura McKenzie, co-founder of angel investor network Scale, told StartupSmart the increasingly close collaboration between different parts of the ecosystem was worth celebrating. "It's exciting to see an increasing amount of visible collaborations within the Australian investor and incubator/accelerator community - whether it be co-hosting events, co-investing in deals or convening to understand how we can best grow the ecosystem together," McKenzie says. She adds the team at Scale has been thrilled by the range of excellent female entrepreneurs in Australia, and says the ecosystem can and will do more to support women entrepreneurs. Orsi Parkanyi, founder and coordinator of national Women as Entrepreneurs network told StartupSmart the community needed to focus on raising awareness in the wider community both during the festival and in the coming years. “We need to make the words "start-up" and "entrepreneurship” household words. I wish to hear more and be able to use these words in mainstream media and wish that everyone in Australia knows what these words mean. We are yet to achieve this,” Parkanyi says. Parkanyi adds political pressure is still needed for the community to get the results they need. “Although recently there have been many heated discussions on the importance of small business in our economy, unfortunately there has been very little attention paid to the importance of entrepreneurship and start-ups in our future economy. I wish to see more discussions and more support from political parties in the space,” Parkanyi says. Phil Morle, founder and chief executive at Sydney incubator Pollenizer, told StartupSmart the Startup Spring Festival was a sign the ecosystem was maturing. “It has become quite large and is starting to demonstrate wins but it is still fragmented and invisible in places. Now is the time for the community to work together for deeper impact,” Morle says. He adds that the start-up community is getting stronger, and increasingly adept at self-organising. “People are working together to look at the fabric of the ecosystem to see where we are strong and where we are weak. This is happening in each city. While Melbourne and Sydney have a bit of a head start, communities in Brisbane and Perth are surging.” Claire Robertson, co-coordinator of the Perth chapter of the Founder Institute accelerator program says Sydney and Melbourne’s increasing international recognition was stimulating a healthy competitive desire for the rapidly growing Perth community to be counted. “The number of people interested in and participating in tech start-ups has seen a sharp increase in Perth,” Robertson says. “This change was initially catalysed by the opening of SpaceCubed and a rise in the number of events in the city such as Startup Weekends and meet-ups.” She adds that Perth, and Australia more broadly, still needs to address some of the funding gaps holding start-ups back.
Pollenizer, an incubator program based in Sydney, has long loved and taught the lean start-up method to founders. But as the approach continues to flourish in the start-up sector, entrepreneurs need to recognise fact from fiction when it comes to how the process works. Lean start-up methodology focuses iteration in order to discover what customers genuinely want so start-ups can be sure they’re solving a real problem, in order to get maximum traction. The team are coming to Melbourne for a two-day lean start-up workshop in the coming weeks. Co-founder and chief executive Phil Morle told StartupSmart lean has been key to Pollenizer’s success. “It de-risks the process, and I find that really powerful. It means we can spend our capital wisely. Lean spirals the whole way through, it’s about learning, holding yourself accountable and really testing what you believe, and having a shared language as a team,” Morle says. Pollenizer invests $100,000 in each new company in the program. “We found organically over the last five years, that the lean methodology helps us be in control of the discovery process as a start-up emerges. It means we can measure as we go along, and know where we are in comparison to where we should be,”Morle says. Myth one: Lean equals cheap or bootstrapping Morle says many people mistake the iterative, experimental process of lean for a cheap way to create companies. “Lean is a management discipline for maximising resources to discover and build value quickly and efficiently. Start-ups have limited resources and we have to do everything we can to get there fast,” Morle says. Lean involves launching early versions of the product to test hypotheses and ensure it’s developing in line with customer needs. “Using lean methodology means we can make sure the product we’re making is reflecting what customers actually want, and make it stronger and more profitable.” Myth two: Lean is only applicable to small ideas Morle says many people can mistake the process as being focused on small ideas, but lean works in organisations of all sizes. “It’s an iterative sequence to release something soon so you can start learning from your customers. It can start small if you need to, but over time, it can become enormous. Facebook is one of the best known lean start-up major companies, who still release early and release often,” Morle says. Myth three: Lean is inherently risky Because of the requirement to launch early versions of the product quickly, some entrepreneurs may be scared off lean because it feels riskier to launch less-honed products. “There is the fear that this will turn off your customers, never to be seen again. But the point of lean is to release early to make sure you have a series of tiny manageable failures that you can learn from,” Morle says, adding this myth is the opposite of the heart of lean methodology: experimentation and de-risking. “The most risky thing you can do as a start-up is to not try and get the customer to do something. The longer you go without seeing people use the product, the more risk we create as company.” Myth four: It’s only for technology start-ups While lean methodology was first created by Toyota after the Second World War to make the most of their limited resources and still compete with major American car companies, the lean methodology has expanded to the tech start-up ecosystem. Morle says many people mistakenly think it only works for software or tech development, but the core of the process works for any company. “Lean is about collecting data to make your offering more valuable,” Morle says. “It can be used in advertising, in medicine and in all manner of different industries when you realise it’s about doing something with a real customer as soon as possible.” Myth five: Lean is too scientific and prioritises analytics over intuition According to Morle, because lean is focused on experimenting and gathering data, people can assume the method is too scientific and leaves no place for intuition. Morle says lean is a good way to make sure you don’t believe your own hype. “What lean introduces is the yin to intuition’s yang because the two things work together. Overlaying lean and metrics with what people actually do, and then learning from that and comparing it to our intuition is the perfect combination for a successful start-up,” he says.
Australian real estate investor and entrepreneur Will Pattison is off to the Philippines next week in a bid to revolutionise online real estate transactions. His start-up idea in the Philippines is backed by start-up incubator Pollenizer and Philippines-based start-up accelerator Kickstart. He told StartupSmart they were aware of a gap in the market, but he was looking forward to touching down in the Philippines, getting in front of people and finding out exactly what the challenges are. “We need to get down on the ground and check the assertions about the problem and understand what the opportunities are,” Pattison says. “From a consumer point of view, I’ve been looking at rental properties in the Philippines and it’s been a pain. There is a lot of information and it’s very crowded and there is just too much going on.” Pattison is working with two tech co-founders and hopes to launch the platform within a few months. He says there are a range of effective and profitable models for online real estate platforms they’ll be reviewing and incorporating into their design. Pattison adds there is limited competition in this space in the Philippines, and most properties are sold or rented via a platform similar to Australian crowdsourced classifieds website Gumtree. “It’s just an online poster-board where you put a property up and you have to pay to highlight it. But it’s too crowded; you search for a property for sale and find ones for rent instead, or in entirely the wrong city,” Pattison says. He says the platform will be designed for both local renters and buyers, but they’re also planning to develop content to showcase the neighbourhoods and nation to international investors. While the start-up is still in the earliest stages, Pattison says they plan to develop it quickly and are confident in its potential. “This plan has all the ingredients of a successful start-up. It has strong ideas, a good team and I’m being mentored by Phil Morle from Pollenizer, from one of the best start-ups in Australia,” he says.
The government has today announced a review of the regulations around employee share schemes and crowd-sourced equity funding regulations. According to the National Digital Economy Strategy (NDES) update announced in Brisbane today, this decision was made in order to “boost support for Australian tech start-ups” and would be focused on helping address the barriers faced by start-up companies in attracting and retaining staff. In a release, Senator Stephen Conroy, the Minister for Broadband, Communications and the Digital Economy, said: “As the rollout of the NBN continues, the capacity for start-up companies, particularly in the tech and digital sectors, to create game-changing businesses and applications is unprecedented.” The decision to review and simplify the employee share scheme options will be welcomed by the start-up and venture capital industries, who have been calling for such an update. Phil Morle, founder and CEO of leading start-up incubator Pollenizer, told StartupSmart the announcement was good news for Australian start-ups. “We welcome the review of share option regulations and look forward to new recommendations playing a major role in stimulating the start-up economy,” says Morle. “To foster its swelling community of start-ups, Australia needs simple, fair and cost-effective ways for entrepreneurs to compensate each other with equity over cash. This recognises the risk taken when building new ventures which are strapped for cash and statistically likely to fail.” The move has also been welcomed by the Australian Industry Group. In a release, Innes Willox, the chief executive of the Australian Industry Group said: "We also welcome the Government’s commitment to review the tax treatment of employee share schemes and to develop a best practice framework for Crowd Sourced Equity Funding, which Ai Group advocated in our recent report Ready or Not? Technology Investment and Productivity in Australian Businesses. We need to improve the conditions for innovation and commercialisation in Australia as a priority, including better access to financing." Assistant Treasurer David Bradbury said in a release the feedback from the 2012 Digital Economy Forum pointed out the government could better support the development of start-ups, and it was therefore timely to re-examine the framework around the employee share schemes. “The government can’t create the next Twitter, Instagram or 99 Designs, but we can provide the infrastructure and regulatory environment to help Australians who will,” said Conroy. A consultation paper to guide the discussions will be released shortly. The employee share schemes review will be due by December 2013 and the crowd-sourced equity funding by April 2014. The NDES update also announced an expansion of the Digital Enterprise and Local Government programs to support small businesses to better engage with the digital economy and make use of emerging online opportunities.
Pollenizer is looking for co-founders for four of its start-ups, one of which would involve a partnership with a Skype co-founder while another would involve working with the former chief executive of CareerOne. According to Pollenizer co-founder Phil Morle, all four businesses need “gutsy entrepreneurs with the audacity to believe that they can pull off a global business with limited resources”. The businesses are as follows: Fitbit for your house – collaborating with your social network to use energy more effectively. This is a partnership with one of the Skype co-founders. “This is a brand new idea so they’re looking for co-founders from scratch,” Pollenizer co-founder Mick Liubinskas told StartupSmart. Social Powered Retail – using social networks to increase sales. This would involve working across south-east Asia as well as Australia. “Social Powered Retail is Gyft… The co-founders took it as far as they could and we’re now looking for a new set of co-founders to go where the business needs to go,” Liubinskas says. 99designs for recruitment – crowdsourcing new hires. This would involve working with the former chief executive of CareerOne. “The recruitment business is looking for more co-founders; more engineering talent,” Liubinskas says. SasS for coaches – customer relationship management, session management and other tools for business coaches, consultants and mentors. “SaaS for coaches is Coachy, which has a lot of great potential customers… We need an entrepreneurial engineer who is longing for some B2B experience,” Liubinskas says. At this stage, Pollenizer has declined to reveal the names of the Skype co-founder and former CareerOne chief executive. But according to Morle, co-founders are paid a “modest salary with great equity”. “We will train you in lean start-up skills – if you don’t already have them – and mainline you into an amazing network of entrepreneurs and investors,” he says. Liubinskas, however, is quick to point out the Pollenizer environment is not for everyone. “A lot of people who come from the corporate world, where they ran a really large company, will say that it’s the same as running a small company, which it definitely isn’t,” he says. “Some people can make that transition but a lot of people can’t. The other thing is completely green people. “[You must also have] a willingness to share… Really the key to that for me is people in the same location. “I vowed I would never, ever do another start-up where the whole team is not in the same room. Some people can do it but it makes life harder.” Liubinskas says anyone who joins the Pollenizer family must be open to change. “Start-ups change every day. Even the businesses we’ve learned a lot about, they’ll continue to change. Not a single successful Pollenizer start-up is the same idea it started with,” he says. “You also need to not be precious. You need to be thick-skinned to deal with a whole bunch of failure along the way.”
Pollenizer co-founder Phil Morle has revealed the reasons why iConnect Catering was named the winner of the latest Startup Weekend Perth, highlighting the growth of the Perth start-up scene.
Mick Liubinskas has highlighted the trials and tribulations of Pollenizer, including how it turned Spreets into a $40 million company, as the online venture builder celebrates its fifth birthday.
Online venture builder Pollenizer plans to create eight start-ups in Australia and south-east Asia this year, after raising $1.1 million from investors including Pandora founder Brook Adcock.
It’s fair to say 2012 was a mammoth year, not only for the various incubators and co-working spaces, but for the Australian start-up scene in general.