A prominent Aussie entrepreneur on the problems with today’s startups – StartupSmart
Many of today’s startups aren’t profitable and are overly reliant on external funding, prominent Australian entrepreneur and TechnologyOne founder Adrian Di Marco says.
Di Marco has grown the tech company into a $1.3 billion publicly-listed entity across its 30-year life, and says the secret to his startup’s longevity is a focus on sustainability and being profitable from the very beginning.
“It was so we could stand up on our own two feet,” Di Marco tells StartupSmart.
This emphasis eventually paid off, with the company able to weather a lack of external funding during the GFC.
But Di Marco says today’s generation of startups too often plan for profitability in the future and seek external funding instead, leading to a lack of revenue streams and products that are sustainable in the long-term.
“It’s dangerous to build a business [that’s] reliant on investors continually coughing up funding,” he says.
Unless you’re building a Facebook-like product where you’re making a “land grab” to make it commercial later on, most founders should be looking at how they can be profitable on their own or risk meeting a quick demise.
“I don’t think there’s enough research and analysis being done on the reason why startup companies between one and five years fail,” Di Marco says.
Embracing the future
Another reason that tech companies often don’t last as long as TechnologyOne has is that they’re not constantly reinventing themselves, he says.
Every seven or so years Di Marco says he pivots the entire company in order to prepare it for the future.
“The scariest decision has always been to embark on that next stage of the company’s evolution,” he says.
When he opened the company back in 1986, TechnologyOne was a traditional on-premise computer company.
Now it’s moving in an entirely new direction.
“We are rebuilding our whole business around the cloud,” Di Marco says.
“It’s a massive undertaking.”
The shift is seeing TechnologyOne reengineer all its software, recreate products and re-educate the development teams so they can reengineer the whole business.
“We have a concept of constructive destruction where we say this product line is not the future, now this will be our future,” he says.
He says that by reimagining the world of software enterprise and TechnologyOne’s place in it, Di Marco and his team are creating world-class enterprise software that will run on any device, anytime, anywhere.
The tech company is also looking at new areas such as virtual reality.
These massive shifts and an embrace of the unknown future has helped TechnologyOne stay ahead all these years, Di Marco says.
“Complacency, particularly in our industry, sows the seed of destruction,” he says.
By integrating innovation into TechnologyOne’s business model from day one, Di Marco says the team has always been able to stay at the cutting edge of technology.
“Even eight years ago we were an anomaly in Australia, we spend a lot of money on research and development and build [our] own products,” he says.
Leaders in the space
When TechnologyOne began, tech, innovation and creativity was not on the public agenda.
“It was of no interest,” Di Marco says.
Now that these areas are starting to be recognised as the way of future of jobs, education and the economy, Di Marco says he’s incredibly proud that he held on to this vision.
“We never gave up, we believed passionately that innovation, creativity, research and development is the way of the future and you’ve got to be prepared to spend money that you won’t recoup for four or five or six years,” he says.
“We were leaders in this whole area of innovation creativity in Australia going back 30 days ago from day one.”
Paying it forward
Another way TechnologyOne has kept its startup heart beating is by giving back to the startup ecosystem and the broader community.
“I like investing in startup companies, supporting them and mentoring and we encourage our senior staff here to do the same thing as well,” Di Marco says.
The company is also planning to open an incubator to help startups working on enterprise software build their solutions at TechnologyOne offices.
“It’s something that we’re looking at doing over the next 12 months,” he says.
And they have taken up the 1% Pledge creating its own TechOne Foundation to donate equity, product and time to not-for-profit causes.
“We believe it’s very important to give back to the startup community and the wider community,” Di Marco says.
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