No Public Funding For Runway White Elephant Please

777lotrThe debate over whether or not public money should be invested in the extension of Wellington International Airport’s (WIAL) runway is starting to heat up. Despite project studies only being released to the public this week, city councils across the region have already indicated they will provide financial support towards the $330 million cost. At present central government has said it will not support and some local body councillors are already starting to feel uneasy about the overall proposal.

The Wellington City Council (minority shareholder in the airport), Wellington Chamber of Commerce and WIAL have been enthusiastically promoting the supposed “economic benefits” of the project. But the real reason the extension is needed is because the current length is sub-standard even for short-haul jet operations. WIAL is essentially asking taxpayers and ratepayers to co-fund capital works. Given that WIAL parent company Infratil earned a staggering $453 million last year and reportedly has a $1 billion war chest, why are public funds needed at all? Surely WIAL can make it’s own business case and access funding itself?

Adding 300 metres to the runway will not make it safe for wide-body aircraft.  “Long haul” flights are not coming to Wellington any time soon and here’s why. Firstly, medium haul, mid sized airliners are actually being phased out across the Asia-Pacific region as we speak. My understanding is that the last Qantas 767 has already gone and Air NZ has a small number remaining with limited lifespans. Asian airlines no longer operate these types. Air Asia and Jetstar withdrew A330s from Christchurch and Auckland, because they could not make a profit. In any event, an A330 would not be able to operate fully laden, even from an extended runway. Truly “long haul” aircraft such as A380, A340 and B777 are unlikely to be operated because of weight and size limitations.

The 787 Dreamliner is often touted as the saviour of long thin air routes. Again, it will not be possible to economically operate this aircraft out of WLG, even with a longer runway. Extending the runway will not remove the nearby hills. Aircraft take-off restrictions are governed by the climb performance under instrument flight conditions with a failed engine at the takeoff point. Long haul operations (10-16 hours) require huge fuel loads and substantial take-off weights. Take-off performance is a function of aircraft weight, engine power and ambient conditions, NOT runway length. Aircraft will be payload limited even with the runway extension in place. This is a really important point that most commentators and the media have missed.

There are many other reasons why investing in a runway extension is a bad idea. Not the least of these is that the airlines refuse to commit. You can be sure that Air New Zealand is not going to undermine it’s cosy hub and spoke operation that is based in Auckland and it’s not clear that any Asia or U.S. based airlines are at all interested. Some passengers complain that travel via Auckland or Sydney is onerous. But can you name any city under 500,000 population in North America that has direct air links with London or Hong Kong? Hub and spoke operations are the norm elsewhere in the world. There are many other investments that Wellington can make as a city and a region in order to promote economic development.

Unsurprisingly, there is zero information on the WCC or WIAL websites about the public consultation process. But the media are reporting the following information. There will be three public open days where people can meet one-on-one with the experts who prepared the reports. The open days will be held at Chaffers Dock Function Centre on December 2 from 12pm to 3pm, at SPCA Fever Hospital in Mt Victoria on December 3 from 5pm to 8pm, and at the Brentwood Hotel Conference Centre in Kilbirnie on December 5 from 12pm to 3pm.

Paul Spence is an ardent supporter of regional economic development, a commercial pilot licence holder and a technology sector company director based in Wellington.

Your Startup Weekend Toolbox

toolboxNovember is looking like a bumper month for Startup Weekends here in New Zealand. With four events in the pipeline, it’s time to begin thinking about your game plan. Here’s a short primer on the fundamentals.

Team – At Startup Weekend we take you from an unformed idea, through to a working business model with a team that can capably execute on the project. Teams of one simply don’t fly and you cannot scale a business without a good team around you. But Startup Weekend helps you connect with people who bring a diverse range of skills. Be ready to share and engage. Choose your team mates wisely – you may be together a long time.

The Problem – Have you thought hard about the problem you are solving? It’s too easy for entrepreneurs to become infatuated with their own idea and overlook whether or not they are fundamentally solving a point of pain for customers. Get out of the building. You might be surprised what you can learn from potential customers and how this can be applied. Testing your hypothesis is the scientific part of being an entrepreneur.

The Solution – Are you creating a product or service that offers a compelling advantage over other similar offerings in the marketplace? Is the related intellectual property defensible or secure? Research the competition and don’t forget to check for trademark and domain name availability. If you can’t find any competing businesses, then ask yourself why.

Customer Acquisition – Forget about all the startup investment mythology. Your best source of funding is real, live customers, not investors. Ultimately someone has to be willing to pay, otherwise you will sink. Here’s a great article that explains customer acquisition versus lifetime value. Building a long term relationship with your hard won customers is key. Venture funding is not a business model.

Business Model – How does the business deliver customer value on the one hand, whilst generating growth revenues with an engaged audience? Look at where your venture sits in the global context and how it could scale up to something really big. Are you a pipe or a platform? Become familiar with using the business model canvas as a framework for your thinking.

Startup Weekend bundles these questions around a lean methodology and provides experienced entrepreneurs to mentor and challenge you along the entrepreneurial journey. Find a New Zealand Startup Weekend near you and sign up yourself (and a friend).

Paul Spence is a commentator, technology entrepreneur, a co-founder of iwantmyname (a New Zealand based global Internet venture) and an organiser and mentor with Startup Weekends in New Zealand. You can follow him on Twitter @GeniusNet or sign up for a free weekly digest of startup related events curated by him with New Zealand Startup Digest.

Image credit: Jason Rhode

Sowing The Seeds For Investment

alanAlan Jones is a well known Australian angel investor who was one of the early hires when Yahoo was just kicking off. So he’s been at the forefront of the tech industry since the early days. As a marketing and tech guy he now works with Aussie startups at BlueChilli incubator in Sydney. BlueChilli provides an integrated suite of services to early stage ventures and is part of an explosion of interest currently happening in tech incubation across the ditch.

Alan joined us at Startup Garage recently and provided a very thorough exposition of how early stage companies should be preparing for presenting to potential seed round investors. Key to building a good relationship from the outset is doing your homework and identifying angels that have an interest in your type of business, he said. If you want some more tips on how to reach out to investors, check out Alan’s slide deck.

On the other hand, if you are lean boot-strapping your start-up, you might be able to delay (or avoid) raising funding and consequently drive a better valuation and hold on to more equity. Recently I’ve been tracking some interesting case studies detailing how a variety of different entrepreneurs essentially self-funded. Remember, getting investment is not validation for your product. The best form of validation is actually selling to customers.

Startup Garage provides a series of sessions with visiting guest speakers aimed at informing the startup community in the Capital. The events are hosted by Creative HQ and sponsored by Grow Wellington and iwantmyname.

A Special Event For Entrepreneur Researchers

swrschCompared to many OECD nations, New Zealand underperforms at building great global companies based on smart commercialisation of knowledge. That’s a shame, because we have no shortage of intellectual talent and we also enjoy a fantastic natural resource base.
So we are putting on a very special Startup Weekend event here in Wellington focusing on science and research. It’s all part of our efforts to strengthen the entrepreneurial ecosystem in New Zealand and get more people in science and technology thinking about entrepreneurship as a career. Encouraging a culture of entrepreneurialism and building bridges between the research and business communities are important themes in driving value-added economic growth that we need to underpin our future.
It is a fantastic opportunity for young researchers who are interested in research commercialisation to spend a weekend with some very cool mentors as well as investors and people from across the business community. The McDiarmid Institute and Kiwinet are actively supporting this event. It’s mostly about teaching a lean methodology for developing and testing business ideas, as well as networking with potential future collaborators.

Participants can bring a project of their own that they wish to explore or join another team simply for the learning opportunity. We are looking for researchers from any field plus engineers/developers, designers and business gurus to get involved as well. Who knows where it might lead?

This will be a smaller event than usual and spaces are limited. Sign up for Startup Weekend Science & Research today!

Paul Spence is a commentator, technology entrepreneur, a co-founder of iwantmyname (a New Zealand based global Internet venture) and an organiser and mentor with Startup Weekends in New Zealand. You can follow him on Twitter @GeniusNet

Imagination Key To Winning Online Retail Race

shirtsLast week three iconic local retail brands shut their doors in my city. Whilst traditional “bricks and mortar” retailers continue to blame their demise on the growing threat from online, the real threat is complacency in the face of a changing market. But it’s an issue that e-commerce businesses need to be mindful of also.

Listed on the New Zealand stock exchange, Kirkaldie and Stains had an amazing history catering for high-end retail in the capital city. The firm was started in 1863 by a pair of immigrant entrepreneurs and is one of the oldest surviving retailers in the country. But the writing has been on the wall for some time, with ongoing financial losses and flagging share price. Subject to shareholder approval, the company will be acquired and re-branded by Australian retail giant David Jones.

The historic Bank Arcade is one of the few tasteful retail venues in the region. Longtime tenant Rixon Groove was an upmarket shirt and tie retailer and manufacturer that opened to much fanfare in 1991, catering for inner city businessmen and office workers. I often walked past that tiny shop and noticed, unlike its busy neighbours, there was sadly almost never a customer in sight. With the price of a shirt hovering around $200 and fashion trending away from formal attire in the workplace, it’s not hard to see what went wrong.

Shoe retail is sometimes regarded as the most competitive category, but boutique shoe store Minnie Cooper was always a hit with the ladies. Rather than go the way of the other dinosaurs, the business has elected to close its stores and go 100% online. They will continue to face huge competition, but without the substantial overheads of a high street presence. It will be tough, but least Minnie Cooper is attempting to adapt to the changing market.

Online businesses also face challenges and must be prepared to adapt and innovate. Customers online are fickle and have the attention span of a small fruit fly. Barriers to entry are relatively low and very few online retailers have a natural monopoly in their market. So e-commerce properties that fail to remain fresh and relevant have a limited lifespan in cyberspace. Addressing a huge global market is a far more interesting proposition, but shirts and ties all look much the same. Clearly differentiating your product offering against dozens of competitors requires a lot of imagination.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Stop Making Sense

headsA recent article in the Washington Post implored society to stop focusing on tech start-ups and begin encouraging more entrepreneurs to start mainstream businesses, because these have a greater chance of both generating new employment and staying the course.

The logic behind this proposition is based on demographics. As “millenial” entrepreneurs come of age, there’s an opportunity to further empower the founder pipeline with better business education and a stronger emphasis on mentorship. Idealistic young people from this generation have a more diverse view on what kinds of businesses interest them and a more holistic understanding of what the art of entrepreneurship looks like in the context of social and environmental responsibility. An overemphasis on tech sector could therefore be limiting because of its somewhat linear narrative.

Much of the mythology around tech start-ups is media driven and does not necessarily reflect the wider tech industry of course. We generally only hear about the success stories of companies that raised millions in funding or had huge exits. We are rarely informed about the 98% of tech start-ups that never get funded or those that crash and burn within a few months due to lack of product-market fit. Moreover, we do not hear often enough about value creation and social equity as measures of performance.

This is partly why I cringe whenever someone suggests we need to build an entrepreneurial ecosystem just like Silicon Valley. There’s more than one way to grow a company. But much of the prevailing wisdom involves companies “getting offshore”, setting up shop in the Valley and networking madly until they score a round of funding. This is not the only pathway. With iwantmyname we proved that it is entirely possible to bootstrap without capital and grow organically, simply by consistently delighting customers.

Furthermore, the Valley is no longer the centre of gravity it once was. The focus is shifting as increasingly affluent Asia-Pacific economies look outwards for investible opportunities across a wide variety of sectors. Our friends across the Tasman already know this and have become very successful at building bridges and welcoming more productive inflows of capital. The face of business investment is changing and it’s no longer defined by slick, white guys in big suits. Making sense of this involves us being able to adapt to the new environment through clearly articulating our personal values as entrepreneurs and as an entrepreneurial nation.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Back In The Air

FLT_nzle_smallBeing made redundant and then putting in the hard yards building a new online business put my lifelong love affair with aeroplanes on hold for a few years. But I’m very pleased to report that I’m finally back in the air again and loving it!

Aviation is something that gets into your blood, so it was hard to give it away. But sometimes life gets in the way and we have to refocus priorities for a period of time. It was sad to be grounded, because flying provided me with so much inspiration. Growing up with aviation has given me skills and knowledge that transferred over into to my business life such as practical approaches to leadership, planning and risk management. Being airborne also allows you freedoms and perspectives that many people never get to experience in their lifetimes.

So it was with a great sense of accomplishment that I recently flew some of the iwantmyname team to Lake Station aerodrome, near the township of Saint Arnaud on beautiful Lake Rotoiti in New Zealand’s South Island (see photo). A lot of good memories came flooding back – along with my self-confidence. I recalled many adventures from my younger days when I was a part-time commercial pilot, building flight hours on days off from my “real” job as an aviation meteorologist.

Consequently I’m enjoying greatly, the rather ominously named, Worst Place To Be A Pilot TV series. But for a quirk of fate, I very nearly headed down the same career track myself. It’s a steep learning curve for the young aviators introduced in the show, as they launch their flying careers in one of the most unforgiving environments on the planet. I’ve visited several of the featured locations in Indonesia and can totally relate to the situations illustrated.

That recent trip down south was the culmination of a lot of hard work and reminded me to confront challenges head on and never, ever give up on ambitions in life.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Wellington Local Body Amalgamation: My Submission

For the record, here is a copy of my submission to the Local Government Commission

“Firstly let me express my utter disappointment at the way this entire process has been managed. The release of the draft proposal from LGC was badly timed and there has been insufficient opportunity for robust public debate as a result. It’s clear that this suited the agendas of certain politicians who are hell bent on forcing a change that, it has become clear, the majority of people do not want. This is not good enough and we expect more of our elected officials and taxpayer funded civil service.

On that basis my submission is simply this:

1. That the entire process addressing changes to local body governance in the Wellington region be halted and subject to an independent review.

2. The existing proposal from LGC be scrapped and a new proposal be developed involving a far more democratic approach and with much deeper public engagement.

3. The existing Wellington Regional Council members be removed immediately and replaced with a temporary commissioner.

4. We already have a pan-regional council. We do not need to reinvent the wheel. What we need are functional board members who can work collaboratively with existing councils around the region.

This process is on the wrong path right now. I would urge the LGC to take heed of public opinion. Thank-you for your consideration of this matter. ”

Postscript:  We won! 90% of public submissions were against the merger and LGC has canned the existing proposal. More background here.

Dysfunctional Regional Council Must Go

In case you hadn’t noticed, the public consultation around the proposal to amalgamate local bodies in the Greater Wellington region closes on March 2nd. You could be excused for not knowing, because (much to their shame) the parties concerned have done little to encourage public debate on the topic. The proposal is highly contentious, has huge implications and yet has been so poorly publicised. But the one thing everyone seems to agree upon however is that the highly dysfunctional Wellington Regional Council must be dissolved, whatever happens.

An information guide dated December 2014 finally turned up in my letterbox in mid-February. The pamphlet explains the “draft” proposal put forward by the Local Government Commission for local government amalgamation in the Wellington region and invites public submissions. Drilling down into the commission website, it became apparent that there was not an online form for submission anywhere, but simply an email or postal address. I guess they weren’t expecting many responses. There was no obvious mention of the proposal or submission process on the Wellington City Council website at all. The Wellington Regional Council website does have one page devoted to the topic, including some useful background material, but zero information on how to actually make a submission. In an age of nearly universal access to internet, this is unacceptable and makes me suspicious about transparency around the entire process.

Notwithstanding the obfuscation, there has been a flurry of media activity in recent weeks as it emerged that almost half the Wellington Regional Council elected councillors are having second thoughts as public disquiet has been growing. Even the pro-amalgamation “Chamber of Horrors” have toned down their rhetoric lately, as it became clear that the real bill for amalgamation could be well north of $200 million, if harmonisation of I.T. services were included. In a recent joint statement the business Chambers agree there is a “need for change”, but do not go as far as endorsing the current proposal.

The original suggestion for amalgamation came from Wellington Regional Council itself and is being driven largely by an individual with one eye firmly fixed on the future super-mayor job. This person has a sterling previous track record of successfully promoting unpalatable political agendas and knows the right levers to push to get the job done. But releasing the amalgamation proposal at Christmas, then fronting up to a couple of small debates a week before the doors close simply doesn’t cut the mustard in terms of public engagement.

Ironically, it is the lack of goodwill between the existing regional council and the other councils in the region that has led to this problem in the first place. There are important regional projects such as economic development, roading and water that must be addressed in a co-ordinated way, but the regional council has failed to galvanise and unify the other players in the region. Making a clumsy grab for power must have seemed like the only option. What is really needed is a functional regional council that has the confidence of all the city and district councils and that can play nicely and work collegially on the really important issues that face our region. What we do not need is another Auckland-style unitary authoritary. Why reinvent the wheel at a huge cost to ratepayers?

So it is very clear that the existing Wellington Regional Council members must now step down and that the Local Government Commission must go back to the drawing board and respond with a structure that empowers the regional council, whilst retaining local legitimacy and addressing community needs. With luck, we should see a public referendum on the issue in the future. A prominent WRC councillor once expressed her disdain for democratic processes in the past, when she said “let us hold our noses and vote”. Perhaps ratepayers (and voters) of the Wellington region should follow suit.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Catton Furore Points To Painful Reality

The last time I saw Eleanor Catton, she was travelling in a pushchair under the care of her doting father Phillip. Judging by her Dad’s response this week to Sean Plunket’s ill-judged comments, she’s still the apple of his eye. But the acclaimed author has come a long way since then.

Eleanor Catton reportedly made some disparaging comments about the parlous state of intellectualism in New Zealand and alluding to how arts and creative endeavours have suffered at the hands of neo-liberal politicians and their supporters. Plunket’s outburst therefore seems somewhat ironic given that he himself built a career out of freely criticising others, including dissecting the political establishement. Should not Catton be afforded the same privilege?

The most amusing aspect of this affair is that Plunket’s rant simply underlines the point Catton was trying to make. New Zealand has become an intellectual desert where the media’s (and public’s) chief obsessions are cleverly branded sports teams and little else. Furthermore, intellectual debate is reviled and the political discourse revolves largely around economic progress. Unsurprisingly, Catton has consequently shown little interest in being lauded as a daughter of New Zealand as her star ascended on the global stage.

We New Zealanders are an insecure race and are constantly needing to claim celebrities as our own, as if to fulfill our ambitions vicariously in some way. Perhaps that is a function of being a tiny island nation on the edge of the real world. Given the state of the rest of the world, we actually have much to be thankful for, in reality. But in the same way that film maker Peter Jackson succeeded in spite of being based in New Zealand, Catton achieved fame through her own efforts and by the quality of her scholarship and determination, not because she had a New Zealand upbringing or any obligation to our country.

Numerous pundits, including Eleanor Catton herself, have taken to social media to express a variety of viewpoints about this sorry episode. “New Zealand doesn’t invest enough in growing strong and stable institutions to nurture and develop its next generation of leaders, thinkers and creators”, exclaims Mark Rickerby in a brilliant but somewhat pessimistic article in support of Catton. Whilst I agree with many of his points, I’m still hopeful and here’s why.

My teenage son is growing up in a New Zealand where at least half his friends are immigrants or children of immigrants, where fewer and fewer kids are taking up team or contact sports and where traditional media is regarded as largely irrelevant by his peers. It’s simple demographics. Plunket and his conservative, flabby, white, football-loving, bogan mates are right to be worried, their days are numbered.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet