Capital Tech Beat Picks Up

r9sw1The logo parade on High Tech Capital’s website aptly illustrates how Wellington’s tech start-up scene just keeps getting better and better. In the depths of the global recession back in 2008, when we bravely launched iwantmyname onto the world stage, you could count the number of innovative, global-facing web start-ups on one hand. The mood was downbeat at that time, but the stage was set for what local angel investor Dave Moskovitz has labelled as a “Cambrian explosion” of innovation.

Way back about the same time the dot-coms were busting in the U.S., some of us saw that the tech and start-up ecosystem in New Zealand needed fixing. Through early initiatives such as Capital ICT cluster, Unlimited Potential Wellington to the World and Startup Weekend we set to work joining the dots. Building an ecosystem takes a long time because it requires some political risk taking and a cultural shift. With a long overdue re-draft of the regional economic strategy and the blossoming of other initiatives such as Macdiarmid, CreativeHQ, AngelHQ and  tech accelerator Lightning Lab, we finally have all the ingredients in place.

It also helped a lot that we have high tech movie and games industries and a couple of hefty counterweights in the form of Xero and TradeMe. There’s a free flow of talent across the semi-permeable boundaries between games, movie and software industries and the big boys keep Wellington in the global spotlight. The recent Green Button acquisition by Microsoft was a coup for local angels who invested and demonstrates how success springs from the tech talent pool, many of whom are skilled migrants.

Keeping talent engaged in our region involves creating an attractive cityscape and ensuring infrastructure such as broadband and transport links are world class. We also need to constantly invigorate the flow of capital and ideas through events, initiatives and global outreach to other start-up magnets around the Asia-Pacific rim.

Stay in touch with start-up, tech and innovation related events with the weekly edition of New Zealand Startup Digest. Registration is free.

Pictured: Josh Forde, Paul Spence & Dave Moskovitz at R9SW. Photo credit: ParleyMedia

 

Recipe For Disaster

bresolinsThe declining quality of our home grown television content was never so prominently on display as during the finale of The Great Food Race last night. Everything that is wrong about “reality TV” combined into a tragi-comedy of epic proportions that unfolded like a slow motion train wreck. The worst part was that the outcome was entirely predictable.

The Great Food Race got off to an entertaining enough start with oddball competitions played out in various exotic locations as bemused locals looked on. The format even looked workable with our national airline nicely leveraging the interest generated with each episode. The pre-recorded sessions were well edited and interesting enough to extinguish my initial scepticism. So what went horribly wrong?

Clearly the producers had exhausted their budget and their wit, judging by the minimalist venue and the lack of direction. Perhaps the writing was already on the wall regarding the future of the show, leading to a lax approach in delivering the end product. It may also explain why the presenters failed to mention the sponsors or prizes once during the final episode.

Where to begin? Clutching her cue cards and clearly still in shell shock from her husband’s (deserved) media drubbing earlier in the week, presenter Zoe seemed hell bent on interfering with the contestants as they improvised their dishes under intense pressure. Perhaps that was part of the challenge? The Bresolins are great entrepreneurs and a credit to their industry, but last night looked awkward and embarrassed. In their defence, they did their best under difficult circumstances, to nibble and slurp their way through the unscripted mess that was before them.

What lessons can be learned from this disaster? Firstly, cooking shows do not make good live television. I’ve seen telethons with better continuity than was on display last night. But at least telethon has audience participation and supports a good cause. Why was it even necessary to go live for this finale? Secondly, spontaneity is great but a little planning goes a long way towards successful execution. Thirdly, beware the disengaged and cynical audience, their social media hate stream can wreck your brand.

The saddest aspect of the entire debacle was that it was clear that the young, blond, more photogenic couple were shoe-ins to win, no matter what they concocted and despite their nastiness towards the opposition. Sara and Danny were the more entertaining of the finalists and genuinely enjoyed themselves throughout however. They even pulled off recovering their disastrous “pasta covered meatballs” with aplomb, which is more than can be said of the production values of the show itself.

It would be a shame if last night’s cook-off spelled the end of the series however. The overall format was worthwhile and could be improved upon in future, with a little more forethought. In the absence of any quality local content on the box these days, The Great Food Race could have been a winner.

How Long Is Your Runway?

runwayAs a pilot I love it when I can draw aviation analogies and experiences into my entrepreneurial life. Perhaps the most obvious comparison involves the “runway” metaphor.

Most of us appreciate that the numbers we drafted in our start-up business plans are (let’s face it) rather meaningless. How can we possibly predict several years worth of revenue and cost data when we are still testing our initial business hypothesis? We simply cannot – but that doesn’t mean we shouldn’t have a plan. Cashflow distress is one of the leading causes of business failure. I’m not too proud to admit that I experienced a “near miss” myself in the past. Here are some tips to avoid a plane wreck.

The good news is that a cashflow crisis is entirely avoidable, if you have a robust planning and reporting process. Obviously, one of the goals of business is to generate a profit, but even profitable businesses are not immune from cashflow problems. If your bill payment cycle is out of sync with your revenue cycle, be wary. If you operate a web-based business, you have a particularly lumpy cashflow because your payment gateway provider may only pay you monthly initially. After a period of trading it is generally possible to negotiate weekly payments. Arrange this as soon as possible.

For other kinds of businesses, the chief risk is aged receivables. In other words slow payers. You aren’t a bank, so why should you loan precious operating capital to your customers?  Which is effectively what you are doing. There’s no law that says customers only pay on the 20th. For consulting or services work, I generally apply terms of 10 working days. Make sure you discuss the terms up front however, so everyone is on the same page. If they can’t be flexible – is that the kind of customer you want to be involved with?

Even if you don’t know exactly what your revenue is in advance, make an intelligent guess based on past experience. But be conservative. A cashflow forecast is quite possibly the one tool that will keep you out of the shit. Figure out your burn rate and balance this against cash on hand and income. That’s how you work out your runway. You should be able to forecast how much cash will remain at the end of each week, at least a few weeks ahead, preferably more. Initially this is tough, but it becomes easier as you collect more data.

Most businesses start out under-capitalised. Provided your business model is sound and revenue starts flowing early, this is not always a problem. But the reality is that under-capitalised businesses fail more often and grow more slowly due to less investment available for growth initiatives. If you are worried about excessive burn rate there are only two possible solutions. Sell more product or reduce outgoings accordingly. Unfortunately salaries are usually the first target, so be realistic with your early employees or co-founders and be clear about what the options are if cashflow drops.

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

 

Making Your Startup Weekend Project Shine

sw65Wet weather and some rumbles from the earth were not enough to put a damper on Wellington Startup Weekend special social enterprise edition in 2013. Teams rapidly coalesced around various ideas for social ventures and the hard work of crafting a business proposition in the short space of 54 hours got underway.

As entrepreneurs, what is our most pressing task? The most important role of an entrepreneur is TO LEARN. Starting up a new business is a crazy experiment. You have a hypothesis, you test it out and then you adjust according to what has been learned (or you stop altogether). That is the essence of a scientific approach to customer development and customers/revenue are ultimately the life blood of any enterprise. There is no magic formula apart from hard work.

Startup Weekend offers a microcosm of the venture development process. It’s primarily an opportunity to learn from and network with a wide range of people who you can potentially work with in the future. Most participants don’t walk away with a big prize or a viable long term business. If that is your primary goal, you are probably in it for the wrong reasons.
But here’s a few tips for polishing up your fantastic Startup Weekend idea.

Judging revolves around three main themes. Business model, validation and execution. Do not expect to have perfected any of these by Sunday evening.

Model. Sustainability is the key. Demonstrate that you can potentially offer a product or service that is both financially profitable or sustainably delivers on social objectives. Why would you invest many hours of your valuable time into a venture that cannot feed itself?

Validation. Judges love to see that you got out of the building and tested your ideas on others. Your Mum’s opinion doesn’t count. Talk to strangers in the street, competitors, suppliers, potential partners and anyone who can give you a subjective viewpoint. Get some online surveying going. Where is the demand? Does your idea suck or sing?

Execution. You don’t have to close any sales deals or have a fully functioning web app by Sunday evening (although many teams have certainly achieved extra credit for this at previous events). But if you have a cohesive team, a good story and some kind of “minimum viable product” or prototype concept to demonstrate, that will impress the judges a lot.

Social Media. Finally an extra tip. Startup Weekend is all about knowledge sharing, networking and community. Extra brownie points for those teams that have been actively generating buzz through social media throughout the weekend. If you don’t have those skills yourself, get someone on the team who does and learn from them – fast. Building an online profile is essential for scaling any kind of business – social enterprises are no exception.

Best of luck!

Paul Spence is a commentator, technology entrepreneur and a co-founder of iwantmyname, a New Zealand based global Internet venture. He’s also a veteran of eight ten Startup Weekends as an organiser, mentor, sponsor or player and was a judge at Wellington Startup Weekend: Social Enterprise in 2013. You can follow him on Twitter @GeniusNet

Tunnel Collapses. Good Call Minister!

hollyfordAs you may be aware, Minister of Conservation Nick Smith this week delivered his decision on whether or not to grant a concession to Milford Dart Limited for construction of an eleven kilometre, one-way bus tunnel between the Dart Valley and Milford Sound. One has to sympathise with the Minister who frequently has to make such rulings and whose decisions are not always popular.

However, it beggars belief how such a ridiculous proposition even got as far as the Minister’s desk in the first place. Proponents of the tunnel who energetically cite how it will reduce travel times to and from Milford Sound seem to have missed the point. Tourists come to enjoy New Zealand’s scenery, not to sit in a dark tunnel. Others have championed how the plan will bring new economic life to the region – when in fact it is likely to kill small towns like Te Anau that rely on passing traffic. Milford Sound itself is physically constrained and simply cannot grow any more, so that argument also falls flat.

Smith used some sound reasoning as to why he declined the project. Uppermost in his mind seems to have been concerns about exactly where millions of tonnes of earth would be deposited after it was dug from the tunnel and that it was not consistent with the park management plan. Even ignoring the fact that the economics of the venture don’t actually stack up; there are much more important, but less tangible, reasons for filing the plan in the waste paper bin.

Despoiling our greatest national park (and world heritage area) for highly questionable commercial gain, would simply be a crime against all New Zealanders. We should keep our special places intact. Good call Mr Smith and deep shame on Tipene O’Regan and his fellow directors of Milford Dart who, given their connections, you’d think might have had more respect for the intrinsic value of a relatively untouched region.

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

 

 

Will The Real Wellington Please Stand Up

wcc2Our Prime Minister laid bare his regional biases when he implied recently that our Capital city is a hopeless economic case. But Mr Key would do well to remember that the regional economies are subsidising the infrastructure build up elsewhere.

Wellington may have lost a few corporate head offices, but its economy is a lot more diverse and robust than that. Let’s look at what’s really going on in Wellington in the context of high value, export oriented, knowledge based business activity. According to economic think tank Infometrics, in 2011/12 the overall number of businesses in Wellington actually grew slightly, whereas in Auckland the number dropped considerably. More importantly, Wellington has the highest GDP per capita of any New Zealand region. This is hardly surprising when we look at the emerging economic players.

Activity in the screen and digital sector grew twice as fast as the New Zealand economy generally, with film, animation, gaming and software delivering a billion dollars to the region annually. Wellington has the highest intensity of knowledge based businesses per capita, a busy port, two universities bursting with fee-paying foreign students and an enviable and growing tourism profile globally. Wellington also boasted the highest number of New Zealand companies in the Deloitte Asia Fast 500, an international benchmarking initiative that identifies high growth ventures across Asia-Pacific.

The only business types that decreased in Wellington were insurance and financial services. That is hardly surprising when you consider that insurance companies have little interest in the Wellington market post Canterbury earthquake and finance companies have been dropping like flies everywhere anyway. No great loss. It’s also no secret that government services have been operating with sinking lid staffing policies for some time amidst austerity measures. But despite fear mongering by public service unions, the actual number of staff affected has been minimal. Government sector makes up only about 10% of the regional economy (about the same as tourism income).

Many of us have invested a huge amount of effort into building creative communities in our region that have underpinned the growth of high value, knowledge based businesses. In the context of a sluggish global economy, Wellington has held its ground relatively well, so it is certainly unfair to make comparisons with the other main centres, which have entirely different contexts at present. The government should also be reminded that the growing tax take in the regions is supporting spend-ups in other parts of the country.

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

 

Tech Scene Blossoms In Sunshine State

2013-04-16 16.09.21The annual pilgrimage to the West Island came around a little earlier than usual this year with the opportunity to attend TechConnect, a public conference for tech startups, investors and advisors held in the three main Australian city centres. I attended the Brisbane event and was pleasantly surprised to find a quietly confident and emerging local tech scene with a supportive community backed by real political commitment and publicly funded resourcing. Notably, some of the initiatives also address the opportunity of the national broadband roll-out.

Keynote speaker at TechConnect was Tyler Crowley, co-founder of This Week In Startups, professional pitch coach and advisor to governments looking to develop innovation ecosystems around technology. Crowley’s advice to start-up clusters was simple. Build a tech hub and identify a “documentarian” to champion the cause. He also recommended promoting more tech meetups and nailing down some sponsors to shout a few beers. Seems like we’ve been doing these things already in New Zealand, so it was encouraging to hear this and underlined our commitment at iwantmyname to support our community.

Brisbane’s start-up scene was abuzz during conference week because of recent news that Twitter had bought local company We Are Hunted. The acquisition was essentially a talent grab as Twitter works towards integrating music services into its platform. But such stories will certainly embolden the Aussie start-up scene which has produced a number of shining stars in recent years. Freelancer is a site that leverages the shift towards web-based out-sourcing and which has grown in leaps and bounds. Everyone agreed Freelancer CEO Matt Barrie gave the best talk at the conference and it wasn’t hard to see why the company was forging ahead so well. Barrie is no slouch in the academic area, with several Masters degrees and university lectureships in both network security and new venture development. He was named Australian entrepreneur of the year in 2011.

From taxi drivers to company CEOs, throughout my visit to the Sunshine State I constantly ran into ex-pat Kiwis who’d made the leap across and done well for themselves. A few years back we shared some office space with young upstart Chris Loh who had been working on developing a collective of iOS developer talent. Now he’s based at QUT’s Creative Precinct on the Kelvin Grove campus and just launched a Kickstarter campaign for a cool tablet based gaming system. Tyler Crowley alluded to crowd funding as the next important source of capital for start-up tech firms, mentioning that AngelList recently received SEC approval in the U.S. to offer opportunities to members through a crowd-funding app.

The paucity of start-up capital is a universal conversation topic and Australia is no exception. Venture capital intensity sits at about one eighth of that found in the United States. Odd considering Australia’s $1.5 trillion economy has one of the highest per capita GDPs globally. But why invest in tech, when you can dig wealth straight out of the ground in the Outback? One of the TechConnect speakers had the answer however – “good start-ups always raise capital”, said Jeremy Colless from Artesian Venture Capital, which works with university incubators and tech accelerators. “Generate real value and don’t come looking for investors until you have some customers on board”. That’s good advice.

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

Why The Rugby Sevens Must Go

73099373MM017_SevensRecently the “colourful” Rugby Sevens tournament brought many visitors to our fair city and teams from all over the world to compete. It would all be very uplifting, except that the event has become less about sport and more about partying and getting trashed. Is that the kind of reputation we are trying to build for Wellington?

The party culture around this event reflects the worst elements of our selfish, reckless, binge drinking Kiwi culture, so it seems entirely out of tune with a city in which we are attempting to cultivate higher values such as innovation, creativity and the advancement of knowledge. Supporters of the “Sevens” frequently quote the estimated $16 million in economic returns to the city. Rarely mentioned is the cost of extra policing and the additional burden on emergency medical facilities from an endless tide of drunks and  costumed misfits. In the same way that the Rugby World Cup failed to deliver, the chief beneficiaries of this economic “windfall” only seem to be pub owners and concessionaires selling booze at the stadium venue.

For a growing number of us who are not sports loving extroverts, the Sevens has become an embarrassment and something best avoided. Certainly one does not venture into the central city in the evening unaccompanied, when the event is underway. Even during the daytime, wearing a costume seems to be a licence for intoxicated young men and women to behave in an obnoxious manner that would be unacceptable on any other weekend.

No doubt I will be accused of being petty minded and intolerant. After all, I should be gracious on the occasions I have been verbally abused, had drunks pissing in my driveway and when awoken at 3am by the tuneful refrain of those meandering home. But not standing up against anti-social behaviour is at the foundation of why social problems such as family violence, alcoholism and drink driving persist. I make no apologies for expressing an unpopular viewpoint on this.

 

Talent Attraction Narrative Needed

Creating an innovation economy has many challenges, not the least of which involves locating and securing skilled workers to help build and grow high technology ventures. There is little point in cultivating a tech start-up culture without the fundamental building blocks in place to fuel growth. Tech founders need to be proactive about building a team, as well as extolling the virtues of New Zealand as place to re-locate to.

Recently I received several requests for assistance from aspiring tech entrepreneurs eager to find a technical co-founder for their start-up project. Of course I was happy to help, but I needed to prompt for some basic web based information, so that I could share the opportunity. If you are a tech founder and you value an open approach to enrolling people into your project – please do yourself a favour and start telling your story online!

I probably reach around 4000+ individuals in the New Zealand tech scene directly through my social media channels, community groups and various blogs. My advice to start-up founders is to take a similar approach. Turn up to events, write blogs, tweet, organise and support stuff in your community, if you want to reach the kind of people who can help get your start-up going. I don’t just mean making a Facebook page or sending a Word document around to a few likely suspects. Get creative, if you want to surround yourself with creative people.

You might also need to look offshore. I’ve recently been involved in recruiting a new employee for iwantmyname and we ended up engaging a guy from San Francisco. When you look around at the most interesting emerging tech companies in New Zealand, at least half were established by skilled migrants. So there’s certainly no harm in attracting more people from abroad to deepen our talent pool; but remember we are competing with every other economy around Asia-Pacific. That’s why we need to get our brand values aligned in a regional sense, so we can be clear about what we have to offer.

We began some important work on this last year through the Inspire event with KEA and Grow Wellington. I’m looking forward to continuing that conversation in 2013.

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

Winning Ways On The Web

Recently a friend asked me how new companies from a remote location like New Zealand can get noticed in crowded markets on the world stage, without breaking the budget. The answer is simple. Build a fantastic product and love your customers madly.

There are other techniques of course, including referral strategies and affiliate programmes, partnering with other businesses where there is the right fit and optimising content for online search. Also work out which social media or social apps your customers like best and hang out there. You notice I didn’t mention actually paying for advertising. Finding the best mix of tools is largely an experiment, don’t let anyone tell you otherwise. Personally I favour generating high value content that draws in viewers in a subtle way. Search engines get smarter every day and will trash low value content, pushing you down the ladder. Fortunately I love writing about technology and business; but if you don’t – find someone who does ( or invite me to write a guest blog article! )

Internet companies have an unfair competitive advantage over companies flogging consumable goods of course. You don’t have to have a physical presence in market to make sales, scalability is only limited by your ability to manage the technology and capital requirements are minimal. The downside is that the barriers to entry are relatively low. That’s both an opportunity and a threat. It means there’s lot’s of other competitors in your space, but it also means many of them are crap. Don’t become one of those. Pay attention to customer feedback and take away what’s important. You won’t win by responding to every single feature request.

I’m currently burning 3-4 hours of my day working on the customer support side of the business at iwantmyname. We’ve adopted a policy that all employees must spend part of their day engaged in customer support. It’s the quickest way to find out where the points of pain are for your customers and a great way to learn more about the technology itself. It can also be humbling both when you solve a problem for a grateful customer and when you fail to do so – and boy do they let you know! It’s fun riding the long tail, but you need balls of steel and the hide of an elephant sometimes.

Have a safe and happy Christmas holiday and a fantastic 2013.

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