Innovation Ecosystem Worries Unfounded

It was very disappointing to read Mike O’Donnell’s recent comments about the supposedly tragic state of New Zealand’s innovation ecosystem. Now whilst I respect what those guys have built, it seems like not a year goes by without a member of the TradeMe cabal bagging our community and what we have achieved. It’s starting to get a bit old.

Let’s deal with the obvious hypocrisy first. O’Donnell draws on a marine ecosystem analogy that he picked up at a recent conference. He describes startup companies as bottom feeding low life species, feeding off the stronger, larger fish in the ocean (read – TradeMe, Xero). Like his mates previously, O’Donnell goes on to lament the confusing proliferation of incubators and accelerator opportunities available to aspiring startup companies. However there’s conveniently no mention of the actual economic value created or new jobs that have been delivered by such institutions.

On the other hand, he loudly sings the praises of two companies led by extraordinary women and illuminates them as exemplars of real startups that deserve success. He’s right about both of them of course, but he conveniently neglects to mention that both companies received a leg-up from the very ecosystem that he dislikes so much. Furthermore, some of the the commentators backing his position are folks who also benefited from being part of the startup community. That’s hard to reconcile.

Opposition to state funding of startup programmes springs from a deeply held philosophical belief in some quarters that only well funded companies with friends in the right places should be allowed to succeed. Now it’s very unlikely that the incoming Labour government will roll back recently announced funding for accelerator programmes, but they will no doubt be reviewing how to deal with promoting innovation and entrepreneurship in New Zealand in the future. That’s an opportunity, so understandably Mike wants to influence that debate. But I disagree with his position and here’s why.

Whilst many of us agree that the startup venture model is less than perfect, that’s not a good reason to pull public funding from the sector. As a nation we must diversify way from commodities and move up the value chain. Let’s take the wins when they come and accept there will also be some failures along the way. Government support comes in many forms across the spectrum from enabling academic research commercialisation through to co-funding accelerators. Arguably we are not doing enough compared to others globally. I don’t see any criticism of Israel or Australia, nations that actively and successfully apply substantial government support to their innovation ecosystems.

Having taken a company through the Lightning Lab accelerator this year (and bootstrapped a previous tech company from nothing), I guess that makes me one of the “bottom feeding” losers mentioned in the article. I find that analogy quite offensive, especially since (for the record) we received no funding handouts whatsoever within this year’s Lab. Let’s work together to achieve good outcomes for New Zealand and ensure there are a mix of great programmes with excellent community partnerships in place and that solid companies with real customers get oxygen to move forward.

Postscript:

Mike O’Donnell reached out to me recently and we had a chat about the context of the term “bottom feeder” that he used in his article. Mike sees bottom feeding species (such as Snapper) as the healthy foundation of the ocean ecology and I accept that his analogy was not intended to be derogatory. As I originally mentioned, we all have huge respect for what has been achieved by companies that have a connection to the TradeMe story. There’s a role for all kinds of fishes in the ocean. We should try to work together to ensure sustainability and longevity of the fishery.

Paul Spence is a commentator and serial entrepreneur, a co-founder of Wellington, New Zealand based technology ventures iwantmyname and Polanyio and a founding mentor with Startup Weekends and Lightning Lab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

Innovators Online Again

It seems like half a lifetime ago that myself and Annick Janson established New Zealand’s first online community for innovators and entrepreneurs (ION). It was a clunky PHP forum site that we managed for hundreds of users thanks to the support of University of Auckland School of Business and Revera. After ten years and a couple of post-graduate research projects between us, we reluctantly moved on to other endeavours. But the need for a community platform did not go away.

So I was thrilled to discover recently that the NZ Innovation Council now has a community site on offer. The new site provides lots of fresh content about New Zealand innovators plus a discussion forum and event listings. In the tech world timing is everything and I guess ION was a little bit ahead of its time. I remember sitting through numerous dull meetings with risk averse public servants who just couldn’t see the opportunity and chose not to support us (including one in particular who subsequently thought spending half a million on a boxing match was a great use of public funds – go figure). Judging by the list of sponsors now backing this new initiative, the change of guard at both NZTE and Callaghan has been a positive thing. </rant>

One of our first sign-ups on ION was a bloke working hard on building a little accounting software startup that you might have heard of. There was lots of great conversations on the forum and we helped a bunch of people. What we learned from our initial efforts in this arena was that valuable knowledge truly arises when you facilitate social engagement. In New Zealand we tend to work in silos, but only through collaboration can we create meaningful impact in the world. Online communities are part of the mix, because we need to push beyond the mindless dross of the big social platforms that do not have our interests at heart.

I commend the NZ Innovation Council for this initiative and encourage everyone to sign up and get involved by sharing ideas and content.

Paul Spence is a commentator and serial entrepreneur, a co-founder of Wellington, New Zealand based technology ventures iwantmyname and Polanyio and a mentor with Startup Weekends and Lightning Lab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

March For Science Matters

Last weekend’s March For Science may have been largely symbolic, but it was important. When a government appoints a rabid climate change denier to perform a hatchet job on its own environmental agency, you know that somebody has seriously lost the plot and voices need to be heard.

Interestingly even China is now becoming increasingly concerned around problems created by climate change and has committed to refactoring the economy towards green energy. It’s a bit like trying to turn around a super-tanker, but I suppose you have to start somewhere. But it is very difficult to reconcile that technologically adept nations such as the United States are going in the opposite direction to almost everyone else on the globe.

The role of science in economic growth and development has long been established. Science driven technological innovation has been a key contributor to our advancement as a species over the last few hundred years. From health to computing to space exploration, science has been at the base of almost every step forward. We live longer and more fulfilling lives, largely due to scientific discoveries.

Conversely, science has arguably also been responsible for some of our backward steps. Industrialisation, internal combustion engines and nuclear weapons are also products of the science lab. Science therefore is no panacea. The philosophical and morale context around science is ever-changing and what seemed like a good idea 50 years ago might be framed very differently by future generations. Scientific theories also evolve over time as new ideas emerge and get tested and old ideas are discarded.

What we do know is that the scientific method provides a solid basis for exploring and understanding our world. Discarding rational thought in favour of rumour and outright lies may be a successful political strategy, but it will certainly not help us to address the pressing social, health and environmental issues in the world.

Paul Spence originally completed a B.Sc. degree in Applied Geophysics and was previously employed as a support meteorologist in the aviation industry. He is a commentator and serial entrepreneur, a co-founder of Wellington, New Zealand based technology ventures iwantmyname and Polanyio and a mentor with Startup Weekends and Lightning Lab. GeniusNet is working to support global environmental projects through its portfolio companies.

You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

Parochialism Will Ultimately Fail So Think Globally

Australian Prime Minister Turnbull’s recent flying visit to New Zealand, to meet our new PM Bill English, was a considerably more civil affair than Turnbull’s reportedly heated conversation with the “so called” U.S. President the previous week. Perhaps that is why the visit went under-reported in the media. Neither Prime Minister could be regarded as a stellar charismatic, but perhaps that’s not such a bad thing. In these unenlightened times, a safe pair of hands with good diplomatic skills and a head for business is a far greater asset. Strengthening regional economic linkages will be key to survival in an uncertain world.

During that top level meeting in Queenstown a cooperation agreement on science and research was signed that paves the way for more trans-Tasman collaboration. To the popular media, topics such as this are about as dull as a damp dish cloth and the agreement went largely unnoticed. That’s a shame because everyone needs to understand how important regional cooperation is becoming to the economy. How we play within Asia-Pacific will have implications for our future opportunities and prosperity. The disturbing shift (in some quarters) towards isolationism and protectionism demands that we build stronger regional relationships.

There needs to be a local mindshift as well. I’m tired of well-meaning local government agencies constantly banging on about how they are making over their cities into the next big centre for technology innovation. It’s a ridiculous notion. The entire population of New Zealand could fit into most major cities on the Asia-Pacific rim, with whom we are in a battle for capital and talent. We contribute 0.1% of the global economy and we are under-cooked by most measures in terms of science and technology research and innovation commercialisation. Short-sighted parochialism makes no sense and must end now. Our businesses and civic leadership need to get with the programme and start connecting regionally.

I had a conversation along these lines recently with Shawn O’Keefe, formerly a co-founder of South by Southwest (SXSW), a huge global film, music and interactive media event. Shawn is currently based in New Zealand and is now an advisor to the Myriad event launching in Brisbane this year. Myriad is supported by the Queensland government, which is pouring a huge investment into promoting innovation in the Sunshine State. Myriad is a three day festival of art, technology, innovation and investment match-making. A key theme of the event is that we need to collaborate regionally to compete globally.

It would be great to see a strong contingent of New Zealand tech founder entrepreneurs at this event.

Image credit: Paul Spence

Paul Spence is a commentator and serial entrepreneur, a co-founder of Wellington, New Zealand based technology ventures iwantmyname and Polanyio and a mentor with Startup Weekends and Lightning Lab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

Is Lean Thinking Killing Creative Thinking?

As a frequent Startup Weekend mentor (and co-founder of a successful boot-strapped tech company), I have had plenty of real life exposure to the doctrines of lean startup. But a recent experience has started me questioning whether we are doing ourselves a disservice through slavish adherence to lean methodology and an overly prescriptive approach to starting up.

Let me be clear. The Lean Startup framework provides a solid foundation for anyone who has not previously been in business and for whom resources are scarce. Starting a business is hard and developing a new business model is especially difficult. Coming from a science background, I’m very interested in how Lean Startup takes an experimental approach to testing hypotheses. This makes a lot of good sense. What makes less sense is when being Lean constrains our imaginations.

But I think there’s a way to resolve these tensions. There are two fundamental issues faced by a new startup and (to put it bluntly) not much else really matters outside of these two.

  1. Are you addressing a real problem that people will pay you money to solve?
  2. Can you position your solution in front of those people?

If you can answer these two essential questions, you have a shot at building a business. If not, fail fast and start over. At the forefront of your mind should be that customers are your chief source of capital, not investors. Engaging with customers early and identifying their problems is essential. Gaining venture funding is not a business model. Most businesses in the real world are NOT funded by venture capitalists.

By all means deploy Lean Thinking in your startup to discover customers, create value and extend your runway without becoming reliant on external funding. Indeed, a successful first product iteration that earns an income stream can provide a pathway to explore bigger ideas in the future. But please don’t let Lean Thinking kill your dreams. Many of the greatest tech companies started small and created their own markets. Be an entrepreneur scientist. Keep experimenting. Entrepreneurship is a creative endeavour, which is why many of us are drawn to it.

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

Network Effects Strengthen Our Economic Game

networkI really enjoyed attending Project16 this week. Offering a nice blend of business, philosophy and creativity, the event attracts an esoteric mix of thought leaders from the United States and bakes them with a sprinkling of local influencers, thinkers and doers. What I like about the event is that it challenges our thinking and helps build connectivity by creating a diverse set of connections. That’s important for an island nation that lies a long way from global markets.

It was also a relief that most speakers generally avoided trotting out the usual slogans such as “number eight wire” and “punch above our weight”. Self-congratulatory (but outdated) language such as this should be forever confined to the 20th Century. We also need to move away from parochial attitudes to economic development. It’s no longer acceptable to be championing specific regions or cities as the centre of gravity. Wellington is no more the “centre” for film production than Auckland is the king of software. Yes, we do have regional strengths, but we can leverage these better by working together.

Economic development is not a zero sum game. But everyone can win through collaboration. Rather than trying to compete individually for capital and talent with mega-cities of Asia-Pacific such as Hong Kong, Sydney and Los Angeles, we need to be building relationships and making deals regionally that are more competitive. For example New Zealand tech startups are now accessing capital in Asia. The Sydney “fintech” scene is doing the same. We could set up more “sister city” relationships that have a meaningful economic basis, rather than a political or ceremonial objective. Deal-making should be driven by identified opportunity, rather than through meddling by governmental agencies.

For this reason, pundits who predict that extending Wellington airport will thrust the region onto the global stage are mistaken. Apart from the technical and economic reasons I already outlined that militate against this silly idea, we actually need to switch the thinking towards complex networks, where much greater value is created through diversity. That means it’s also totally fine (and indeed desirable) for air transport links to hub through Auckland, Sydney, Adelaide or Melbourne.

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

Twitter Tweaks

twit2There’s no doubting that, in terms of social impact, Twitter has been a shining beacon of light in a world of largely vacuous and self-absorbed social media content. Therein lies its strength. But considering that the company has received over $1 billion in venture funding since 2007, you would think they might have settled upon a viable business model by now.

Legions of internet commentators have already weighed in on whether or not Twitter can ever salvage a real business from its existing offering. I hope they can. Twitter is my preferred outlet for social media content, for a number of good reasons. It allows me to receive, share and comment on high value content whilst retaining a degree of privacy that is not offered by other services.

But a recent article in Inc illustrates that Twitter has a problem of perception. At present it is not clear to potential new users whether or not Twitter will evolve into anything other than a “stream of consciousness”. So there might be a finite limit to how far Twitter can grow. That’s not a problem for me in the least, but it will be a problem for Twitter’s investors. There is a certain irony however in suggesting that in order to innovate, grow and survive, Twitter must become like the other big platforms. Arguably Twitter already has many platform features. It connects content creators with consumers and allows a certain amount of freedom in terms of user curation. So the next step might involve further reducing the friction for users to find the best content.

Twitter may be smaller than other social media services, but it packs a lot more more punch. Twitter users tend to be better educated, more affluent and (importantly for advertisers) three times more likely to follow their favourite brands online. Pundits complain that the current round of Twitter tweaks will not be enough. But I tend to disagree. You don’t turn around over 300 million users in a single day. Transformative change for the Twitter’s business model is necessary, but will take time. Experimentation and testing are part of that process.

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

When Good Ideas Have Sex: The Case For Innovation Networking

w2wLast year I attended the final pitching session at Get Funded 36, a compressed accelerator course for budding entrepreneurs from within the academic community. Callaghan have produced a blog article explaining how it all worked, nicely showcasing PhD student Brendan Darby and his spectroscopy solution for testing turbid fluids. During the one and a half day event, the participants were walked through the fundamentals of lean startup methodology and coached on how to develop a short pitch to promote their proposal with investors and funding agencies.

I have been involved in promoting this kind of innovation networking through startup community events for some years now, including developing Unlimited Potential Wellington to the World (see photo above) a tech and research innovation showcase and helping to run a special Startup Weekend for researchers last year. The results were mixed, but Get Funded 36 went on to tailor the model a little more and I hope there will be other similar events in future. There’s certainly a strong case for developing more short course formats for giving researchers and academics a taste for entrepreneurship and for exposing the business community to new ideas.

Technology research forms the basis of most high value ventures, but New Zealand has traditionally been a poor performer in commercialising academic research. Part of the problem has been an obsession with “publishing” research, instead of turning it into a business. Our university commercialisation offices have had some successes at licensing intellectual property, but less success at seeding high growth ventures in which most of the economic value has been retained locally. Those mindsets need to change if we are to earn our keep as a nation in future.

There are other initiatives in the New Zealand research and academic community such as Velocity (formerly Spark) and KiwiNet that have gained some traction over recent years and which welcome engagement with the broader innovation and business community. We need more of this! I firmly believe researchers need to get downtown and mingle with entrepreneurs and investors more often. As a friend of mine is often fond of saying, “when good ideas have sex, great things can be achieved”.

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, tech and innovation related events curated by Paul through New Zealand Startup Digest.

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