Frontier Firms Follow-On Funding Favoured

frontier-firms

The recently published New Zealand Productivity Commission Report on the economic contribution of “frontier firms” predictably rated only a passing mention in local media. However recommendations in the publication could have far reaching impacts if implemented. But is the government listening?

Frontier firms are described as the most productive, profitable and innovative in an economy and generally have scale and global reach. But the report says that New Zealand’s frontier firms lag behind their global peers in terms of productivity. The OECD defines productivity as the ratio of economic output compared to inputs. Nations with highly productive frontier firms have greater competitiveness because of more efficient use of resources such as labour and capital. These nations also benefit from secondary “innovation and knowledge diffusion” within their economies.

Chairperson of the Commission Ganesh Nana, in an interview with Radio New Zealand says New Zealand is already well behind other small developed economies in the OECD in terms of productivity and the gap is growing every year. He says part of the reason is because we do not have many so-called frontier firms to which smaller innovation based companies can anchor. One of the key findings of the report is that the government must invest in developing a deeper innovation ecosystem, including supporting more commercialisation of research, science and technology.

But will the government take on board this message? Many of us currently working within the New Zealand innovation ecosystem have lobbied in the past for vastly increased resourcing and for setting greater aspirations as a nation. But such pleas have largely fallen upon deaf ears over the years. There are sadly also actors within our ecosystem that are philosophically opposed to any kind of government investment on the basis that only wealthy and well-connected players should be allowed in the game. This is despite the fact that our neighbours (and competitors) in places like Australia, South Korea and Singapore identified the value many years ago and have literally invested hundreds of millions of dollars into building out their own innovation ecosystems.

Developing more frontiers firms is not about growing more “unicorns” as some have mistakenly claimed. But it is about building a more interconnected economy that has research, science and technology at the heart of the beast. That’s a big ask for a small nation for which there are many competing priorities and challenges to face such as health, housing and climate change. But the key to motivating the decision-makers involves grasping the reality that having a powerful innovation ecosystem is actually part of the solution to those challenges.

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest, advisor at ThincLab within the University of Canterbury Centre for Entrepreneurship and principal at GeniusNet Research. 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. Paul is a co-author of the Entrepreneurship Manifesto 2020.

The Commercialisation Imperative

Oxford

Blue Skies Thinking Needed

Competing and surviving in a highly technological, fast changing and globalised economy increasingly dictates that universities and institutes step up and generate economic returns on their research. But although there have been a few notable exceptions at New Zealand universities, we continue to underperform in the commercialisation of new scientific knowledge into value generating products and services that drive economic growth. So if disruptive innovation lies at the core of economic development, how can we better reconcile commercialisation with the core purpose of our institutions?

Firstly, there are some valid arguments in favour of the separation of commerce from academia. Normative, collectivist elements of academic science as a social system, along with the autonomous nature of university culture, seem to sit uncomfortably with the motivations of profit seeking firms that wish to take ownership of intellectual property. Claims of IP ownership can lead to fears of diminishing the scientific commons, which would be detrimental to the collegial and collaborative nature of science and therefore hinder the very process that will drive future discoveries.

Furthermore, commercialising technology research is risky and accommodating new and developing fields of commercially focused science takes up resources that might be used for other teaching and research, impacting the core mission of universities. We have already witnessed closures and staff reductions within arts and humanities faculties where commercial outcomes are less of a focus. There’s also a danger that high tech institutes established in emergent fields become impenetrable and elitist silos of specialist knowledge open to only a few, at a time when we should be striving for greater equity. Are there other societal factors at play that dampen success?

Patent filings data is sometimes quoted as an indicator of “innovativeness” in the context of economic development. New Zealand sits at the lower end of the table, but not because it is a small economy. Countries with relatively small populations such as Finland, Switzerland and Israel lead the pack. In New Zealand total expenditure on research and development as a proportion of GDP has been increasing in recent years, but continues to lag behind other developed countries. Investment rose to 1.37% in 2018. This compares to an average research intensity figure of 2.38% across all OECD countries, ranking New Zealand 21st out of 34 nations [Statistics NZ — 2018]. So whilst the size of an economy does not fully explain the innovativeness of a nation, the level of commitment to research and development investment certainly plays a part.

Approximately half of that R&D investment originates from publicly funded sources. With government investment comes an expectation that tax payer funded academic research will provide a “return on science” or economic and social benefits to society. The challenge then is to generate meaningful commercial outcomes, that do not undermine the core missions of teaching and research. There are a great many reasons to do so, not the least of which is our ability to fund future health, education and welfare needs. As a nation heavily reliant upon commodity based income we must gravitate towards higher added value goods and services to ensure the future economic wellbeing of our society. Developing an ecosystem approach to cultivating innovation is a key part of this journey.

For example, benefits in cultivating university-industry ties become amplified due to network effects and serendipitous conversations around the humble water cooler (or perhaps kombucha fridge these days). This “innovation ecosystem” approach has benefitted a number of scientific fields. For example the emergence of biotechnology as both a science and business from MIT and other institutions clustered within the Boston area. Commercialisation of new knowledge can also speed up solving complex social, health and environmental problems that might not otherwise be addressed, attracting both government and private sector funding into academia.

The global pandemic has also accelerated the need for scientific innovation. Previous hard won gains against poverty and improvements in social equity have been wiped out by pandemic related economic carnage. In addition, because of growing urgency in relation to addressing environmental challenges, there is forecast to be a vast migration of capital away from polluting industries over the next two or three decades. This green transition will create enormous opportunities for scientific organisations operating at the leading edge of cleantech, renewable energy, low carbon construction and regenerative agriculture, for example.

Embedded within entrepreneurship centres of research, university innovation labs such as ThincLab at the University of Canterbury are important intermediaries in the cycle of innovation and a key part of a vibrant ecosystem that engages with a wide array of supporting players to ensure the success of spin-off companies, whilst at the same time respecting the scholarship that underpins scientific discovery.

This article was first published on the ThincLab blog and formed the basis of my presentation to the Food, Fibre and Agritech Supernode Challenge 2021 cohort.

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest, advisor at ThincLab within the University of Canterbury Centre for Entrepreneurship and principal at GeniusNet Research. 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. Paul is a co-author of the Entrepreneurship Manifesto 2020.

Entrepreneur Ecosystem Resource Rethink Requested

Square EManifestoNZ PostDuring the last few months a number of us from the entrepreneur enabler community have been working on a manifesto document aimed at making the case for a more coordinated and vastly better resourced entrepreneurial ecosystem. The initiative sprung from a weekly discussion session that began during the pandemic lock-down and was hosted by the Global Entrepreneurship Network in New Zealand.

As entrepreneurs we are accustomed to dealing with uncertainty and frequently making do with limited funding. But as the economic and health crises evolved, it has become clear that as a nation we will need to do a great deal more together to support entrepreneurship. This is more important than ever now because encouraging early stage new venture development will be fundamental to both the economic recovery and preserving our living environment. In fact we need to be embedding transition thinking into every economic policy decision.

Despite claims by officials to the contrary, government support for early stage entrepreneurship is negligible by comparison to our neighbours across the region. New Zealand is light years behind and it’s time we had an honest conversation about it. Singapore and Australia have already injected hundreds of millions of dollars into developing their ecosystems over the last few years, with demonstrable success – particularly in software and deep tech. There are currently over 4,000 technology based startups operating in Singapore and there was around US $10 billion in venture investments made during 2019 alone. Australia’s “deep tech” incubation program turns 20 years old this year and continues to churn out high tech success stories with publicly funded support through the universities.

But how do we make a case for scarce public funds at a time when there are so many other competing needs? The reality is that we cannot afford to delay any longer. Our innovation infrastructure has been left to languish for far too long thanks to gate-keeping and a lack of a compelling vision. This long-standing under-investment now looks like a threat given the challenges we currently face. So it is our role to inform and educate through the Manifesto document.

Fortunately we could make a huge difference with even a modest increase to resourcing. Through the manifesto we’ve suggested five areas [PDF] that could deliver early wins and for which there are already a number of initiatives in play that could very easily be leveraged and scaled up. Building upon our existing innovation infrastructure is the smartest way to grow economic activity and employment.

For example, there are several excellent educational programmes operating within New Zealand that aim to build entrepreneurial and innovative capability, specialising in various demographics from primary school through to postgraduate research level. All of these programmes bring value to the ecosystem and help to create a pipeline of talent. But there is little in the way of coordination between these initiatives. This is a lost opportunity at a time when there has never been a greater need for high value, new venture innovation across society.

One approach would be to provide an overlay to better align our efforts in educating, encouraging and empowering entrepreneurs from an early age. Furthermore, creating an “innovation nation” is the key to solving the most intractable environmental problems that confront us, whilst also generating positive economic and environmental outcomes across society. New Zealand has a unique window of opportunity to show global leadership in this space right now, in order to attract the capital and talent we will need to rebuild better.

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest and principal at GeniusNet Research. 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. Paul is a co-author of the Entrepreneurship Manifesto 2020.

Environmental Entrepreneurship Focus Needed

fern5The pandemic induced economic crisis has raised awareness that economies remain fragile since the GFC and that we must urgently shift to more sustainable and environmentally sound forms of economic development if we are to survive as a species. As a nation in the spotlight right now, New Zealand has an opportunity to lead with change. But we need a vehicle to drive this process and we must shift the mindset of the nation towards environmental entrepreneurship.

Institutional leaders such as the World Economic Forum (WEF) and the European Investment Bank predict that the next two decades will see a vast migration of capital from traditional industrial verticals to green investments, “responsible” deep tech and “bio-impact” investment, as the “just transition” to a cleaner, low carbon economy takes hold. Some sources claim that this “green shift” could be worth as much as $6 Trillion[1] per annum as infrastructure replacement and the migration to cleaner industries proceeds. The global effects of the COVID 19 pandemic has only served to accentuate the very urgent need for deep structural reform. In fact the WEF argues further that the fiscal response to the resultant economic crisis absolutely must be tied to a greener economy.[2]

Along with this shift comes increasing recognition from global corporations that profit and social purpose are inextricably linked. Socially responsible companies and those that develop engaged, happy and productive learner employees, will capture a greater share of value within the transition economy. Consequently this will invoke greater delivery on environmental, social and governance objectives (ESG) as part of reporting to boards, shareholders and other stakeholders such as local communities. Indeed, the New Zealand government is a signatory to the UNDP Sustainable Development Goals (SDG) of which SDG 9 has a particular focus on “building resilient infrastructure, promoting inclusive and sustainable industrialization and fostering innovation”. At the same time, governments remain interested in endogenous approaches to economic development[3] that value development of human capital, since innovation through creating new knowledge is essential to sustainable growth and wealth creation.[4]

Problem

With rapidly shifting technologies, the reconfiguration of the global economy and consequent disruption of traditional industries, in what has been described as the “fourth industrial revolution”, there is an ongoing need for discovery, evolution and enrichment of entrepreneurial skills, from an early age and throughout life, supported by better connectivity, greater insight and structured exchange of knowledge. Many of the capability building mechanisms required for this journey already exist in their own silos within New Zealand. But there is no unifying framework or plan in place to fully capitalise on this energy.

Solution

As part of the response to our Entrepreneurship Manifesto 2020 document I am calling for the establishment of a New Zealand Centre for Environmental Entrepreneurship (CEE). This would provide a coordinating role in aligning innovation and entrepreneurship programmes nationwide towards delivering a pipeline of talent fit and ready to address the biggest and most important economic opportunity of our lifetimes – our living environment. Partnership with the CEE would be through an application process with successful programmes receiving additional government funding support. A lean and future focused advisory board would administer the CEE. The board would comprise an equal weighting of experienced founders, business academics and government representatives supported by an executive officer. The CEE could be a virtual organisation as well as rotating hosting among academic institutions with strengths in business and environment.

Impact

Success would be measured thus:

  1. By a more coordinated national approach to entrepreneurship and innovation education in general, through supporting high performing enablers.
  2. By implementing micro-accreditation and NCEA credits for entrepreneurship and innovation courses.
  3. By delivering a talent pipeline with an environmental and social innovation mindset (including migrant entrepreneurs).
  4. By raising the status of entrepreneurs as champions of change and opportunity in the global transition economy.
  5. By a growing pipeline of new ventures that address both the SDGs and position New Zealand as a global leader in green transitional technologies.

Possible Focus Areas

  1. Technological responses to climate change.
  2. Alternative energy technologies.
  3. Social housing solutions.
  4. Management and improvement of flora and fauna ecosystems.
  5. Agritech and food security.
  6. Infotech and data security.
  7. Health Tech solutions for pandemic response.
  8. AI and Education.

References

  1. https://newclimateeconomy.report/2016/
  2. https://www.weforum.org/agenda/2020/05/the-european-green-deal-must-be-at-the-heart-of-the-covid-19-recovery/
  3. Isaac Ehrlich, Dunli Li, & Zhiqiang Liu (2017),The Role of Entrepreneurial Human Capital as a Driver of Endogenous Economic Growth, J Human Capital 11,3.
  4. Maradana, R.P., Pradhan, R.P., Dash, S. et al. Does innovation promote economic growth? Evidence from European countries. J Innov Entrep 6, 1 (2017).

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest and principal at GeniusNet Research. 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. Paul is a co-author of the Entrepreneurship Manifesto 2020.

Finnotec Triumphs Again

finnotec2019After missing the previous two events due to timetable clashes, the planets aligned and I finally made it to this year’s Finnotec event. With some important partnerships now sorted and a bunch of thought-provoking speakers in hand, Binu Paul from Savvy Kiwi, the driving force behind the event, has ensured Finnotec will remain New Zealand’s prime conference for all things FinTech related.

With payments technology being an important aspect of my previous venture, I thought that I possessed at least a rudimentary knowledge of what goes on behind the scenes in traditional financial processing systems. But the high quality speakers at Finnotec soon made me realise that I had a lot more to learn. The annual one day conference has become an important “clearing house” for accessing regulatory knowledge, business networking and a nice showcase for emerging talent in a category that barely existed a decade ago.

I was especially impressed by speaker Cathryn Lyall, who clearly has a huge depth of experience across the FinTech space. A board member at Deutsche Bank UK and with 30 years in a variety of roles across capital markets, including as a market floor trader, ex-pat Aussie Lyall is undoubtedly well placed to be an investor and advisor in Fintech. The big takeaway from her talk was about the urgent need for Fintechs to “create real value” for customers in a crowded marketplace where users already get a lot of their services for free from the incumbents.

So courtesy of Rewired the new Xero co-working space, we enjoyed a number of presentations from some hot new startups that have been making waves in our local FinTech scene. Here’s a quick run-down from the showcase:-

MyCap Markets – A blockchain based private share management offering complete with a secondary market platform. Solving the problem of liquidity for shareholders of smaller, unlisted companies.

Kernel – A data driven approach to index investing with a digital tool kit that helps customers make informed decisions.

Transactional AI – Using AI to analyse consumer spending behaviour and better inform lenders. One of the shining stars of this year’s Kiwibank FinTech accelerator at CreativeHQ and a favourite with the Finnotec crowd.

Planolitix – A financial cashflow diagnostic Saas offering initially aimed at financial advisers. Anything that banishes spreadsheets has got to be good, right?

First AML – Simplifying dealing with the obligatory and burdensome administration around anti-money laundering legislation. Solving a real pain point.

Relay.AI – Back in the day it was called “factoring”, but this startup digitally reduces waiting times for businesses to receive invoice payments.

Overall, a thoroughly informative and engaging day out with a diverse group of highly dedicated players and supporters in New Zealand Fintech. Harmoney, Westpac Ventures, Paymark, Xero and UK DIT deserve compliments for having the foresight to back this event. With a little more community curation and the continuing support of FinTechNZ, this event can only get bigger and better as the industry grows.

Paul Spence is a commentator and serial entrepreneur, formerly a co-founder of New Zealand based technology venture iwantmyname,  a co-founder and director of Creative Forest and principal at GeniusNet Research. 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.

iwantmyname Acquired

iwmnWe are pleased to announce that one of our GeniusNet portfolio companies ideegeo Group Limited was acquired in August 2019 by London AIM listed registrar group CentralNic PLC. Founded by Paul Spence, Timo Reitnauer and Lenz Gschwendtner, ideegeo began in 2008 in Wellington, New Zealand with the goal of bringing much needed change to the domain name registrar industry.

Our retail registrar platform iwantmyname was regarded as one of the most innovative and customer centric in the industry globally. This reputation ultimately drove interest from a number of parties and will ensure that the brand and associated technology will endure. An important feature of the company culture was a commitment to community building, which often saw the founders out engaging at startup events and mentoring other entrepreneurs. That’s a habit that we hope to continue.

Special thanks must go to Dave Moskovitz who provided advice at key points in our journey and also Simmonds Stewart and Avid Legal who supported us through the acquisition process.

Paul Spence is a commentator and serial entrepreneur, formerly a co-founder of New Zealand based technology venture iwantmyname,  a co-founder and director of Creative Forest and principal at GeniusNet Research. 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.

Farvel 2017!

I was at a community event recently chatting to a friend and he commented, “you’ve had quite a busy year”. He was not wrong. But it was the first time it really struck me. Here’s a short recap.

We had a solid year at iwantmyname and have grown the iwantmyname team to fourteen, about half of whom are based outside of New Zealand, supporting the 93% of our customers that come to us from offshore. Mid year we convened everyone for a week in Vancouver to co-design a “social contract” for the company, plan some projects and eat all the salmon burgers and maple syrup pancakes we could lay our hands on. Hard to believe that next year iwantmyname will be ten years young. I’m sure we will be planning something special for the community that has supported us. Watch this space! In the meantime we’ve continued backing tech meetups and Startup Weekends around New Zealand (and abroad).

In 2017 I was part of the team that took Polanyio through the Lightning Lab Electric accelerator. There were tears, there was laughter plus loads of hard work forging a position in a very tough and intransigent sector.  We are currently working with an industry partner to continue development of a unified procurement platform that engages energy brokers, their customers and energy retailers. Amidst all the startup hype around consumer apps, we elected to focus on a non-sexy B2B project that will actually drive some long term efficiencies in the evolving energy market landscape. As a result of this experience, I remain open minded about what incubators and accelerators bring to the economy, but I continue to maintain that the government does have a role in promoting innovation and entrepreneurship.

There was also some big changes in my domestic life this year. The lovely Renea Mackie graciously accepted my marriage proposal and we decided to make the move to set up a semi-rural family home in delightful Wairarapa. After more than three decades stoically enduring Wellington weather, I’m certainly loving the Mediterranean climate as well as reveling in the joy of having world class vineyards only a few minutes down the road. We’ve been fortunate to be able to work from home mostly, but we venture across the Rimutakas once or twice a week for meetings and to keep in touch with family. Best of both worlds.

Renea and I have also been busy establishing Creative Forest together with the aim of continuing and extending the wonderful work that Renea became so well known for in Canterbury. Creative Forest offers an innovation framework for young people to explore entrepreneurship with the support of mentors and technical advisors from the community. The company is part of a growing portfolio of interests for GeniusNet and has begun to attract attention from educators, government and iwi representatives.

There were some disappointments in 2017 as well and it also felt like we reached peak political correctness in terms of the vocal minority who find it increasingly necessary to impugn others who hold different views than themselves. In my opinion this is largely in response to the ugliness and idiocy of the current American administration which has unfortunately permeated our collective consciousness during the last twelve months. The consequent steady erosion of the legitimacy of Western democratic social values is very concerning. Notwithstanding this, I’m choosing to focus on the positive aspects of 2017. As my Norwegian ancestors would say – Farvel 2017! Happy 2018 everyone.

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.

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.

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.