Optimising Our Knowledge Networks

Instructing the Super Fund to channel $300 million of investment into emerging tech firms, as well as a recent call for delivery of a “deep tech” incubator to assist commercialisation of public funded research in New Zealand, illustrates that the government has been listening to the concerns of the high tech business community around the need for greater support in the commercialisation of knowledge. Health, environment, food production, robotics and AI – there are many problem areas in which we can excel.  But whilst a broadening of activity in the innovation ecosystem must be seen in a positive light, new entrants may face an uphill battle.

Some say that government involvement in the sector is long overdue. Not a month goes by without the media reporting the departure of a promising high growth, high tech firm such as Rocket Lab, for example. The paucity of follow on capital and expertise available locally is often quoted as the culprit. Successive previous governments failed to address the problem due to being ideologically opposed to what has sometimes been unfairly branded as corporate welfare. But interestingly the most vocal critics of incubation and government directed investment funding tend to be wealthy and well-connected individuals who have no problem sourcing capital for their own ventures.

Since the public purse is already funding universities and research organisations in one form or another anyway, is it really such a stretch for government to facilitate obtaining an economic return on those investments? Those who mutter in their beards about “level playing fields” should take a look around. We are losing the battle with our neighbours in the Asia-Pacific region with whom we compete for capital and talent. Australia, Singapore and Korea all provide substantial support for startups and the commercialisation of publicly funded research.

So where does that leave New Zealand with its newly rediscovered enthusiasm for investing in science and technology commercialisation? Well there was an additional most welcome announcement this week of new funding for an existing body that has already made considerable inroads into surfacing promising research and turning it into businesses. That seems to foreshadow where government thinking might be heading in terms of who is now best equipped to develop a formal incubation programme.

But research commercialisation is actually a network optimisation problem involving many and diverse stakeholders. A post graduate study that I conducted on this topic a few years ago is still relevant. The most creative ideas and opportunities are found at the boundaries where disparate networks overlap. Hence the direction we are heading with, GeniusNet. It is therefore absolutely essential that we have an open innovation based ecosystem and a diversity of players in the incubation and commercialisation marketplace, if we are to lift our economy up the value chain.

Paul Spence is a commentator and serial entrepreneur, a co-founder of New Zealand based technology ventures iwantmyname and 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.

Crazy Rich Asians

SIN City 3If you are a fan of romantic comedies you may recall a scene in last year’s hit movie Crazy Rich Asians in which friends join the happy couple at an outdoor food centre for an evening of laughs, beer and Singaporean food. Amerasian Rachel is trying her best to fit in but is caught off guard by a particularly spicy mouthful of Laksa, much to everyone’s amusement. In some ways this typifies the visitor experience in Singapore. At first it can be hard to find your place in the cultural melange, but there are surprises around every corner and people are friendly once you’ve been properly introduced – so it’s very much worth persisting.

During a recent trip to Singapore I ventured into the Newton food centre where that movie scene was filmed. The venue exemplifies Singaporean society and politics perfectly with a spicy blend of regional cuisine subtly dominated and flavoured by the prevalent culture on the island. But perhaps that is part of Singapore’s magic formula which has been openly founded on the basis of a benevolent autocracy. And I must admit that it was a pleasure to spend a week in a society where trains and planes consistently run on time and there is no trouble from neighbours with barking dogs or idiot boy racers ripping up the tarmac. There are even plans to require registration of e-scooters, because it is simply the sensible thing to do.

The subtle hand of the State is found almost everywhere. Singapore has one of the largest sovereign funds per capita of any nation and many of the most influential corporations are State owned. But that is not to say that private enterprise is discouraged. Quite the opposite in fact. The city state has a very active startup scene and despite some obvious headwinds in the economy and increasingly stiff competition from neighbours such as Hong Kong, India and Dubai – Singapore remains the largest single source of investment in South-East Asia.

Co-working hubs like Found8 can dial you into local networks quickly and The List is a community that keeps founders in touch with all the coolest tech and innovation events around the region. I spoke to Sarah Yen from Simmonds Stewart’s Singapore office during my visit. The Wellington based legal firm assisted South-East Asian business clients to raise $220M in venture funding in 2018, which was double that transacted for their clients in the New Zealand market. Yen explained to me that after a brief lull, global venture funds based in the region are raising capital once again. The legal firm has built good relationships with U.S. based funds like Sequoia which have Asia focused funds for example.

New Zealand startups or growth stage companies seeking capital should not be shy about looking to Singapore, she says. Yen outlined how her firm can easily handle setting up a local presence for clients interested in tapping into the deep pockets of these funds. Taking VC investment is not everyone’s preferred pathway of course, but for those who choose to do so, it can be a hard road in New Zealand. For example the scarcity of follow-on funding has recently led to criticism by Rocket Lab founder Peter Beck in an explanation of why his company had to move to the U.S.

So perhaps we need to be a little more creative in how we engage with offshore funders. Either we need to somehow encourage global funds to engage locally more frequently or we need to develop structures that better facilitate inbound investment, whilst retaining economic value within the New Zealand economy. Otherwise we are doomed to remain largely excluded from the global flow of capital and confined to being an incubation nest for ventures that must eventually fly away and leave us.

Paul Spence is a commentator and serial entrepreneur, a co-founder of New Zealand based technology ventures iwantmyname and Creative Forest 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.

Photo Credit: Paul Spence

Whatever Happened To Competitiveness?

Having spent a decade helping to build a technology business as well as giving back to the community along the way, I thought that I was making a valuable contribution to growing a more knowledge intensive economy here in New Zealand. I was able to measurably improve my own lifestyle and assumed that we were all heading in the right direction together. But with regional economic development becoming more politicised than ever and national indicators of labour productivity and GDP actually decreasing over the last two years – I now realise that we have a lot more hard thinking ahead of us as a nation if we are to deliver on the clean and competitive, high value economy that we all hoped for.

Lately, in an effort to determine how I can best contribute intellectually to this creative endeavour, I’ve been revisiting some of the traditional macro-economic theory around “competitiveness”. As well, I’ve been exploring some new approaches that are emerging in the development arena, with the goal of bringing together my business experience and the latest in economic development thought leadership. I’m a firm believer that policy and actions should be driven by a combination of practical skills and academic theory.

The World Economic Forum defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country”. Productivity is simply the ratio of outputs versus inputs in an economy. Traditionally a more productive economy generates more wealth and (theoretically) more income per capita and better standards of living for its citizens. In practice, it is more problematic and here’s why.

Firstly because this formula assumes wealth is the only measure of good. Happily, some governments and corporations are now beginning to rethink GDP and put more weight on less tangible measures of progress such as well-being for example. Secondly, social factors can skew apparent productivity. For example wealthy nations with large populations of guest workers who have a much lower standard of living compared to local residents. Also the rise of pan-national states (such as EU) and the drift away from globalism towards regional trade agreements, force us to revisit how we look at competitiveness from a global perspective.

Competitiveness is as relevant as ever, but it is being framed within a somewhat different context these days. Even Prof. Michael Porter, who famously drove much of the original thinking around competitiveness, agrees that the landscape has shifted. Today businesses (and national economies) are highly networked, social and collaborative – meaning that the forces of competition have changed. Furthermore Porter has evolved his own thinking and now dedicates much of his time to promoting social progress as a measuring stick independent of GDP.

The challenge for New Zealand remains the same. How do we drive our economy up the value chain and away from extractive and polluting commodity based export industries? After ten years on the job, I learned that building and scaling a knowledge based business is very hard work. Even for those who do succeed, the returns may not outweigh spending the same time and capital investing in property, dairy farming or planting pine trees. That’s a huge competitiveness problem that we need to solve if we are to maintain our enviable lifestyle into the future.

Paul Spence is a commentator and serial entrepreneur, a co-founder of New Zealand based technology ventures iwantmyname and Creative Forest 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.

Photo credit: Renea Mackie – Creative Forest

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.

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.