Will CGT Deliver “Well Being”?

The findings of the Tax Working Group are in and (unsurprisingly) the recommendations lean heavily towards introducing a full blown capital gains tax (CGT) into New Zealand from 2021. About the same time, the Prime Minister fronted with her first economic speech of the year in which she clearly signaled that the next budget will be focused on “well being”. Only a very cold-hearted person could deny this is much needed, but there are huge political risks attached to both these initiatives.

Lifting the economic, social and mental well being of youth seems to be front of mind for our government. Quite rightly so, young people are our future. Growing an increasingly impoverished and disenfranchised group in society is in nobody’s interest at all. But equally, ignoring economic realities and the role of business in society is a dangerous road to tread. Young people need jobs and hope and we cannot deliver this in a shrinking economy. The government must continue working on the infrastructure deficit and especially deliver on intelligently supporting economic growth in the regions, where there are many latent opportunities.

This point is important because youth unemployment and social needs are high in our rural areas, smaller towns and cities. Interestingly, farms, small businesses and family owned property holdings are likely to bear the brunt of a full CGT. Not exactly a recipe for economic growth in the provinces. But I think we all know that a comprehensive CGT is unlikely. The political risk is enormous and even the most optimistic of economists agree that, although beneficial in the long term, CGT will crush economic growth – at least initially. So the government needs to be ready to take that one on the chin.

A small blip in the economy could be weathered perhaps, but keep in mind that we are not a high growth economy in the first place. Forecasts (without considering CGT effects) place New Zealand at about 2% growth, compared to 3% average globally forecast for next few years. During my recent visit to Singapore, I noticed there was much hand-wringing in the media that their GDP growth had dropped to 7%! We are not in such an envious position and even a small drop has huge implications on tax revenues, thus cancelling out the resources for “well being” projects.

Another worry is the looming threat to businesses owners. Those who invest time and capital into growing their businesses may now be penalised when they come to realise gains from their efforts. Taxing habitual property traders and business that impact the environment is certainly something we should do, but taxing entrepreneurs for employing people, paying GST and income tax while strengthening the productive part of the economy, is a very bad idea.

Companies that produce high value “weightless exports” such as software are likely to be disproportionately penalised because these ventures tend to be started with minimal shareholder capital investment. Therefore almost all of the value at time of disposal will be subject to taxation. No doubt the government has an eye on the tsunami of baby boomer business owners that will be exiting in droves over the coming years. But who will replace them? In a world with an uncertain economic future, the current no-CGT regime on sales of business assets is one of New Zealand’s few competitive advantages.

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.

 

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

Creating An Education Nation

This week I gave my young son a tearful hug and watched him cross through airport security to join the first leg of a long journey to Europe. I found myself, reviewing the previous eighteen years and wondering whether or not I had done enough for him. His mother and I have a solid friendship now, but we separated when he was just two. So co-parenting presented numerous challenges for us for many years. Not the least of those was that (despite his intelligence) my son sometimes struggled within the school system. At times it broke my heart and I often felt like I badly let him down. But what I have found out since we began researching our new project Creative Forest is that the education system is simply not serving our kids well enough in the 21st Century.

Let me state that this article is not about shifting blame or spotlighting shortcomings in  education, it’s about acknowledging that kids have different learning styles, society is changing rapidly and that we are not addressing this fast enough. Our current “modern” form of Western education has origins that date back two centuries. That system arose in the wake of the Industrial Revolution as economies transitioned away from being agrarian and when there was a need for a more literate workforce. Teachers stood at the front of the class imparting knowledge to students lined up in rows. Little has changed.

I don’t mind admitting that this old system served me well personally, because I actually enjoy absorbing facts and was good at sitting exams (one of my few talents). I ended up with three degrees including a post-graduate qualification and was the first person on my father’s side of the family to complete a university education. But now it’s becoming clear that many bright children are not suited to this model, yet there are so few alternatives. It’s time we became an education nation where teaching is properly resourced and we provide alternate pathways that motivate learners. Our future viability in the world depends on it!

Today we are faced with vastly different economic structures, increasing disparities in wealth and exponentially accelerating technological change. How do we equip our children with the skills to navigate these enormous problems? With Creative Forest we take some of the emergent thinking on project based learning and personalised learning and bring them together with a design based ecosystem approach that supports both students and teachers. The open source Creative Forest system delivers success in STEAM subjects, on the basis of personal inquiry, guided by teachers and external mentors. So we use a hybrid setup with the online platform supporting the classroom environment.

Critics of these new methodologies worriedly cite the dangers of eliminating knowledge from the curriculum, but this is a red herring. Learning is not a zero sum game and introducing new approaches does not need to be at the expense of curricula. Indeed bringing forward some new thinking has the potential to enhance how knowledge is passed on. It also opens doorways for kids that were previously excluded and conveys soft skills such as collaboration that they will need in the real world. Thankfully some teachers are already beginning to embrace these ideas and Creative Forest is making progress working with these early adopters.

Meanwhile, thirty hours later we receive a cheerful FaceTime call from my son. He has negotiated several major international airports, landed in Tokyo, Japan, found his hotel then flown on to Osaka the next day, where he interprets online maps to find his way safely across a huge, unfamiliar non-English speaking city, via trains and buses, to a tiny apartment where his buddy is staying. We also hear that he has a job offer awaiting his return to New Zealand. I guess I didn’t fail him entirely in his education.

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.

Once In A Lifetime

A series of events unfolded last week that caused me to take a step back and have a rethink about my world view and exactly what drives me to succeed in life. But to preface this story, let me explain that, for a number of reasons, this year has been one of the most challenging in my business career. It has been a year of unnecessary conflict as well as necessary but jarring changes. There have been times when (rightly or wrongly) my capability and core sense of self-worth has been questioned by others and indeed by me as well.

So it was within this tumultuous context that I found myself waiting politely with my partner in a supermarket checkout queue recently. A passing shop employee happened to notice a bank ATM card lying on the floor near to where I was standing and enquired if it was ours. It was not, so she hurried off to deposit the card safely at the supervisor’s station. Now my attention was drawn to an elderly lady ahead of me who was struggling to complete her transaction. Doubled over with an awkwardly curved spine, her skin had the awful gray pallor of someone gravely ill and possibly with limited time left.

Her adult son was trapped in the adjacent queue so, appraising the situation, I waved him across ahead of us. We had just enjoyed a pleasant walk outdoors and were in no particular hurry ourselves. It soon became evident that the poor lady had lost her credit card, so we quickly pointed the man in the direction of where it was being held. The woman was greatly relieved and completed her payment. It was a simple act of assistance towards a stranger in need that any decent person would have provided of course. But what happened next was entirely unexpected and affected me deeply.

The gentleman turned to me and grasped my hand. “Bless you sir, you are a good and kind man”, he said. At that moment I began to realise how easily we lose track of what is really important in life. As humans we strive so hard for material things. We crave money, power, sex and social recognition and yet it all means nothing in the end. The only meaningful aspect of our short lives, is how we contribute to others. As entrepreneurs we are naturally ego-driven and results oriented of course. But this is a feature, not a bug, provided we balance that energy with a healthy sense of humanity and a sense of self-worth.

This week I have also been reading a number of stories about entrepreneurs struggling with their mental health. It reminded me once again that we all must be vigilant in how we balance work and leisure and relationships. I also enjoyed Jenene Crossan’s outpouring about how entrepreneurs simply need to give the best 1% of themselves to their businesses and be surrounded by good people – rather than deplete themselves by giving 100%.

Wherever the road takes me in the future. I hope it will be a place where I can live by that credo and that it will be within an enterprise that demonstrably helps people in some way and genuinely values the contribution of every team member. We only get a limited number of iterations in life – we should make them count.

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.

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.

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.

Ashes To Ashes 2016. Now Welcome To 2017

Let’s face it, last year was a pretty shit year for fans of popular music and culture. I don’t care what the statisticians say, the catalogue of highly talented stars that made premature exits in 2016 was exceptional and shocking. However the media were (mostly) too polite to mention that the collective drug consumption of the dearly departed probably supported a number of small South American nations’ economies throughout the 1970’s and 80s. All tragic losses, but perhaps not entirely unexpected.

Less predictable was the outcome of the U.S. election, a result so unpalatable that we can only hope that the American political establishment will find a way to put matters right, before there is a very nasty accident involving long range armaments or fiscal collapse. One way or another, I very much doubt Trump will see out his four year term. The Brexit debacle was equally disturbing and was also another example of a poorly informed, inward looking minority being allowed far too much influence. But of course it would not be democracy if we excluded people with double-digit IQ and questionable heredity from voting.

At a time when irrational fear, regional isolationism and misguided notions of nationalism seem to be taking root globally once again – it is important that thinkers give voice to their concerns loudly and often. Important because intellectualism usually becomes an early victim of the mob, when rational thought gives way to populism and slogans. History repeatedly shows us that this never ends well.

So I was at first encouraged when I read this opinion piece on how we all need to work together to create a sustainable economic future for New Zealand. Whilst I certainly agree with the sentiments, I disagree that this approach is predicated on Auckland as the “centre of innovation” for New Zealand. In fact the problems of Auckland are analogous to arterial thrombosis. If the heart fails, the entire body will die – and that’s a big issue for all of us in New Zealand. Regional relationships and complex networks are the better approach, as I have discussed previously, with regional linkages and multiple innovation hubs.

For my part this year, I intend to continue to connect entrepreneurs and innovators from across New Zealand and abroad and to contribute economically by working on growing the businesses we have under the GeniusNet portfolio and (hopefully) add one or two more during the year. I will also continue to speak out on issues, especially those that relate to economic development. It is about time the citizenry had greater influence over decisions than those self-serving politicians whose main aim is building grandiose edifices to themselves. Here’s something good from 2016 that gives the world hope in this regard. Thanks Audrey.

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.

Mrs Clinton Misses

clownObserving the U.S. election result unfold was very much like watching a slow motion train wreck – ugly but also fascinating. That an arrogant, racist, misogynist with no experience of political office could even make a party nomination (let alone win the presidency) speaks volumes about a badly broken America and a failed political system.

No doubt there will be endless soul-searching and detailed media analysis of the result. But the media are themselves thoroughly complicit in this disaster. Ironically the Washington Post best summed up the situation with an introspective opinion piece on how the liberal media’s self-satisfying world view completely ignored the real story of growing pain and dissatisfaction in heartland America. The Republican president-elect appears to have successfully tapped the disenfranchised, angry (and largely uneducated) under-belly of American society in the same way that Brexiteers and Far Right have damaged Europe.

The presidential candidates collectively spent an estimated $3 billion on their campaigns. Imagine how many small businesses could have been created, roads repaired or schools upgraded with that money. The new president may have a majority Republican senate to lean upon, but he will not be able to deliver on the economic pump priming and rejuvenation of the sunset economy that he implied during his campaign. Grassroots supporters and swing voters will have four years to contemplate their error of judgement.

The political elite woke up this morning smelling the rotten corpse of the “American Dream”. It remains to be seen whether or not the nation can be reunified with a changing of the guard. The traditional approach to doing so is to find a diversion in a common enemy. That is also a disturbingly real possibility with the next administration and a chilling prospect for all of us.

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.

Has Britain Gone Mad?

cowThe United Kingdom seems to have become infected with another case of “mad cow” disease, if the events of the past few weeks are any indication. Prime Minister-elect Theresa May’s appointment of Boris Johnson to the post of Foreign Secretary seems designed to maximise offense to Britain’s neighbours, already reeling from the extraordinary Brexit campaign, of which Johnson was himself a prominent supporter.

May’s appointment of Johnson should be no surprise however. Three days into the job, she has already been accused of pandering and being inconsistent in her position on foreign investment, amongst other issues. The Boris appointment is either an awkward misjudgement or a clever ploy to undermine the entire Brexit process – which she quietly opposed during her time as a senior cabinet minister.

The new Prime Minister also seems in no hurry to start the exit negotiations and who can blame her. The Brexit debacle has plunged the UK into it’s biggest political and economic crisis since World War Two, say some commentators. Furthermore the exit vote was not exactly a landslide. There might yet be more water to flow under the Euro bridge as Britain stares down the barrel of an estimated 5-10 year recession as the full implications of Brexit take hold.

In a world of uncertainty, now is not the time for isolationism and petty parochialism. Britain has benefited enormously from its previously close relationship with the Continent, but the stayer camp failed to make this case sufficiently strongly. May was complicit in this, in her efforts to appease all sides and pave the way for her own career development. That in itself is a clear illustration of why the British government is failing its people at present. The vested self-interest of a minority of over-puffed political personalities has overcome common sense.

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.

Catton Furore Points To Painful Reality

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

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

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

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

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

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

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