Air Affair Needs Pre-Flight Check

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You have to give credit where it’s due. Air New Zealand’s spin doctors have had a delicious time making their engagement with Virgin Blue sound like a huge bonus for customers. Unfortunately the reality of the situation is somewhat different. Our national airline’s lusty desire for consummating a union with Virgin may sound like a match made in heaven but it should not be allowed to get airborne without a proper pre-flight inspection.

The two airlines plan to merge and rationalise all their trans-Tasman operations in order to compete more effectively. With Qantas and its low cost offspring Jetstar making rapid inroads into market share and a host of other carriers dumping excess capacity in the region the blue team are taking a beating. It makes perfect economic sense for the airlines to work together, but there is no upside for passengers – especially those from Wellington, where ANZ and PBN already face little opposition. 

No matter what spin the airlines put on the alliance proposal, there are only two possible outcomes for consumers if it proceeds – fewer flights and higher prices between New Zealand and Australia. That is the sole objective because it is the only way the airlines can get revenue per seat to a sustainable level. The net result is that eventually one brand will cease to exist. Given that Air New Zealand is entrenched, it is likely to be Pacific Blue that dies. This will also reduce competition on the domestic scene. That would be a shame because both companies are highly innovative and have excellent customer service standards.

In any event New Zealand’s domestic market has never been able to sustain more than two airline brands historically and somebody will blink eventually. Then the era of cheap airfares will be over, at least for a while. On the other hand Singapore’s Tiger Airways is waiting in the wings – so to speak, although with its appalling customer service record it is questionable whether Tiger’s arrival would be either beneficial or long-lived.

There are however two possible benefits of the proposed alliance to consider. Firstly, Air New Zealand gains access to Virgin’s domestic feeder traffic and marketing machine. That would be a plus for the New Zealand tourism industry and a long awaited return to the Australian market since Air New Zealand’s near death experience with its misjudged acquisition of Ansett back in 2000. Secondly, with more A320s on the way, Air New Zealand will have more capacity irrespective of its partnership status. There may be scope to launch some kind of new low cost option to address this section of the market and placate the regulators.

There is a certain inevitability about all of this, so it’s important that any deal gets properly examined. Australia handles such proposals through the Australian Competition and Consumer Commission, but in New Zealand it will likely be a Cabinet level decision. Considering that the New Zealand government is the majority shareholder in one of the applicant companies, that would seem to be a slight conflict of interest. Hopefully a compromise can be hammered out that both ensures the viability of airline services and protects competition in the market.

The Hills Are Alive

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The hills of Wellington may not be alive with the sound of music as such, but they are home to some of New Zealand’s coolest emerging technology sector companies.

Providing a network forum for entrepreneurs to connect with investors, future employees and other innovators is part of what we do at Unlimited Potential. This week IN-Business magazine published its fantabulous SmartNZ technology supplement and were kind enough to include an article penned by yours truly. In the article I talk about the resurgence of tech entrepreneurship and how we can enjoy New Zealand’s lifestyle whilst scaling our businesses globally.

The publication leans heavily on the people and events happening in the technology scene around the Greater Wellington region and is a beacon of light for those of us working within smaller tech companies. Being an entrepreneur has its ups and downs and we all need a little dose of inspiration at times. Tim Collins and the team at IN-Business have done an outstanding job with SmartNZ and I would highly recommend grabbing a hard copy or checking out the digital version of the magazine.

The article I wrote for SmartNZ also mentions Startup Digest, a weekly listing of startup, innovation and technology events. If you would like to subscribe to the New Zealand digest or find out how to get your tech event or product launch listed, you can find this week’s edition here.

Funding Allocation Begs Questions

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The Pacific Island community was reeling last month after the shock suspension of popular community radio personality Efeso Collins. The gagging came shortly after Collins expressed reservations over an uncontested government funding deal worth almost $5 million offered to a previously unknown economic development trust entity called Pacific EDA. Now the government is scrambling to distance itself from the whole mess, but the story just won’t die.

Collins made an empassioned statement during his regular spot on Radio 531pi recently, calling for more transparency but was then dumped by the station management. The text of his comments has been made available on the Pacific Eyewitness blog. Pacific EDA received a direct Ministerial allocation of funding in the 2010 Budget, contrary to advice given by officials at the Ministry for Pacific Island Affairs. Radio 531pi parent company National Pacific Radio Trust receives government funding and is chaired by Tino Pereira. The CEO of the Pacific EDA is one Anthony J M (JR) Pereira. Coincidence? No, the men are brothers and were both directors of Pacific EDA when the company first formed.

The affair reeks of political patronage and has been aggravated further by the fact that a journalist appears to have been prevented from doing his job because of vested interests. These efforts will come to nought however because Collins’ friends have ensured the case has been widely aired in the New Zealand Herald and in other media forums online. Collins rightly asks why an organisation with three employees should receive such a vast sum to essentially perform programmes that already exist within other organisations.

So, will this funding create more jobs and improved outcomes for Pacific Islanders? Will there be a demonstrable return to New Zealand in general? Those are very good questions. Questions that will no doubt be further explored by the media and the government in the weeks ahead.

ION e-Letter May/June 2010

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GeniusNet is proud to host the ION e-Letter. ION is New Zealand’s original virtual community forum for innovators, entrepreneurs, mentors and investors. 

ION is kindly supported by EGL, Revera and iWantMyName.

During 2010 we are moving to an opt-in newsletter format for ION. Through our relationship with Silicon Valley based theStartupDigest.com we can now offer you a weekly digest update of tech/biz/startup events across New Zealand. To check out the latest NZ digest, follow this short link:

http://iwmn.me/1gOw4A

Hit the subscription button within the digest to get a weekly update of events in New Zealand and please let us know if you have a technology, innovation or startup event or a cool product launch that you wish to promote. Also, if you are heading offshore on company business, don’t forget to check out other regional Startup Digest event listings.

Follow ION on Twitter

Mid Winter Mentors Offer X Factor

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At this time of year when it’s cold, grey and wet, it becomes all too easy to simply enter hibernation mode. But businesses don’t stop running just because the weather sucks and certainly nobody can afford to stop creating and implementing new ideas. Every so often we need to escape our local environs, go away and stimulate our brain cells by becoming totally absorbed in something completely different. That’s why I’m looking forward to my trip to X|Media|Lab Sydney later this week.

X|Media|Lab is a highly effective and affordable globally focussed event for businesses involved in the digital media innovation space. The event comprises a conference day plus a weekend workshop for selected project teams. There are also social events at which the organisers can facilitate introductions to potential partners, investors and international mentors. X|Media|Lab visited New Zealand in 2008 and 2009 and we’d love to see them back again. The events are organised at venues around the world, several times a year and attract a who’s who of speakers from the worlds of digital media, animation, games and mobile.

With ideegeo being essentially a business software developer, I wasn’t sure we would ever get the chance to attend the international mentoring workshops – but much to my delight, the opportunity has arisen. No, we haven’t started creating digital animated games or building social network sites, but we have begun conceptualising a product that will help such sites to monetise. So it was with much excitement that we found our project had been selected as one of a handful for mentoring from over 80 entries.

We’ve already been talking to some very smart people about the idea but there is more work to be done. Whether or not we can take the next step will largely hinge on securing some high level partnerships at a very early stage. Such relationships are difficult to secure without travelling outside of New Zealand. X|Media|Lab brings a bunch of influential movers and shakers to our front doorstep. It’s an opportunity we are relishing.

Research Week Brings Science Leaders Together

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A winter retreat for scientists interested in medical research and biotechnology is bringing some of the world’s finest science researchers together for a week long convocation.

Queenstown has for many years played host to a number of research meetings across a diverse range of topics from molecular biology to neuroscience. Now these meetings are being clustered into a knowledge fest being labelled as Queenstown Research Week. It’s an opportunity for local researchers to mingle with and learn from some of the world’s leading minds from within the medical and biotech arenas.

It is also an opportunity for investors to hear about opportunities within biotech and to promote science commercialisation in general. No doubt there will also be some quiet analysis during the coffee breaks on whether or not there is any substance to Craig Venter’s recent pronouncement that life had been created in a test-tube.

Irrespective of one’s position on that particular topic, one thing is certain. Medical and biotechnological science is advancing at a rapid rate and such fields create wonderful opportunities to improve human quality of life, address environmental problems and deliver economic gains – provided these technologies are viewed with a robust ethical overlay.

Starting Lean: When to Pivot

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Lean Startup methodology when applied to technology start-up companies advocates rapid prototyping, iterative re-testing of market assumptions and soliciting frequent customer feedback to more quickly evolve a product offering. At a recent lunchtime seminar hosted by Wellington’s Lean Startup group, we discussed when to pivot.

Pivoting involves a fundamental change to one or more of the three fundamental questions that frame the business model and could be a response to either a flawed model or a new opportunity.

We Are Selling What? + Via Which Channel? + To Whom?

Bruce Aylward from Psoda described how his company underwent a complete change in strategic direction in terms of how their product was marketed and distributed. Psoda is a SaaS suite that assists professionals to manage programs, projects, requirements, testing and product development. Psoda’s pivot point came when they realised that customers only wanted some of the services being offered – so they created a pick ‘n mix option. It was a subtle change that boosted the company’s revenue take.

The domain registrar industry has a well established model and hundreds of incumbents. Finding ways to innovate within such a model is tough, but it is the only way forward for a new company. At iWantMyName our pivot point came when we realised we were creating a scalable platform-as-a-service offering that we could rapidly roll out to channel partners. It was a great learning experience for us that added a lot of value to our business.

Bright Tech to Lead Recovery

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The collapse of financial institutions during the recession led to the destruction of billions of dollars of wealth and made us question the sanity behind investing exclusively in property or risky finance companies. But a renaissance in angel investing and a surge of interest by economic development organisations in the tech sector is opening up new opportunities.

Grow Wellington is the regional economic development body that offers business programmes for enterprises across Kapiti Coast, Wairarapa, Hutt Valley and Wellington city. Recently Grow Wellington launched the Bright Ideas Challenge in an effort to identify and motivate the region’s closet entrepreneurs and help get good ideas supported and funded. The challenge invites aspiring entrepreneurs to submit a 100 word description of their business idea in return for advice and coaching. The top 200 ideas will be eligible for KickStart, a business startup programme. There is $25,000 in seed funding on offer plus the chance to meet investors and inspirational leaders in business.

With high value technology ventures and small businesses driving the economic recovery globally, at Unlimited Potential we thought it a good idea to get behind the Bright Ideas Challenge and to encourage our entrepreneurial members from the ICT sector to put their best foot forward. So when you go to the Bright Ideas submission page, make sure you click on Unlimited Potential in the dropdown box. UP will use its industry networks and events to support nominated ICT projects that graduate from the challenge.

Paul Spence is currently Unlimited Potential co-chair, CEO at tech startup iWantMyName and the New Zealand moderator for Silicon Valley based StartupDigest. You can contact him on Twitter @GeniusNet.

Search Build Grow

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I recently spent an enjoyable Saturday with the Wellington Lean Startups group watching live webcasts from the Startup Lessons Learned conference in San Francisco. Perhaps the most important lesson of the day emerged from Steve Blank’s presentation about the role of a startup founder. The underlying iteration for a startup venture can be defined by the following three words, search-build-grow. It’s a message that we do not yet fully embrace in New Zealand, which is a nation of small businesses that (mostly) do not scale up at all.

Prof. Blank teaches at the Berkeley business school and introduced a novel subject called “customer development” to the curriculum there. I say “novel” because in the excesses of the late ’90s, more than a few startups (and investors) overlooked the fundamentals of business for a while. It took a bursting bubble and a massive destruction of capital to remind tech company founders that the foundations of a real business never change. At the outset, the entrepreneur’s role involves searching for a viable business model. Later the task becomes building a set of organisational processes that can allow the business to grow. Finally, the business has to scale upwards.

Possibly the reason we predominantly remain a nation of small businesses is that we are great at being founders and innovators, but less confident at implementing formalised professional management that can deliver scale. Part of that is about the desire to retain control; but there is also the question of ambition. New Zealand needs more medium to large sized businesses, especially ones that export value added goods and services. We need to get over our lack of self confidence and think global.

When I left the secure bosom of full-time paid employment last year I stated that my goal was to build a knowledge based business with a $100 million valuation. No doubt there were a few quiet chuckles in private about that statement. But if we don’t set ourselves big goals how can we measure ourselves and drive forwards? At ideegeo having reached the “build” phase of our first venture, we have already begun the “search” phase for our next one. It has been challenging at times, but I’m confident we remain on track. Serial searching and building is a valid business model in itself, provided you can assemble the right skills and access sufficient resources.

Thanks to Dave Moskovitz uber-mentor and facilitator from Webfund for organising the Wellington Lean Startups group and CreativeHQ for feeding us and taking an interest in what’s happening at street level in the local tech startup scene.

Two Dimensional Culture Devalues Society

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A couple of issues currently being debated in the New Zealand media suggest why as a nation we struggle to think outside the box. It also illustrates how we are failing miserably to deal with a selfish and deeply ingrained culture of alcohol misuse that continues to plague our society.

Proponents of street racing in Christchurch have suggested that the best way to keep intoxicated young drivers off the street is by providing a burn-out pad adjacent to a residential suburb away from the city centre. The disadvantages of this idea will be immediately apparent to local residents who will be required to endure hours of engine revving, tyre squealing and the stomach churning stench of burnt rubber associated with this mindless “sport”. Construction of a burn-out pad therefore simply legitimises what is already a highly anti-social form of behaviour.

At the other end of the country there is much public hand-wringing and a media feeding frenzy over the lack of progress to develop the Auckland waterfront into “party central” in time for the predicted influx of visitors to the Rugby World Cup (RWC). But nobody has yet questioned whether there exists a real need. A quick survey of Princes Wharf and surrounds reveals dozens of existing bars and restaurants, many of which seem to be struggling to attract any custom at all outside of the traditional boozy weekend nights. Surely the basis for “Party Central” already exists. On the other hand, given the rugby playing community’s poor track record in treating alcohol responsibly, perhaps the Police would prefer all of the RWC drinkers to be corralled into a large centralised holding pen, as is being suggested.

The most disturbing aspect of these two debates is that the focus seems to be on providing a solution that caters for and indeed promotes boorish behaviour as a cultural norm rather than addressing the prevailing values in wider society. In a nation that seems overly self-obsessed with a two dimensional culture of sport and binge drinking, will we ever truly be able to nourish and grow an environment of creativity and innovation?