Worth-Less

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I really wanted to begin this week with something positive. But the bad news just keeps coming for this government. Last week’s sordid fiasco over alleged impropriety on the part of Cabinet Minister Richard Worth was the latest in a long line of stuff ups stemming from bad decision-making around political appointments.

First there was the ill-advised addition of Christine Rankin to chair the Families Commission, then poor Melissa Lee got thrown to the lions in the unwinnable Mt Albert electorate. Now the resignation of a Cabinet Minister. It raises questions about the political judgement surrounding the original appointments and about the level of talent that the Prime Minister has at his disposal.

I actually posted a comment on Twitter in mid-April predicting that Richard Worth would be “gone by lunchtime”. Although it had become self evident that he had an unhealthy predisposition towards self-destructive behaviour, even I was surprised how rapidly the end came for him. As for Rankin, I’ll give it 12 months before she exits with another nice golden handshake amidst a cloud of controversy. Nice work if you can get it. 

I have a little more sympathy for Lee however. I admire that she is an Asian woman that has succeeded with her own business in the male-dominated world of media. I also think her media colleagues were a little unfair in talking up the back story from the disgruntled former employee. To make matters worse, she has also been saddled with the near impossible task of attempting to wrestle Helen Clark’s former seat from Labour. It will certainly be a character building experience and perhaps that was the rationale.

The problem for the rest of the country is that whilst the traditional media are salivating over this tedious daily reality TV fest, there are far more important tasks at hand that are not getting proper coverage, like exploring why the government is not fully addressing research, science and technology commercialisation and entrepreneurship as a basis for the economic recovery.

Cow-shit and Candyfloss Overcomes High Tech

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In an interview for Unlimited Magazine, physicist and technology entrepreneur Paul Callaghan recounts meeting Prime Minister John Key at a business function. The PM had just stepped off the speaker’s podium where he had been talking up agriculture and tourism and expressing scepticism about the value of New Zealand’s technology sector to the economy. If that is the kind of leadership we are faced with, then I fear that the devaluation of our economic potential will continue unabated.

And before I’m accused over being overly harsh, let’s just look at this government’s track record since taking office well over six months ago:

  • Research & development tax credit reduced then cut altogether.
  • Fast Forward programme wiped and replaced with identical project with less funding.
  • I.T. worker redundancies from government agencies.
  • Negligible budget increase to RS&T vote.
  • Major cuts to tertiary education funding.
  • NZ Innovation Centre loses $15M in funding.
  • Reported $100M net loss to market development assistance programmes for exporters.

To be fair, we all knew that the Budget needed to be tough – even if Key and English can’t agree exactly why. Certainly borrowing to fund superannuation and tax cuts doesn’t make good fiscal sense; but neither does knee-capping your research, science and technology capability. To its credit, the government did provide additional resources to the Marsden Fund and a one-off operational grant to REANNZ the high speed research network. In the latter case, they obviously could not be seen to allow the research network to fail, whilst at the same time pouring billions into digging trenches for a brand new domestic network for which a proper economic business case has yet to be made.

Investing in and commercialising research will never be cheaper than today and you can be sure that our competitors in America and Europe are continuing to do it. I’ve said it before – when I look around town, it is the businesses that have invested in developing new technology that are still growing. It seems like the government is signalling it wishes to play less of a role in this arena. Dairy commodity prices are dropping again, so too are visitor numbers. The PM’s support for agriculture and tourism is no doubt uplifting for the cow-shit and candyfloss brigades, but it does little to bolster our GDP per capita output in the long term.

Wool to Weta by Paul Callaghan is available at all good bookstores and explains why research, science and technology is important to the New Zealand economy and why a unified vision is needed.

$10M Windfall Saga Reflects Desperation

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The story of the errant business owner who absconded with over $10 million has captivated news audiences in an otherwise quiet week. But the incident is deeply troubling in that it also reflects something of the nature of a society in which consumption and short term gain are idolised at the expense of industry, thrift and common sense.

Although the purpetrators have a three week head start on the Police, the fact that they made no attempt to cover their tracks would tend to suggest that their foolish escapade will be short-lived. It is reported that one of the group has even been bragging about her exploits on a social media site. Perhaps this information is a cleverly planted red herring; but that is giving them way too much credit for intelligence. So it leaves us to ask what drives an individual to such desperation. Surely Mr Gao must realise that his days as a playboy millionaire are numbered? Will a few weeks of idol leisure be worth the several years of imprisonment that will almost certainly follow?

I think the answer to that question lies deeply ingrained in the fabric of our society. We live in a heavily consumerist world in which (empowered by marketing) short term satisfaction and easy credit prevail over wise personal choices and old fashioned hard work. In fact, part of the blame for the present economic crisis lies with those that gave in to the overtures of banks and realtors and who overly extended themselves financially because of a desire to clamber aboard the property pyramid. One only needs to look at the rapid rise in the numbers of mortgagee sales to understand where that road has led.

Last week I wrote about the lack of vision. That short-coming is not only the domain of government. As a society we must all begin to think more about sustainability and building enduring economic wealth. For most of us, in the absence of a $10 million windfall, this is the only path to prosperity.

 

Mayor Banks Gaff Embarrases Technopreneurs

Last week I attended the XMediaLab event in Auckland at the kind invitation of the organisers. XmediaLab is a highly polished global networking and workshop event aimed at digital media entrepreneurs. Many of the international guests are successful investors and entrepreneurs themselves and they are all highly articulate and thoroughly interesting people to hear speaking. So it was in that context that I was hugely embarrassed for all New Zealanders when Auckland Mayor John Banks stood up to address the opening event on Thursday evening.

Banks was clearly out of his depth and had obviously not been properly briefed as to the purpose of the event. His “off the cuff” speech was appallingly condescending towards the event organiser and his pathetic attempts at humour were cringeful to say the least. He obviously completely missed the point that the event was about building international connections, not belittling them. We can only hope that the offence will quickly be forgotten and that with the support of NZ Trade & Enterprise we will see the event return to our shores in 2010. But…perhaps not to Auckland. Enough said.

Where’s the Vision?

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If there is a change of organisational leadership within a business, one of the first tasks of the new leader is to review what values the organisation stands for. New ventures must also begin with a vision as a foundational building block. So when a new government comes to power you would think that this would be a project of some urgency for politicians. But neither the National government nor its predecessor have ever made any attempt to articulate exactly what we stand for as a nation.

The net result of this lack of leadership has been that policy-making is driven by subjective advice at departmental level, but without any central overriding objective in mind. This environment is a fertile breeding ground for politically correct personal agendas and is the basis for much of what is wrong about our public service. And whilst it may be the case that public agencies retain the specialist expertise needed by Cabinet to make decisions, it is not their role to set aspirational goals for the nation as a whole. That is the role of our leadership in consultation with the wider community.

In a country such as ours endowed with considerable natural beauty and a rich diversity of culture it seems almost irresponsible not to have a clear vision on the way forward. Instead we are continually burdened by short term decision-making neccessitated by petty politics and regional self interest. The media circus in Mt. Albert and the lack of due process around the “super city” debate spring immediately to mind. In stark contrast, Pres. Obama seems to have taken the bull by the horns in terms of re-stating what America stands for in a global context. I hope Mr Key accepted some advice on the matter during their phone exchange last week.

What is your vision for New Zealand?

XMediaLab Sails Into Auckland

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Speaking of the need for visionaries, the city of sails plays host to the XMediaLab event this year with a star studded lineup of speakers from the global digital innovation scene. The event comprises a day long conference on Friday focused on commercialising ideas and drawing upon a wealth of experience from entrepreneurs, technology investors and digital media commentators from around the world.

“If you are a digital media professional, media executive, producer, creator, technology wizard, entrepreneur, analyst or strategist of any kind, this is the one day you need to attend,” says event manager Megan Elliot. The conference is followed by a valuable networking event on Friday evening. During the weekend workshop, pre-selected projects will also receive advice and support from international mentors, including a number of the conference speakers. XML now also have a video channel so if you can’t make it to the event, check back later for short talks from previous event speakers.

I’m looking forward to a dose of inspiration – hope to see you there.

Seismic Survey Data Decision Rocks

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In what amounts to the first substantial new investment by the government in economic development since last year’s election Minister Gerry Brownlee has announced a spend up of $20 million on the acquisition of geophysical data in New Zealand’s offshore petroleum bearing ocean basins.

With a government services spending drought firmly in place one has to admire whatever MED mandarin it was that managed to make the business case for the project. National are claiming it as an election promise delivered, but the reality is that it needed to happen no matter which government was in power and here’s why. In 2006 Crown Minerals went to Court to force petro-giant Exxon Mobil to hand over data that had been generated by the company and its partners but not exploited. About the same time the government began undertaking its own surveys. In 2007 there was another tender round for fresh exploration blocks but the response from major players was muted.

Notwithstanding that legal action by the Crown raises questions about ownership rights and foreign investment; by owning the survey data, the Crown has far greater influence over how it is used. It also mitigates the risk of any further expensive and wasteful Court actions by multi-nationals keen to defend their patch. Exploration companies build survey estimates into their financial reporting data, but will quite happily sit on this information until it suits them to act on it, possibly for decades. The Great South Basin is by far the most promising of New Zealand’s licence areas, but is also the most treacherous. At $55 per barrel small players could not possibly justify the several hundred million dollar invest required to bring a deep water well into production.

Offshore oil exploration is a dirty business and Exxon-Mobil in particular have an appalling environmental track record for which they make few apologies. So the government needs to be careful about how it spreads the financial and environmental risk associated with this game. On the upside, making the survey data available could potentially lead to a multi billion dollar exploration and production investment once the oil price rises again (which it no doubt will). Unfortunately because of the development timeframes involved, it is unlikely to contribute to the economic recovery in the short term.

Ten Ways to Bootstrap Your Tech Idea

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Despite the economic climate, it seems like there’s never been a better time to be a technology entrepreneur in and be supported with mentorship, investment and advice. Below are 10 initiatives targetted at helping aspiring technopreneurs get up and running in New Zealand. Note that some of these close off shortly, so don’t delay.

1. Grow Wellington – Activate Business Pitch

GW are offering a $4,000 Activate Scholarship to the best business pitch, as judged by their expert panel. The Activate programme is for entrepreneurs from all kinds of business sectors and is an intense 16 week programme aimed to inform and inspire. Applicants must be based in the Greater Wellington region. Closes 10th May.

 2. IRL – What’s Your Problem?

Industrial Research and A J Park have up to $1 million in technology research and development services on offer with the aim of producing more high value goods for export by adding value through R&D. The programme is ideal for established firms wishing to extend their product development pipeline. IRL have particular research strengths in energy, materials and life sciences. Competition closes 24th May.

3. Icehouse – Kickstart

The Kickstart seminars are packed with tips from experts and other entrepreneurs and are brought to you by the highly successful Icehouse incubator. The seminars cover sales, I.P., financials, funding and much more.

4. University of Auckland – Spark

Closely allied to the Icehouse programme is Spark the University of Auckland Ideas Challenge. There is a seminar on 5th May and the deadline for the  ideas challenge is 13th May. Ideas are submitted in writing and everyone gets feedback. There is also the spark $100K Challenge which is a separate intiative offering seed capital and business incubation at the Icehouse.

5. Adept – Designs for Life Award

Adept has been at the forefront of plastic processing technology and new product development in New Zealand for 40 years and now they are offering $50,000 worth of their product development expertise to an inventor or entrepreneur with a manufactured product that improves quality of life for people in some way.

6. UpStart – Dunedin

The Dunedin based UpStart incubator holds regular free seminars for budding entrepreneurs. There is also The Distiller group made up of young entrepreneurs and who offer support to others who are starting up.

7. Unlimited Investment Challenge

Unlimited is perhaps NZ’s leading publication aimed at entrepreneurs and they back that up with an annual investment challenge project. The 2009 programme gets underway in May. Watch this space!

8. Focus on Health – Innovation Challenge

Raising the profile of New Zealand health technology in the United States market is the aim of this New Zealand Trade & Enterprise sponsored initiative. Mentoring, introductions to key influencers and a substantial pool of cash prizes are on offer. Launch workshops begin in June.

9.  XMedialab

Perhaps the most effective and affordable globally focussed event for businesses involved in the digital media innovation space. XML 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. XML will be held in Auckland this year 22-24 May.

10. W2W

Unlimited Potential will be hosting a half day showcase event in Wellington during October aimed at technology entrepreneurs and investors. If you have a new venture that has the potential to scale up and go global we’d love to hear from you. The half day event features entrepreneur pitches, technology researcher presentations and an evening social event attended by angel investors. For progress reports or to get in touch, please follow on Twitter @geniusnet or @upnz.

I probably missed something, so please feel free to post any additions in the comments below.

The Apprentice

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Almost one year into my “apprenticeship” as a technology start-up CEO I found it was time to take stock of achievements, critically reassess my position and then plan for the next phase of growth. Balancing the capital requirements of the business has proven to be the biggest challenge.

I read somewhere recently a suggestion that there is “an inverse relationship between the amount of capital available and the level of creativity in a start-up.” To some extent this is true. With too much capital in the bank there is a lot less urgency to get your product built and consequently innovation happens at a much slower pace. But when a company needs to find the cash to pay for rent and employees each month, building a brand and growing revenue certainly come into much sharper focus.  However, bringing in an investor should not be a priority at an early stage because it may result in divesting too much control at a very low price. If possible, put your assumptions to the test first.

On the other hand, running a capital starved business is like flying an aircraft without enough fuel in the tanks. You won’t make it to your destination and you may well end up wrecked in some farmer’s turnip field. Hence, we train pilots to load sufficient fuel for the planned flight plus an additional fixed margin for safety. Most experienced pilots add a little extra on top of this, especially if the weather is inclement. When the economic climate is adverse, it is not the time to be short on financial fuel.

We’ve made huge progress since we launched iWantMyName last December and I’m very proud of what the guys have already achieved. The good news for ideegeo is that the site has growing revenues and is only the first of several spin-off projects as we build and test our internal capability. The bad news is that we have entered a mature market in a highly competitive industry with this first project. That means we have no choice but to offer the best user experience and market our product powerfully.

Something else I read recently. “Overnight success” can take years, especially in the technology sector. That is why I realised that it was time to sit down, readjust my self-imposed frame of reference and plan for more growth (and more hard work). If consumers see value in the product, cash will continue to flow into the business; if not then it will soon become an expensive hobby. The key will be to add smart services that differentiate iWantMyName from other offerings in the market.

Innovation, Property Rights and the Political Economy

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In recent months I have noticed an elevated volume of commentary relating to the overlap between economic development and the political expression of property ownership rights. Part of this debate has been driven by sea changes on the political landscape and new analysis of the role previous governments have played through intervening in markets. Last week’s OECD report card on New Zealand fanned the flames of this debate to a new level.

The report suggests that previous governments have consistently failed to address historically poor levels of productivity and innovation. In the face of a global economic emergency there is a strong call for urgent action to reconfigure policy on this front.

“New Zealand’s living standards remain well below the OECD average. This is entirely attributable to persistently low labour productivity, which in turn is related to economic geography as well as structural policy factors. The small size and remoteness of the economy diminish its access to world markets, the scale and efficiency of domestic businesses, the level of competition and proximity to the world’s technology frontier. This points to the need for a “New Zealand policy advantage”, that is, a set of structural policies attractive and welcoming enough to overcome the geographic handicap and attract the drivers of prosperity – investment, skills and ideas – to New Zealand.”

Innovation, property rights and the political economy are intertwined. For example without a robust framework for the protection of intellectual property there is little incentive to innovate and generate economic returns from new ideas. But implicit in the OECD calls for macroeconomic restructuring is the suggestion that Crown assets be sold to address fiscal debt. This remarkably unoriginal idea seems to mysteriously surface every time a National government is elected.

Some have argued that New Zealand’s historically interventionist approach has discouraged investment in innovation and critical infrastructure. However, hurried or ill considered sales of State assets (originally funded by taxpayers) in some respects seems contradictory to ongoing academic arguments that favour less intervention, more consistency and the protection of unalienable rights to property. How do we reconcile these positions? Should we be doing so? As was once proposed, would it not be better to leverage the capital invested in State owned enterprises to create new, high value spin-off ventures?

Of course the situation is complicated in New Zealand by the fact that Maori have strong views in terms of property rights, securing favourable State regulation and the connection this makes with their own economic development aspirations. But can we promote a free and unfettered market with strongly protected property rights on the one hand whilst at the same time contemplating separate justice and electoral systems and the wholesale transfers of property assets based on race? External investors no doubt also weigh these risks when considering New Zealand as a destination.

ION e-Letter March/April 2009

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

 EGLRevera

XMediaLab Sails into Auckland

The wonderful XMediaLab returns to New Zealand with a three day event in Auckland this year. After last years tremendous success it is encouraging to see XMediaLab returning to host another event focussed on commercialisation of ideas. With the support of New Zealand Trade and Enterprise, Friday 22nd May sees a full day seminar open to anyone interested in high tech entrepreneurship, followed by a weekend coaching session for selected start-up ventures. In terms of relationship building and knowledge sharing, quite possibly the most valuable annual event on the innovation and entrepreneurship seminar calendar.

Internet Must Encapsulate Social Values

Technology is not neutral and web designers cannot afford to sit on the fence when it comes to building socio-technical systems says Massey University researcher Brian Whitworth. Designers must “enable virtue” in a web context because the Internet relies on trust and technology devoid of values will otherwise run rampant. Dr Whitworth has published a handbook of social-technical design for web designers working in the area of social networking systems.

New .TEL Domains Perfect for Small Business

Thousands of small businesses are currently missing out on the benefits of an Internet presence because they don’t want the hassle and cost of developing and maintaining a website. But the new .TEL domains changes all that with a global virtual telephone book. Each of the new domains comes with a free and secure website upon which the domain owner can publish a short profile plus keep any contact information such as phone number, social networking pages and related links fully updated. Wellington based registrar iWantMyName is currently the only New Zealand provider of .TEL domains.

UP3D

Unlimited Potential, Wellington’s leading provider of networking events to the ICT community, is hosting UP3D on Friday 24th April. UP3D will feature Gavin Lennox, CEO of Nextspace and Dr Steven Mills from the Geospatial Research Centre who will show off some of their toys and talk about how they are engaging with the local technology industry to facilitate new ventures and collaborations. Please register for this event as places are limited.

Adept Offers Prize for Inventors

Auckland plastics and medical device manufacturer Adept has embraced crowd-sourcing of innovation and is offering its resources to the winner of a competition for a new humanitarian product. The winning idea will get $50,000 worth of help, including design, development and regulatory expertise. A medical and plastics-based product would best suit Adept’s expertise, says managing director Murray Fenton, but other products would be considered. Find out more on Bizchat.

[We also hear that a separate but major initiative is in the pipeline to support emerging technology businesses specifically involved in the health sector. Keep an eye on the GeniusNet blog for more details coming very soon.]

ION Spotlight – Learning Source

Petone based Learning Source is rapidly gaining attention as a provider of service management software for the training sector. The company provides the Software-as-a-Service application to trainers, industry bodies and other software companies. Microsoft were so impressed by the technology that they have included Learning Source in their BizSpark programme which assists developers to connect with customers and grow their market. Learning Source is embarking on a road tour around New Zealand to demo the application to potential users and connect with industry in general. More details can be found on the Learning Source blog.

Got an enterprising Kiwi tech story to share? I want your name! ION Spotlight is kindly supported by iWantMyName.

Hi-Tech Start-Ups Brewing at the Distiller

Dunedin’s tech network The Distiller has been named as a finalist in this year’s PWC Hitech Awards. Established by local tech entrepreneurs the Distiller was set up to bust the myth that failure is the quickest road to learning, says PocketSmith co-founder and Distiller advocate Francois Bondiguel. By providing a focus point it is hoped that tech company founders can share knowledge assist one another to overcome hurdles as they work towards launching their products on the world stage.

IONise Yourself

Don’t forget to check out the ION forum. Join the conversation on NZ’s original social network for innovators, entrepreneurs, mentors and investors.