I had a revelation on the weekend, it was triggered by the opening ceremony in Rio. Only those who are 30ish or older will remember what it was like going out during the Sydney Olympics. 16 years has gone quickly. An even scarier thought is that I can clearly remember the night we won the Olympic bid in 1993. “The Winner is Sydney.”
I was 16. We convinced a mate of mine’s brother to drive us into the city. We had snuck into places underage before (Sorry mum) but, wow… the city was electric that night.
Sydney celebrated the fact that we had beaten the rest of the world and won the rights to put on the Olympics in Sydney. The taste of victory was sweet.
Sydney as a whole city had decided to take on the rest of the world. We wanted to be great and in the end we were. The Sydney Olympics were truly one of the best ever. We delivered as a city and nailed it on a global level.
It’s time for us to do it again. It’s time we stepped up and asked; What will make this city great? What does the future of this city look like, and what do we want to be known for?
Now is a time for hope. When Malcolm Turnbull became leader, I felt the same feeling as when we were bidding for the Sydney Olympics. Back then we asked ourselves if, as a city, we could be truly great. We dug deep and had hope. Wepushed through, we bid, we won and we delivered on a global scale. But most importantly – we didn’t just look to implement best practice from the rest of the world. We raised the bar and set an unprecedented standard. We were going to put on the BEST Olympics ever..
So what is Sydney’s new Olympics? What can we do that will put us on the map again as a global force and have long-term economic benefits to this great city?
Mr Turbull has been talking about innovation and startups and to Bill Shorten’s credit they have shown bi partisan support as they both know its too important for this country. Could this be our new Olympics? Why should you care about technology and innovation? Well, I’ll tell you the story of how starting a technology company changed my life and how starting more of them could not only change your life too, but also the future of this great country we live in.
Early Taste of Success
My first job was working for an entrepreneur. He started his advertising agency with a mate and two Amex cards. Things went well for them. They launched Microsoft in Australia. He mentored me, gave me the opportunity to step up, make mistakes, and learn from them. I got to taste success. I was hooked and destined to be an addict for the rest of my life.
From there, I saw opportunity in every problem in the world. I worked in a family bar and restaurant for what I thought was a few months but turned into a few years. I identified that the bar’s biggest problem was about getting bums on seats. With my newly formed entrepreneurial superpowers, I thought I could solve this problem with the introduction of Booking Angel, an online reservation system.
Unfortunately I didn’t change the world. I started Booking Angel in 2004. In 2007, after not being able to raise money or get much traction in Australia, I moved to Silicon Valley. Wow… that place was like the Sydney 2000 Olympics equivalent of entrepreneurialism every day. It was electric. Everyone around me was focused on startups and I learned a lot, and quickly. I lifted my game and with this higher dose of entrepreneurialism I was even more addicted and determined to be successful.
I met some of the smartest and brightest people in the world, including very astute entrepreneur and investor Kevin Hartz, cofounder of Eventbrite. Kevin gave me some great advice; He asked me to think deeply about why my startup wasn’t successful. I told him we had had some success running special offers on our partner websites to drive more online reservations. This triggered a thought and he pointed out that that part of my business seemed similar to a model he had seen working well in Chicago which involved a group buying model that had been pioneered by Groupon in the US. “Wow, how cool” I thought. “I’ll have to implement something like that in Booking Angel as an added feature at some stage…” Thankfully, 3 months later, Booking Angel ran out of money.
I remember the call when my Dad called me in the US and told me my Grandfather had passed away. I was sad. He was awesome. He taught me magic tricks and could recite amazing poems that seemed to go forever. I was sad also as I knew the moment I stepped on that plane to Sydney, Booking Angel was going to be finished. I had $956 in my bank account which I know wasn’t enough for a flight back to Silicon Valley.
It was 2009. I’d invested 5 years into Booking Angel, and now I was back home and was wondering what to do with myself. I did a little consulting on website developments to pay some bills. The work happened to be in the offices of Pollenizer who at the time were incubating startups.
I managed to convince Pollenizer founder Phil Morle that the group buying model I had seen in the US was worth a building in Australia. I convinced him to partner with me (probably because I got him drunk at the Christmas party). We called it Spreets. Why? Because it was a shopping spree and a treat… But mostly because the domain name was available ;-)
We launched it on my birthday; 4 February 2010. The first deal alone bought in $4270 revenue; It was for 41% off a meal at the Foveaux Bar and Restaurant which was downstairs from our office. It was equivalent to a months’ revenue at Booking Angel. From there it grew. I pitched to investors in Australia. Nobody would invest, but one of them introduced me to some German guys who were considering launching a group buying site in Australia themselves. Instead of launching a competitor, the Germans:
- invested $800k in April/May 2010,
- introduced me to my co founder Justus Hammer (Yeah it’s a cool name huh, he’s a cool guy too), and
- got us a partnership with Brands Exclusive to help us grow.
Soon after, Damien Andreasen joined as Sales Director and Spreets grew very quickly. In June we were opening a new city every week. In September, we were bringing in $1 million dollars a week. We were spending big on marketing and hiring staff like crazy. Soon, we had about 40 staff in an office made for 20… Let’s just say we got to know everyone well.
It was great fun. We introduced a policy that if we beat our best revenue week we would celebrate with Staff drinks on a Friday. This was an awesome incentive that really did drive people. We had a hell of a good time most Fridays. And no, we didn’t got to bed at 1:30am; Sometimes it was later. There are lots of debate’s going on about Sydney’s culture at the moment. This article isn’t about that but I tend to agree that the cities that thrive in technology do have a fun, accepting open culture London, Berlin, LA even San Francisco city vs Palo Alto. The type of people that are attracted to these types of cities also start great companies.
So back to how a high growth technology company changed my life…When Justus and I were in Europe meeting up with investors, we got a call from Groupon. They wanted to buy us.
We considered their offer, but recognised we had other options. and could raise more money for Spreets
We knew the group buying market was getting competitive, so we asked ourselves; Which company is going to help us get in front of a lot of eyeballs?
Seven West Media was the biggest media company in Australia and their partnership with Yahoo in Australia to form Yahoo!7 made them a superpower in terms of eyballs. With this in mind, we decided that they were the best buyer for the company’s future.
In January 2011, only 11 months after launching, we sold the company for $37 million.
So I guess you can see how a startup can change lives in a pretty short time.
Not only did Spreets success change my life, but the lives of employees, my family and our investors who made most of the money from the deal. In fact they made 18x their money in 6 months. The industry, although it has certainly cooled off since its peak, is still generating in excess of $500Million revenue every year and employing over 1000 people in Australia. This is on par with the figures when we sold in January 2011.
1000 employees mightnot seem that much BUT when you consider that the $500Million revenue represents hundreds of thousands of new customers to thousands of small business, the multiplier effect of this business in terms of benefits to Australia were significant.
You just never know how big or successful a company will be. Who would have considered that, 10 years ago, that these two guys would trade their IT professional of the year certificates for the NASDAQ listing certificates.
Atlassian is now bigger than Qantas. They have an industry of agile development practitioners who implement their software for teams around the world so their impact is probably even bigger when you consider that.
Jobs of the future
A century ago, a large portion of us worked on the land. Now, only 4% of the world’s population are involved in providing the world’s food supply.
Did the advent of the first tractor cause nervousness about the future of agricultural jobs? Probably not, as innovation on the land has happened relatively slowly. But with the introduction of technological solutions, the world hasn’t ended; we as humans just found bigger problems to solve.
This rate of innovation is now happening quicker than before. The world is a better place than what it was 100 years ago, but we must adapt with the innovations or be disrupted but remember in the end the world wont end, infact its going to get better. We just have to get used to change.
It paints a scary picture when you ask yourself a question. How could my job be replaced by technology? The fact is that 22% of Australian GDP will be disrupted by new technologies, and with that, the traditional job roles that we currently know.
If you look globally at those same trends, it’s 10’s of trillions in GDP. On one hand, that might seem scary. But entrepreneurs see opportunity to capitalise on these trends, and a chance for this country to shine.
Sydney needs to decide if we are big wave surfers who will ride the waves of new innovation, or if we stay watching at the water’s edge, hoping the waves will calm down eventually so we can go for a nice swim. Truth is, the waves are only going to get bigger and faster, so we had better learn to surf. Those who do get to enjoy themselves. Those that don’t just get smashed by the waves.
If we organise ourselves as a city, and commit like we did for the 2000 Olympics, there is $109 billion up or grabs and around 540,000 jobs . These are not just any jobs - they are more than likely jobs that will be around a lot longer than any car manufacturer.
In fact the Kauffman institute highlighted that startup companies were the only net increase in employment in the US economy. This means existing industries will be employing less and less people, whilst startups will be employing more and more people. So teaching our kids how to do existing jobs might notbe a great idea if you want them to have a job in the future. We need to equip them with the necessary skills to securethe jobs of the future, and we need to prepare ourselves.
We really do need to commit though. Figures according to a recent study by Tufts and Mastercard show that Australians have been slow to seize this opportunity. Worst of all, their study shows that those bloody New Zealanders are beating us. They not only have the Bledisloe cup, they are kicking our butt in terms of technology innovation
So we need to ask ourselves: What jobs can never be replaced, and how do we train people in those positions? The answer is the creative entrepreneurs & scientists that discover and drive this innovation, and the clever engineers and software developers that know how to build them.
The skills kids can learn in school to set them up for these positions included science, technology, engineering and Maths (STEM). If Aussie kids don’t have a solid education in these subjects, they won’t be well equipped to build the companies of the future. Data shows that we arealready behind the rest of the world in this, so we need to act now.
Slipping down the ladder
According to the Compass report, we are ranked 16th in the world as an ecosystem for the birth of new technology. A few years earlier, we were 12th. Again, this is the gentle kick up the butt we need to get things going. We need to turn this around. We need to ask ourselves what would it take to be one of the top 10 ecosystems by 2023? Could this be our rallying call for this city? Is this our time we step up to do something meaningful for this city to make it great and to put Australia back on the map?
Recipe for change
There are three things I believe we can do in Sydney to achieve this now.
Firstly, get together. A group of entrepreneurs in Sydney have got the ball rolling and started a not for profit group called TechSydney. If you want to be part of improving the startup ecosystem in Sydney, jump onboard and sign up to the site. TechSydney.com.au. This in itself is a lean startup, so the most important thing is that they start set some sprint goals and get shit done.
Secondly, we need a location for the Sydney ecosystem to live. A multitude of research and anecdotes showing the strength of other global ecosystems is the strength of the network, and that the strength of network is accelerated by having everyone in close proximity.
So what kind of location would work as the startup ecosystem? Sydney’s biggest draw card is its beauty, so if we want to capitalise on this strength to attract the best people into the industry, the location it needs to highlight the best this city has to offer in scenery, vibrant entertainment, healthy lifestyle, close to transport and centrally located. We need at least a temporary location now to host the Sydney network.
Thirdly, let’s look at the data from the Compass Report and think about how we can capitalise on our strengths and address our weaknesses.
In 2015 the size of the ecosystem in Sydney was estimated at around $4.4 billion The median of the top 4 ecosystems (excluding Silicon Valley) was around $46 billion, so to get in the top 5 we need to grow 10 times larger. That’s a big ask but we could certainly make it into the top 10.
Time to grow
How do we grow the existing ecosystem? We grow the companies in the ecosystem. Research with existing company founders about what will help them grow is:
- Access to Talent – This is about positioning the technology industry to smart graduates, talented people in corporates and smart folks from overseas.
- Access to Experts – Often there are specific problems that Perhaps they need better people in the industry, experienced Mentors more capital, or access to bigger markets. We are on the doorstep of China and have established a free trade agreement with them. Is that opportunity knocking? Once we understand what’s stopping them – we will be able to support them make the adjustments necessary to allow for maximum growth.
We need to focus on starting meaningful companies, but it is vital that we work out how to make existing companies successful before filling the funnel with too many new startups.
The downside of Sydney is that it’s expensive. There has been talk of re-introducing the living away from home allowance for technology workers and streamlining the visa process. Maybe, with an awesome ecosystem here, our brilliant people freezing in New York or San Francisco will be tempted to come home and hey if Trump gets in. I think there are going to be a lot of people leaving.
Now is the time for action. Our Prime Minister is the only technology entrepreneur heading up a country and to Labour’s credit Bill Shorten realizes this as well. Malcolm understands what it is like to grow a successful company. We just need to ask the politicians for the policies that will help make us successful but government is just one ingredient.
Startups changed my life. Startups can change your life by giving a future to this country that will allow us to maintain the awesome lifestyle we have in this country
It up to us as a city to decide to be great again. The winner was Sydney and it’s time for us to win again.
Dean McEvoy is a serial entrepreneur / investor and co founder of the industry group TechSydney.com.au. They are running a crowd funding campaign to garner support for the initiative, which ends Friday 12th August. Visit https://pozible.com/project/techsydney-campaign