Startup Australia
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Just imagine the headlines:
TEN MILLION WASTED ON PHONE APPS
Perth has buckets and buckets of capital. This town is stupidly flush with cash. And Perth's taste for risk is much higher than the rest of country. You can raise tens of millions of dollars for high-risk, high-reward ventures in a relatively short time.
But there's a catch: this only applies if your proposal is to take some geologists and a drilling crew for mineral exploration.
The lifecycle for startups is ostensibly quite similar, but ... no dosh. The local investors don't really want to know about it.
edit:
That said, I wonder if Australia's intelligentsia will ever get over fetishising whatever industry and country which happens to be in the news a lot. I remember endless song and dance about Japanese cars. Now it's Silicon Valley.
Eventually it will be, I dunno, rockets and jetpacks. From Montenegro.
Meanwhile Australia is one of only 3 countries left with AAA rating and is the only country in the world that has had a growing economy for umpteen years. You can go a long way with sensible, basic policy settings.
Somebody has lots of money, they bloody well ought give me some!
:D
A pity then that Australia's federal and state government policies (negative gearing, first home buyers grants, interest only mortgages for investors etc. etc.) have done so much to pump up the real estate market into such a huge speculative bubble than will do untold damage when it finally pops.
It's insane what Australians are expected to pay for basic housing in one of the world's most lightly populated countries/continents. Here's an example picked at random: http://www.realestate.com.au/property-house-vic-north+melbou.... 3 bedroom terrace house (i.e., no windows in side walls) in North Melbourne, 1 bathroom, no parking, all yours for a mere $775k at 6.5% mortgage rates.
I was thinking of other things though: floating dollar, low tariffs, relatively light regulation of many subjects compared to world averages, somewhat predictable inflation targeting policy of the RBA and so on and so forth. We get a lot of things more or less right.
Australia has pretty tight land release laws.
If we had more cities with decent jobs you might see housing prices go down or at least go flat.
It's also worth noting that Australian housing was fairly cheap until the early 2000s (excluding Sydney)
Australia does have tight land release laws, but it means that property prices are kept artificially high and too much capital is tied up unproductively in mortgages instead of investing in innovative, high-growth industries.
Superannuation savings are north of AU$1.5 trillion dollars at this point. Supposing that "only" a trillion of that is held by fund managers, then a mere 0.5% shift in portfolio allocations would pump $5 billion dollars into VC.
Given that the total Australian VC is a few hundred million on an outside guesstimate, that'd be pretty noticeable.
Edit: maybe I should be knocking on doors at super funds? Though I guess the local VCs are doing that already.
I am going to take up the offer to email and see how it goes... but I would be surprised if I get an offer which pays enough to actually live in Sydney.
I recently went hunting for jobs and my experience was less then stellar. Many companies didn't even bother sending feedback to coding tests, and one expected me to pay for the Yahoo Boss API and violate Google's terms of service for a test. I will say I had an excellent experience with Hotels Combined though despite declining their offer for personal reasons.
EDIT - Emailed then, and got a response within 1 minute. I will say this for Matt he's very responsive.
Agree that most grads seem to want to avoid coding. Out of my class I think only 1 or 2 actually ended up coding for a living. Not sure why that is in Australia but it seems fairly common.
I think another problem is that there's no one with the -exact- skillset they're after. Why take a chance on a local person that would take a couple of weeks to get up to speed when a foreigner has the exact skillset you're after. Not that I'm against foreign visas, but they do let industry off the hook on the whole training thing to a degree.
I have an advert out at the moment for PHP dev in Melbourne that clearly states we want to pay top dollar.
I'm still only getting applications from web developers who happen to know enough PHP to make them dangerous.
Of the applicants, only four are reasonably interesting.
Three of them are here on 457s.
Nowhere does the ad say "competitive salary offered". We all know that means "we're cheap and don't want to pay".
My experience has previously shown that if you mention PHP though the salary expectations are usually less then 75.
It would be nice to say any great coder would be good, but I do need someone who at least knows PHP.
Austrlaia literally spend more on a single day of gambling (Melbourne Cup: $7.27 per capita) than we do in our entire venture capital industry.
The government have also decided we're betraying the country by "abusing" a visa program to get more skilled programmers here. Of our 12,000 IT graduates, 8,000 of them are from overseas. 4,000 graduates doesn't go very far... Many of the 457 visas would also likely be programmers from international companies staying in Sydney: Atlassian and Google have numerous offices abroad and commonly allow programmers to travel around. The Australian government have no clue what's going on.
Mike Cannon-Brookes, founder of Atlassian, just tweeted "How can you say IT is the future of the country, then complain when we import skilled labour to help us?!"[2]
[1]: http://en.wikipedia.org/wiki/Venture_capital
[2]: https://twitter.com/mcannonbrookes/status/312033343988449280
Also that's not saying that all those 4,000 are good graduates. A top tier institution like the University of Sydney might graduate 100 per year. If you look at Sydney city, there might be the same from UNSW, UTS, UWS, Macquarie etc. That leaves it pretty thin on the ground.
How is fibre going to a small town like Burnie in the middle of Tasmania going to encourage the creation of technology startups when its users are going to be technologically uneducated in the first place? What will most likely happen is all that bandwidth (paid by taxpayers) will most likely be used for Torrenting music, warez, movies and porn.
As a pragmatist, the NBN rollout should have been targeted firstly for areas of high concentration of startup activity. That way, users most likely to benefit and create wealth from the increase of bandwidth will have first dibs that will eventually trickle down to the rest of the system. Unfortunately, for most short-sighted politicians, the main agenda of the NBN is to buy votes from rural and marginal electorates.
> Burnie in the middle of Tasmania going to encourage the creation of technology startups when its users are going to be technologically uneducated in the first place? What will most likely happen is all that bandwidth (paid by taxpayers) will most likely be used for Torrenting music, warez, movies and porn.
I'll paraphrase your words: Poor/socio-economically disadvantaged people don't deserve nice things, because they are too poor to understand them. Politicians are short sighted for ignoring the rich middle class.
You're view point is exactly WHY the NBN should be rolled out.
The idea that innovation can only come from certain areas is completely baseless. The idea that people in countries towns like Burnie have no use for NBN other than music, warez, porn is offensive. And your concept of wealth "trickling down" has been shown time and time again to never happen.
And the NBN is being rolled out everywhere so not sure where you get this ridiculous vote buying concept from.
Then, rolling out an inferior tech (compared to fibre) that is only marginally better to current ADSL to the rest which is going to run over an aging copper network that will require billions of dollars of maintenance over the years? All while maintaining the current telco monopoly...
Really, their only selling point is the cost, but I haven't actually been able to find any evidence that the plan is actually costed - every reference to it being cheap is just based on rollouts in other countries with very different geography, population density and existing infrastructure. If they actually costed it, and then took running costs into account, I doubt it would actually be cheaper. And the current, superior NBN isn't even a cost to the taxpayer - it's an investment that will eventually pay itself back with a small profit.
I think the biggest thing though is that even if it were double the price and didn't pay itself back, the economic benefits of having fibre generally available to businesses and homes, as well as having a network which provides open access to suppliers (instead of having to go through the Telstra monopoly) would make it worthwhile.
Not to mention, NBN Corp. will not be any different monopoly from Telstra Wholesale.
And regarding speeds, how is NBN going to solve that? Australia doesn't even have enough international throughput in the current network. NBN will make speeds even worst as the demand will only increase. The bottleneck here is not copper, it is international capacity. What's the point of replacing copper if the weakest link of the network remains.
The copper situation is ok in inner city areas (except some buildings where the wiring is corroded, or the two wires split to different lines which increases noise/slows the connection), but ADSL speeds also depend on distance. Many areas can't even get into an exchange because they're full, and when you do if you're too far away from it your speeds will be quite horrible.
Not to mention upload speeds, NBN would make it possible to send virtual images, giant movie files, HD video and other big chunks of data person to person, rather than this many to one subscriber download model we kind of have at the moment.
Exchanges in some areas are full because nobody wants to invest into building new capacity since government has volunteered $50bn to make it all redundant. The problem has been created by government by announcing NBN in the first place.
I'm still not convinced. How is ability of users being able to send each other high-resolution images, HD video etc. going to be worth $50bn+ to economy?
The reason why upstream is so slow is because there is hardly any demand for it. Some ISPs will double your upstream on ADSL2 by reducing your downstream speeds. Hardly anyone is interested.
Australia has 20 million people spread across one of the largest countries in the world, there is not enough market (i.e critical mass) for private firms to build this kind of infrastructure, it is called market failure, it is EXACTLY when government should intervene.
>I'm still not convinced. How is ability of users being able to send each other high-resolution images, HD video etc. going to be worth $50bn+ to economy?
Why was electricity so important just to spread nighttime lighting!? Why'd we even bother!? You don't know that all we will use data for is HD video/image.
Also I think you underestimate how much caching occurs, speeding up local network with speed up "the internet" as ISPs cache a lot.
The real technological bottleneck of our time isn't CPU's, GPU's or anything that can be purchased by the end user. Internet speed/latency limitations are what's stifling emerging markets and technologies. Let's have a look at some ideas around the corner, some of them already waiting for fibre to the home...
- OnLive-like game streaming with minimal latency or frame compression - would only require cheap hardware to play super detailed games rendered in the cloud
- OS in the browser/cloud - instant bootup, less hardware dependent, software/file system accessible anywhere
- Streaming 4k high definition video on demand
- Downloading 12Gb+ games on a whim as opposed to walking/driving down to your local JB Hifi or EB Games and paying for the game plus physical materials
These aren't pie in the sky ideas. They'd be here already if we had fibre to the home. Australia will be open to markets that aren't practical elsewhere because of the NBN.
NBNCo gets a cut of the customer's payment to the ISPs for their Voice & Data Service.
> Not to mention, NBN Corp. will not be any different monopoly from Telstra Wholesale.
I believe NBNCo aren't allowed to sell services directly to the consumer.
> And regarding speeds, how is NBN going to solve that? Australia doesn't even have enough international throughput in the current network. NBN will make speeds even worst as the demand will only increase. The bottleneck here is not copper, it is international capacity. What's the point of replacing copper if the weakest link of the network remains.
There is plenty of competition in this area (http://en.wikipedia.org/wiki/Telecommunications_in_Australia...). Capacity has increased, reducing international traffic costs for local ISPs (and hence, the consumer).
Yes, it is still a monopoly, but what would you rather have - a fast network that reaches the whole population with open access to providers, or the Coalition granting Telstra and Optus some more money to upgrade parts of the network that they don't want to let other carriers access because they are competing with them in the retail space?
I think we do need to put in more overseas cables, but that's no reason to delay upgrading our local network. Anyone who can't see that bandwidth requirements are rapidly increasing to the point where we'll inevitably need a fibre network is delusional (or doesn't know much about technology). It just seems such a waste to spend billions to put in another system that is not sufficient in the long term, and nowhere near as upgradable as fibre, that will have to be ripped up...
Nitpick: we can't see the actual financials because they are "Commercial-in-Confidence".
When you bring in an outside firm to audit something, if it's not a report regulated by law (eg the annual report of a public company) you can instruct them to use any assumptions or constraints that you wish.
An audit will only point out if your formulae are incorrectly formed (invalid), not whether they are at all realistic.
For example, NBN's internal funding plan might say something like:
"We assume 100% takeup in 2 years".
And the auditor's job isn't to say "2 years to 100%? That seems unlikely".
It's actually to say, "given 100% in 2 years, our calculation is X, and your calculation is also X, therefore the audit passes".
Typical selfish attitude.
What clearly you don't understand is that for a large percentage of the population the weakest link IS the copper network. They don't connect at 24Mbps. I personally know people who connect as low as 1Mbps. So what good is a faster international link to them ?
And there are huge benefits internally if everyone has a super fast connection especially for anything that involves face to face communication e.g. those in remote, rural areas.
When that happens, what good will faster internet in rural areas do?
Having said that - the LinkedIn article does not actually say much about what Startup Australia actually is. A google search brought me to this: http://www.startup-australia.org/ . The first thing that hit my eyes was a large advert asking if I want to date mature women.... seriously, get some class! Do you really need to fund this with cringeworthy advertising?
The rest of the site is underwhelming, maybe great startup some web design company could take a shot at making it look good.
I think startup-australia.org is completely different entity from what Matt is talking about
More is on the way
It includes access to the data used during the workshop
When a country is rich in natural resources, smart and enterprising people specialize in learning to extract natural resources. This damages the technology sector because talent gravitates todward money in market economies.
Also, the first paragraph of wikipedia's article on dutch disease is flawed. Dutch disease is used by economists to describe when a domestic comparative advantage crowds out another industry. It has nothing to do with manufacturing. The first paragraph incorrectly implies that it has something to do with the manufacturing sector.
Because historically it's been the manufacturing and trades sectors that get crowded out; they are the industries most directly competing with mining for skills and equipment inputs.
They generally have no capacity for risk whatsoever, and unless you're digging stuff out of the ground and razing the environment, there's very little on offer from the Government, either.
So I can see why a lot of tech startups kick-off here and then go offshore because the economic environment is just not conducive to startups (at least in general).
Given how many people small business employs in this country (from memory, its the single largest employer, unlike mining, which only directly employes a low, single digit % of workers despite the mindshare it has) we should be doing everything we can to give people a leg up to start a business.
For example, something like Jon Stewart's proposal for a 'softer cushion for failure' would be a great start. We could do a lot worse here in Australia that institute something like this: http://boss.blogs.nytimes.com/2012/10/18/jon-stewart-propose...
With Silicon Beach on and off, Startup Grind, lots of small meetups, and Fishburners in Sydney, there are certainly groups to build this community around but I still think we are years behind the critical mass of something like HN London. And that's just to talk about forums for people to gather in - it says nothing about our skills shortage.
I agree with Matt's points regarding our reliance on the resources industry. So many people head off to the mines on a fly-in-fly-out basis, and make incredible coin - but it won't last long-term and then our skill base will be incompatible with value-adding services industries.
However, I think we need successes before a great weight of people will shift towards STEM disciplines, in the same way that the dot-com frenzy saw Web Development course demand explode.
People who are good at trades are not 1-to-1 exchangeable with people who are good at STEM subjects.
However, before the industrial revolution we were all toiling in fields, so I think perhaps labour is more fungible that you give it credit.
But the general point that labour and capital are highly heterogenous still stands. You can't pluck a boiler fitter out of the Pilbara, drop him at a desk in Perth, and expect to see anything useful for your web business any time soon. And vice versa.
I wasn't trying to claim that we can immediately shift these resources, but that this shift won't happen en masse until services has a bigger profile and more to offer than mining.
https://en.wikipedia.org/wiki/E-3_visa
It's a reciprocal visa program between Australia and the United States. Australia offers Americans the friendly 457 visa and the US offers Australians the friendly E-3 visa. It's an independent and generous quota compared to the H-1B visa.
It's surreal to me reading people weighing in so heavily about the difficulty in hiring Australians and ignoring the elephant in the room.
If you are a decently skilled Australian in IT, you get up and move to Silicon Valley. Why?
* More money.
* More respect.
* In the center of your industry.
* Paid travel!
This is the same complaint New Zealand has had about Australia for years too. Kiwis move to Australia for the similar reasons.
Background: I've been on a 457 for two and a half years.
Everyone I know from the US or Europe on a 457 is in Australia for the "lifestyle." The rest are people who came to Australia to study or work from place like India/China/Philippines[1], converted to a 457, and are working their way to permanent residence and finally citizenship.
And you'd be unsurprised how many move to work in the US or Europe after earning their Australian citizenship.
[1] http://www.immi.gov.au/media/statistics/pdf/457-state-territ...
I often get asked why I chose to incorporate in the U.S and take investor money from U.S based investors and not from Australians. This is article explains why.
There is a lot of talk in Australia but very little action - a lot of people calling themselves Angels, VC's, incubators etc. without actually funding any companies, or any decent companies.
The problem is that we lack a lot in both areas. Chicken/Egg.
The USA is a bit overboard on under paying. Minimum wage needs to go up + tied to cpi + fix health care to find a happier medium and build out a strong middle class. This might be our personal style though, but I think its gotten out of hand. I don't want to be Australia.
I think Australia has gone a bit far and the USA not far enough. Somewhere in between is a sweet zone.
I don't know where you get this ridiculous idea from. Most IT in Australia is actually in software engineering and testing for banks, media, mining etc. Most of the tech support I am aware of is slowly being outsourced.
IT is not well regarded, you cannot argue otherwise, I live here and no one things highly of IT unless your pulling in a large salary, and Most IT grads I know hate coding and work in IT support (on the phones fixing modem settings)
How depressing it is. (I study engineering and computer science, because I felt computer science is dumbed down in the Universities here too and want to graduate with a mathematics based degree (Electrical Eng) Funny enough, computer science here is mathematically weak and most people in my computer science class can't do basic calculus)- no wonder they are getting IT jobs, they can't do anything else with their weak pass average computer science degree that was all about playing computer games.
what do you think is happening to the distinction and high distinction students?
all the interesting from uni (unsw) i know either have good jobs or are doing really interesting research.
and software engineering is plenty well respected - people usually know it means you build apps and generally assume you're pretty smart. cheer up mate.
It then applies to IT as well.
Many Australians talented developer and computer engineers have been flocking to USA for mainly two reasons:
1. They are rewarded more in USA, both socially and financially. Who doesn't want to be in the middle of global innovation among other great people?
2. It is much more prestigious and hard to resist. Many US-based companies have been actively recruiting Australians, for example Amazon.com.
This leave Australia with limited local talents and therefore comes up with need to employ overseas eng-IT professionals. Note that 457 are neither cheap nor simple to lodge and employ. We are currently at a phase where it is necessary to keep feeding our demand of technical professionals to keep the growth of Australia tech industry.
I've only been able to get to one, but it's already given me useful feedback and I met some great people.
To sure up her base on the left yesterday she came out and attacked the 457 visa and said that they needed to be more tightly regulated, since they are being exploited by some and are taking jobs away from Australians.
Prominent Australian entrepreneurs came out in support of the visa, and argued that you can't grow a new information economy without the importation of skilled labour to make up for the shortfall in local skills. This was the biggest national news item yesterday.
As an analogy, imagine if Obama came out in support of lowering H1B visa's or restricting their use, and the shit that would cause.
The second issue here, which Matt also takes on by attaching it to the first, is what a lot of people in the startup world feel is a disadvantage that the Australian startup ecosystem has over its US, Israeli etc. counterparts. This argument has been playing out for years now, to not a lot of effect.
I think there is a contradiction in this argument, when you combine the two together. On the one hand you are asking the government to leave you alone and let you import labour, but on the other hand you are asking them to do something about the lack of venture investment, the lack of skills, university places, etc.
I think the later argument of asking the government to do something to assist startups stems from a misunderstanding of how silicon valley works and why it became successful. This misidentification leads to a feeling that with one or two changes you could 'clone' what has made silicon valley a success, which is not true.
The attitude in Silicon Valley has always been to be left alone by the government. The tech industry in the USA is grossly underrepresented in Washington lobby groups (only recently have Google, Apple and Microsoft invested more in lobbying as their businesses broaden and intersect areas where government has more control, such as spectrum).
Further to that, Australia ranks well in most global indicies for business startup, running a business and open markets. We actually outrank the USA in ability to start a company, and we rank about even in other business friendliness metrics[0].
I think Australia's major problem is cultural. We have a fear of failure, a lack of entrepreneurial spirit, and a severe tall poppy syndrome (all of which I have experienced first hand - ironically from some of the very people who are most vocal about wanting to make Australia more like Silicon Valley).
These should be a clear indication that the "problem" with the Australian startup scene (if there is one, I don't think there is) is not the cause or fault of the government.
I think Matt would have been better served here to focus his argument on the 457 issue, using the same arguments he has (such as Australia won't always have things to dig out of the ground), but leaving the other issues alone for now.
[0] http://www.gfmag.com/tools/global-database/economic-data/118...
Australia is too closely ranked to other countries with successful startup ecosystems in the major market and freedom indicies. The USA is now going through the long-term capital gains issue, and nobody has suggested that less startups would be founded, or that there would be less innovation because of it. As Warren Buffet says, he has never known an investor to turn down an investment opportunity because taxes are too high.
In fact, there is no capital gains tax. It's all taxed as income. There is no incentive to sweat it out for years building equity because once you exit, you will give an enormous chunk to the government because you are suddenly in a $1M+ tax bracket for that year only.
Their bankruptcy laws also don't reward risk taking as well as the US either.