
Why we kept our startup in Australia - rodgerd
https://macropod.com/blog/why-we-stayed-in-australia/
======
jondubois
I can totally relate to the points made in this article. I have worked in 6
different startups in the past 4 years in Australia (Brisbane and Sydney) as
an Engineer - All at different stages of growth. I also hang out with the
startup crowd in Sydney (I've been invited to a couple of events and was able
to talk with founders/CEOs and engineers of some of these startups).

One thing that really stands out about Australia is that tech startups here
last a long time (they don't seem to ever 'run out of money'). Investors are
patient and they invest cautiously; in fact, if they like your idea, they will
'keep tabs' on you and they won't invest a single dollar until you have some
meaningful numbers to show them - And by numbers that means either decent
revenue (yes, REVENUE) or exceptional user growth (coupled with a clear
monetization plan).

That's both good and bad. It means it's very difficult for early starters to
get funding in Australia, but it means that once you do get that funding, you
can expect the investor to stick around. I have worked for 2 startups which
had been operating on a modest loss for 5+ years - One of them had almost no
growth and little potential (in my opinion), the other had modest growth but
high potential. These startups don't seem to have problems raising further
rounds of capital year after year.

I found that Australian startups are lean and have a low marketing budget -
They tend to spend everything on the product and generally don't like hiring
sales people or paying for advertising unless it gives them an immediate,
measurable return - They don't spend money just to create hype.

Australian founders tend to dismiss the importance of advertising - They
believe that if they put all the focus on product development, that
eventually, the product will become so good that it will just blow away the
competition (who have wasted all of their funding on advertising).

US startups generate a massive amount of noise in the market - Spending on
advertising at the moment would just create more white-noise - You won't get a
return on that. At least that's the general belief.

~~~
solve
In other words, lifestyle businesses, i.e. businesses that plan to direct
nearly all profits and investment capital to the founders / employees / other
expenses while the investors end up getting nothing (unless they do something
extractive to the company e.g. via seizing control and extracting value for
themselves via that) -- versus "non-lifestyle" where the company optimizes for
a big exit through which investors can be compensated.

Remember, tech startups nearly never pay dividends. Making a ton of profit but
no exit = good for founders and employees, big problem for investors.

~~~
danieltillett
There is nothing wrong with lifestyle businesses :)

The problem basically comes about because almost all startups here are forced
to bootstrap for a long time before they even get the possibility of raising
funds from an investor. If as a founder you have managed to get your business
to profitability by bootstrapping why would you take on any outside investor
who you expect will try and screw you over?

~~~
pyrophane
You are right, there's nothing with lifestyle businesses, but the previous
comment is still correct: they aren't good or investors. If you can bootstrap
one and only need to take on small amounts of funding (i.e. via a business
loan or from family members), then they are fantastic, but if you are trying
to seek larger sums from outside investors the are problematic for the reason
mentioned.

~~~
danieltillett
There is a bit of a chicken-and-the-egg problem with startup here in
Australia. Without a viable investor infrastructure founders won’t create the
sort of businesses that will generate returns for investors (i.e they will
create bootstrapped lifestyle businesses) and without the right type of
businesses being created investors will avoid putting their money into start-
ups since the type on offer are the lifestyle businesses that they can’t get
the money out of. Someone needs to break this cycle and they only side that
can do it is the investors - they need to start putting money into really
early startup and supporting the types of companies that will generate returns
for investors.

------
adventured
Companies like Atlassian have shown what can be accomplished in Australia.
When it comes to funding, Australia is one of the richest countries on earth,
with a median adult net worth higher than the US, Japan and Germany combined,
and twice that of Norway and Switzerland.

Obviously the VC funds are different, and nowhere near the scale that they are
in the US or China right now. Still, there is a lot of wealth in Australia
seeking investment opportunities.

It would seem to make perfect sense to stay domestic and contribute to
building up the tech scene there.

There are problems with the generalizations in the article though. The author
talks about American entrepreneurs being, basically, obsessed with get rich
quick schemes, and that outcomes are more binary in the US - that's mostly a
Silicon Valley cultural thing. There are tens of thousands of successful tech
companies all over the US that have grown themselves slowly, are great
businesses, but are not unicorns, and are not an all-or-nothing proposition.
Why didn't the author look at other tech start-up cultures in the US as an
alternative? Alternatives exist in every major city. I get that, in that
scenario, it makes as much sense to stay in Australia - so then why mess with
Silicon Valley at all, by now it's pretty blatant what it's all about. That
contradiction left me confused.

~~~
tajen
"If I were starting Atlassian today, I wouldn't have stayed here"

\- Scott Farquar, CEO of Atlassian

[http://www.computerworld.com.au/article/557248/atlassian-
ceo...](http://www.computerworld.com.au/article/557248/atlassian-ceo-gets-why-
startups-want-leave-australia/)

Besides, Atlassian is now officially a UK company.

Australia is indeed a rich country. Lots of funding is probably available.
Laws seem simpler than in Europe. I don't know whether Scott is comparing
Australia to UK/US or to other more latin countries like Spain or France.

~~~
johnnydoebk
> I don't know whether Scott is comparing Australia to UK/US or to other more
> latin countries like Spain or France.

Both Spain and France are European countries.

------
maramono
I can strongly relate to this experience too. As the founder of Ortask, my
company is not successful by Silicon Valley measures, but it is successful in
my terms because it makes me very happy.

For example, I’ve learned so much by deploying my two products, doing
marketing myself, and am currently developing a new breed of test management
tool that integrates other of my own technologies that actually help with
managing testing (IMO, current test management tools are simply glorified DBs
with dashboards) — something I have been very passionate about for years.

Also, I have never identified (or agreed) with the new mentality in the US for
creating companies a-la Amy Hoy. At the worst case, such “strategies” teach
you how to steal someone’s idea and build something for which you feel no
passion, just to become rich.

I wish them and their company the best and hope it grows in a way that keeps
making them happy.

Thanks for posting this article!

------
timr
_" in the US you have to talk a lot of bullshit. No matter what your company
looks like, you have to talk as if it’s the next Facebook. You have to pretend
you’re a Unicorn even when you know you’re not. I never once met a founder
that when asked, “how are things going?” could give me an honest answer.
Everyone is killing it, smashing it and blowing shit up. You have to be moving
fast and break things. It’s all a million miles an hour and to hell with the
consequences. There’s no room for words like “considered”, “mindful” or
“deliberation”. You move now, or GTFO. It’s as if everything and everyone is
in a Hollywood production."_

For what it's worth, this is a "post-unicorn" phenomenon. San Francisco has
been overrun with entitled assholes as it has become the trendy new place for
get-rich-quick schemes. It wasn't that long ago that it was considered
_insane_ by investors to put a company here (for good reasons, actually: it
_is insane_ to have a company here. People now just arrogantly want to change
the existing city to fit their greed, rather than go somewhere more
practical.)

A lot of the people who were doing startups before the Rise of the Unicorns --
many of whom are now famous and powerful people -- were, frankly, lunatics. I
wouldn't say that they were _modest_ , exactly, but they also weren't
exclusively focused on money -- it wasn't clear that anyone was going to make
any money! Maybe I'm being romantic, but it seems like there were more
interesting people, doing interesting things, and hoping to have a good time
along the way. There was more thought, because there was less money, and
people _had_ to be careful.

Today, the interesting people are fewer and further between, and the question
is less _" how can I make something great?"_, and more _" how can I get
investment?"_ Nobody gives much of a shit about anyone else, because if there
are any externalities, hey, that's just "disruption", bro. It's awful, and has
probably destroyed the culture that produced those unicorns in the first
place.

------
danieltillett
Running a technology company from Australia is totally insane (this is coming
from some who has done exactly this for the last 15 years). Unless you have a
family reasons for staying then leave right now.

On the positive side Australia is a great place to live, just a massive up
hill struggle as a place to build a technology based business.

~~~
parkie
Reasons?

~~~
danieltillett
There are so many but here are a few:

1\. Lack of real VCs. 2\. Lack of non-predatory Angels. 3\. Lack of a start-up
culture. 4\. Risk adversion from everyone especially customers. 5\.
Geographical distance. 6\. Cultural cringe towards anything developed in
Australia. 7\. Time zone difference. 8\. Overvalued currency. 9\. Cultural
obsession with real estate speculation as the way to get rich.

~~~
toast76
I agree for the most part. I wrote a follow up post that goes into some of
these issues as well. [https://macropod.com/blog/funding-a-
startup/](https://macropod.com/blog/funding-a-startup/)

These things are hurdles, but there are hurdles everywhere you go. You trade
lack of VCs here for more competition for VCs there. You trade lack of startup
community here with higher dev payrates there. It's all trade offs.

Things like timezone, distance etc are only an issue if you're selling in the
US only. Smart Aussie companies sell into the Europe and Asia as well.

The Aussie dollar is shit at the moment, so I don't agree with that. It's a
great time to be selling in USD.

~~~
solve
> You trade lack of VCs here for more competition for VCs there.

No, some places are just vastly better than others for certain things.
Everything doesn't always just balance out as if nature forces there to be a
balance.

"Everything balances out so here is equal to there" is one of the biggest lies
that small towns tell their ambitious people.

[https://en.wikipedia.org/wiki/Just-
world_hypothesis](https://en.wikipedia.org/wiki/Just-world_hypothesis)

------
fffernan
It's not even "when you will come to the US". It's when will you come to
Silicon Valley. The rest of the US is considered inferior in S.V. from the
community here. We live in a global economy. You can build your company where
it suits you best. There are many quality investors all over the world. Good
Luck.

------
carboncopy
I have to admit that I ended up skimming over the rest of the article after
the false choice of "unicorn or nothing" that the author characterized about
SV. Even limited to YC companies, what percentage are unicorns? And is every
company expected to be a unicorn? The vast majority of YC companies are
moderate successes or moderate failures.

The whole "there's no Australian Secret or Pets.com" really sounded like sour
grapes to me. Do Texans (people from a region of similar population size and
GDP to Australia) boast about their lack of spectacular technology company
failures?

Why not just say, "Australia is bloody awesome, it's home, and we've decided
to stay for that reason. We're living proof you can flourish as a startup in
Victoria. It turns out that we decided that we didn't want to move to the Bay
Area."? I'd really be interested in the details of how they actually got it to
work (marketing, customer relationships, developers).

That being said, I'm very grateful that they posted a blog about it. I've
found Australian companies to be fairly tight-lipped in comparison. The more
exposure there is to Australian technology companies, the more opportunities
for customers and investors will materialize.

------
Gatsky
One area where I hope things might be different is biotech. The markets are
always global, and there is a lot of scientific talent here. The disadvantages
compared to other countries is less I think just due to the nature of biotech.
There are going to be big opportunities as healthcare in Asia is transformed
by increasing personal wealth in China and South East Asia.

~~~
danieltillett
My business is technically in the biotech area and if anything biotech is
worse. The problem is biotech takes long term susustained funding to succeed
which Australia lacks the will to provide. We have great scientists who are
incredibly inventive, but turning this opportunity into viable businesses
seems beyond us. We would rather as a nation speculate in residential real
estate than use our very competitive science skills.

~~~
chris_wot
Ah, now I know where you are coming from. Yeah, we have amazing potential
around biotechnology, but the current government cut funding to the CSIRO by
$111 million and scrapped the Science Ministry when they won government, then
recreated it last year and put as its head Ian MacFarlane who said of
Scientists who weren't happy about a lack of a dedicated Science Minister:

"But I hear it constantly from some of the precious petals, can I say, some of
the precious petals in the science fraternity, and if you can’t guess, I won’t
accept it.”

So I'm not surprised you don't think startup culture is great in Australia!

~~~
danieltillett
It is even worse than this - we have almost all the conditions (both
culturally and economic) to develop one of the best startup cultures in the
world, yet we let ourselves down time and time again for totally stupid
reasons.

~~~
chris_wot
Serious question: what would we need to change to allow for startup culture to
flourish in Australia? I'm genuinely interested - from your ASIN patent I can
see you are developing a way of ameliorating issues in sequencing genomes. I
have virtually no understanding of DNA, but from reading the first few
paragraphs of your patent, it looks like you are one of Australia's
innovators!

P.S. You need to fix the patent page on your website. It seems to have been
lopped into two columns, and is impossible to read. Just a heads up.

~~~
danieltillett
I actually think we don’t need to change that much as we have nearly all the
things in place for creating a great startup environment. Since it is a bit
long for just a post here I think will make it a blog post on personal
website.

I had forgotten that the ASIN patent was even on the Nucleics website. It was
being used for an old SEO experiment. I have fixed it up so at least you can
read it now :)

------
fuzzieozzie
As an Australian who has lived in Silicon Valley for 20+ years it’s good to
hear the perspective from home. I co-founded, bootstrapped and sold my first
startup to a public company. There is room to not “pursue” the unicorn model
in Silicon Valley – but you need confidence in your approach. Needless to say,
I am on my third startup now – and having done it “my way” I intend to
continue doing it my way. Good on you and good luck — I think you’ll enjoy
your life alot more doing it the way that feels right to you.

------
ikonst
Uh, wait, does the US have a "startup visa" now?

~~~
hobo_mark
There's the E-3 specifically for Australians, I've been told it's fairly easy
to get but I am not sure how it applies to founders.

[https://en.wikipedia.org/wiki/E-3_visa](https://en.wikipedia.org/wiki/E-3_visa)

~~~
pyrophane
The E3 requires employer sponsorship and doesn't offer a ready path to a green
card, so it isn't friendly to starting a company in the US. It is fairly easy
to get because it has its own special quota just for Australians so they do
not need to compete with immigrants from other countries as for an H1.

~~~
aleek
I know many people that have converted an E3 to a green card, the main thing I
found with US immigration is that you want a good lawyer.

