
The Australian boys who built a $1b company in the cloud - realize
http://www.theage.com.au/technology/technology-news/the-boys-who-built-a-1b-company-in-the-cloud-20120627-212d1.html
======
beilabs
This is all part of a series relating to tech companies in Australia and the
challenges they are currently facing.

All the episodes are here:

Episode 1 - [http://media.smh.com.au/technology/digital-
dreamers/digital-...](http://media.smh.com.au/technology/digital-
dreamers/digital-dreamers--episode-1-3302673.html)

Episode 2 - [http://media.smh.com.au/technology/digital-
dreamers/digital-...](http://media.smh.com.au/technology/digital-
dreamers/digital-dreamers--episode-2-3315654.html)

Episode 3 - [http://media.smh.com.au/technology/digital-
dreamers/digital-...](http://media.smh.com.au/technology/digital-
dreamers/digital-dreamers--episode-3-3347393.html)

Episode 4 - [http://media.smh.com.au/technology/digital-dreamers/the-
new-...](http://media.smh.com.au/technology/digital-dreamers/the-new-gold-
rush-big-ideas-and-1b-dreams-3375254.html)

Episode 5 - [http://media.smh.com.au/technology/digital-
dreamers/milliona...](http://media.smh.com.au/technology/digital-
dreamers/millionaires-in-thongs-digital-dreamers-episode-5-3408609.html)

It seems to me that Australia has a unique problem. There is a massive brain
drain of engineers & tech entrepreneurs moving to the US to start their own
business (E3 Visas). These are American, not Australian companies.

* The current tax law is a nightmare for those AU startups wishing to dole out equity.

* Lack of talent, the majority of students have steered clear of tech disciplines in university after the dot-com bust, the effect of this is being felt now as engineering talent is needed.

* The government is not focused on the needs of startups preferring to invest heavily in pie in the sky ideas or just digging the dirt out of the ground. There is no decisive strategy from the opposition nor the current gov in power.

* Lack of funding. There are just not enough investors in Australia looking to fund in Australian tech startups.

The Australian startup scene is booming! Hopefully this series will highlight
some of these issues so things can get even easier for new Australian
companies.

~~~
jacques_chester
> * The current tax law is a nightmare for those AU startups wishing to dole
> out equity.

Could you elaborate?

~~~
toast76
It's less that it's a nightmare, and more that there aren't enough people that
have done it to know the right way to go about it. We've been trying for
6months to get an ESOP off the ground, and have had a hard time finding an
accountant/lawyer who knows their way through it, EVEN THOUGH we know what
needs to be done.

------
astrofinch
>"There's more lines of code in a Ford [car] than Facebook and Twitter
combined," Cannon-Brookes said.

If this is true, it's evidence that Ford can't hire software engineers.

~~~
yitchelle
I work in the Auto industry, and yep, the amount of code in a typical car is
enormous.

Just do a simple, back of a envelope style calculation. A typical car has
about 25 electronic modules, ranging from simple seat beat controllers and
complex controllers like engine management units and instrument clusters.
Assuming that each modules have about 250K line of code, that would take it up
to 6.25M line of code. That goes up if we start to consider high end cars like
BMWs and Mercs.

Let's not forget about the development infrastructure around the code
development, that is another story..

~~~
raverbashing
Yes, in some ways make sense, if you add all of the code

Also, embedded software doesn't / can't make use of existing libraries because
of code size (but this is changing)

And of course you can't really compare PHP+JS+what else in Facebook with
C+Java+Assembly of car embedded systems

But yeah, hardware companies don't know how to make software

~~~
yitchelle
"But yeah, hardware companies don't know how to make software"

What are some of the short comings that you can see?

------
Zuz
Atlassian as a company is awesome, their products quality varies and of course
the best sellers (Jira and Confluence) are also the worse one code wise since
they are the oldest.

The point I'm starting to get mad about is this BS about not having sales.
I've worked with an Atlassian partner and, well, Atlassian huge partner
network _is_ their sales force.

And over the last year Atlassian itself has started hiring internal sales
people too so please stop with this "no sales"

------
cletus
Firstly, congrats to the Atlassian boys. Whichever way you look at it, it's a
great accomplishment.

This thread has turned into a discussion about startups in Australia in
general and let me add some perspective as an Australian who now lives in the
US (NYC).

Firstly, a disclaimer: I'm from Western Australia, specifically Perth. WA is
different to most of the rest of the country (except maybe Queensland) in that
it awash in the biggest resources boom probably ever. Iron ore and oil and gas
primarily but others too (aluminium, nickel, etc). China is of course the
largest buyer.

In many ways Perth, the capital of WA and a city of some 1.5 million, is a
boom town and really two cities: the haves and the have nots.

The haves are in the resources game, directly or indirectly. The biggest
indirect benefactor is construction. There is some $50B+ in infrastructure
projects in the pipeline and prices paid for construction are just
astronomical. This was worse in the housing boom (up to 2008) but is still
bad.

My brother-in-law who manages construction projects (apartment buildings and
so forth) says that to build a two storey brick-and-tile house is about
$2,000+/m2 (roughly $200/sq ft). Single storey is still probably $1500.
Apartments in West Perth (close to the business district but not much else
going on) sell for over $10,000/m2).

The have nots are everyone else _including software engineers_.

Post-housing bubble and because of the high cost of entry to the market (you
will not find a house in Perth cheaper than $250,000 _period_ and I'm
including rundown houses built 50+ years ago) and tighter lending practices by
the banks (anecdotally, the wholesale cost of lending pre-bubble bursting was
20 basis points about the RBA rate, now 100+) rents are going through the
roof.

A one bedroom apartment I rented in 2005 for $300/week is now $600+. There are
far more extreme examples than this.

On top of this the cost of living is ridiculous. Food, utilities, you name it.

Basically if you aren't in the resources/construction game, you have
experienced a drop in your real standard of living over the last 10 years.
Commercial property is expensive. Everything is expensive.

One big problem Australia has (IMHO) is stamp duty. Stamp duty as it applies
to most people is a state government tax on the sale or transfer of property.
In the US instead you pay property tax (typically 1-1.5% of assessed value
AFAIK). In Australia you might pay as much as 5% of the sale value in tax.

Now consider that a "normal" family home in Sydney or Perth might be $1
million. So if a family in Sydney wants to pick up and move to Perth they may
be $80,000 in the hole (including agent fees and the like) before they even
start... all for a job that might only pay $100-150k. This I believe really
hurts labour market flexibility.

Through a combination of taxing property and not the transaction and lower
overall property values, this is not a problem the US has.

I often joke to friends and family that it is cheaper for me to live in
_Manhattan_ than in Perth now.

This has several negatives when it comes to tech:

1\. There is a strong incentive go to the US, Real standard of living is
higher, jobs are more plentiful and so on;

2\. The high cost of living makes bootstrapping a startup in Perth expensive
and not very attractive. More broadly to varying degrees I believe this
applies to a large part of urban Australia;

3\. Perth at least has never really had a tech scene per se. The norm is for
any sufficiently large company to headquarter itself in Sydney or Melbourne.
The only exception are resource companies (Rio Tinto, BHP, Woodside Petroleum
and the like); and

4\. Because there is so much "easy money" floating around in resources it's
just to justify a tech startup comparatively.

Plus there are usual reasons: Australia is far from everywhere (Europe,
Australia, even Asia) and Perth is even further (it is I believe the most
isolated capital city in the world and you need to go 3000 miles before you
find another city above 100,000 people).

Startups don't start in a vacuum. There is an ecosystem that makes them
thrive. Angel funding, VC, etc.

As far as regulation goes, I don't see any particular barrier here. Forming a
company in Australia isn't cheap (~$1000 for a private company, more for a
public). Financial regulation is much stricter such that operating in
financial services is a difficult proposition because of regulatory burden.
For example, I don't believe Mint.com could ever have started in Australia.

I largely discount the "lack" of government involvement. Businesses will grow
and thrive largely independently of the government and it's not something the
government tends to be good at encouraging anyway (just look at the whole Curt
Schilling thing).

If I was going to do a startup today I'd go and hole up for 6-12 months
somewhere cheap to get an MVP and then base myself somewhere with a decent
tech scene, maybe NYC or Boston.

From what I read the housing market is just nuts in SF now. Attracting and,
more importantly, retaining staff I imagine is difficult in the Valley now. So
much so that I think I would skip it entirely.

Whatever the case, Australia would be pretty low down on my list.

~~~
jacques_chester
I'm in Perth at the moment.

Perth is not that expensive if you're prepared to put up with a 40 minute
commute (O horrors).

The town I grew up in, Darwin, is now regularly amongst the most expensive
capitals in the world for rent. And food, petrol etc is a helluva lot more
expensive there than it is here in Perth.

Getting investment in Perth is tricky though. Investors in Perth understand
the mining lifecycle. If you see something interesting on a map, you can round
up some geologists and drillers and raise $10 million in a few weeks. It's
basically the Silicon Valley of mining.

But god help you if you want to launch a software business. There's one
venture fund and so far they've invested in one (1) software venture -- and
that was Filter Squad, _after_ Discovr was successful.

All the Australian action is happening over east. And there's nothing much
there either.

If I could up stumps, right now, and move to the US, I would.

~~~
suttol
Disclosure: I work for the funded startup mentioned, Filter Squad.

There may only be one venture fund locally, but there are several around
Australia that have invested in startups out of Perth.

Also, That one VC (Yuuwa for those playing along at home) have invested in
companies other than Filter Squad (Agworld being one of them - very much a
tech startup, despite focusing on very non-traditional web / mobile
audiences).

Likewise, Yuuwa invested in a seed round pretty early in Filter Squad (I can't
remember exactly when since I wasn't around at that point) - it was just their
follow up that was a bit later.

~~~
jacques_chester
Hey Darcy, nice to see you again. I guess I got it wrong -- I went by the
announcement on Yuuwa's blog.

That makes it two (2) software companies they've invested in. The rest are
bioscience doodads. Admirable and impressive, but it means I'm competing with
university spinoffs with commercialisation offices to back them up.

------
205guy
If they're that great, and have all that success, why does Confluence still
suck? sorry, I thought this was quora.

~~~
sherifmansour
What sucks about it? Interested to hear...

