Monthly Archives: July 2011

Silicon Beach Drinks – Wollongong Style

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The Silicon Beach Wollongong Mascot - he'll be in the middle of the table at our meetups

Just a quick note to let you know that we’re kicking off a regular Silicon Beach Drinks here in Wollongong. After kick-starting the tech entrepreneur scene three years ago, and playing a massive part in bringing together a really strong community, we thought we’d have our own regular drinks here in Wollongong.

Key details:

  • Thursday nights at Hotel Illawarra, the corner of Keira and Market Streets Wollongong.
  • Kicks off at 5:30pm, we’ll probably be there until 8pm, and sometimes roll on for dinner, so if you’re one of our poor long suffering commuters who only gets back into town on a 6:30 or 7pm train, don’t be afraid to swing by!
  • If you’re new and don’t know what our regulars (Nathan, Tristan, Louis, etc) look like, just have a look for our cute mascot, who’ll be sitting in the middle of the table where we are – don’t be shy to come and introduce yourself!

While our Melbourne friends have beaten us to the punch, the fact Wollongong is the third city in the country to kick them off really says something about the amount of startup and tech activity going on around here (no small thanks to the Uni of Wollongong  graduating 1 in 7 IT students in the country).

Feel free to come on by and say hello – whether you’re a seasoned entrepreneur, working in or on a startup, or a wantrepreneur who’s looking to find a great cofounder/idea/opportunity, you’re more than welcome.

UOW Occasional Address – It's what you do with it that counts

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Introduction

Today is one of the days you’ll remember for the rest of your life.

It might be because you feel proud – it is the culmination of thousands of hours work and study.

It might be because you feel relieved – no more cramming for exams and assignments at the last minute.

It might be because you feel dominant – after countless hours of swearing and rage you’ve managed to beat the compiler and debugger enough to graduate!

It might be because you feel appreciative – for the amount of support you’ve received from teachers, parents and friends over many years, efforts that you might not have appreciated at the time when you were stressed about an exam or an assignment.

It is probably all of these reasons, and more – this is a special day for you all (and sometimes more so for the parents and friends up the back).

Given this is such a special day, when you get a call from the VC and you’re asked to give the Occasional Address, you naturally want to make it to be good.

You think back to the great addresses given at occasions like this by people like Steve Jobs, Theodore Roosevelt and Nelson Mandela.

You naturally think, “Hey, I should try and impart some wisdom and amazing advice,” and then you realize there’s a little problem.

I’m less than 10 years older than the average age of the graduands here. I don’t have enough grey hair yet to have any wisdom to impart.

It gets worse though. I’m an Informatics drop out. I’m never got to sit in your seat as an Informatics graduate.

What legitimacy do I have to fill you full of advice about what to do now you’ve graduated?

Damn, so we’ve got a bit of a problem.

So, rather than vainly try and fill you with wisdom I don’t have, coming from a drop-out without legitimacy, I thought instead it might be more valuable for you to share a few stories and lessons learned, and then I want to do something a little unorthodox – I want to throw thrown down a challenge to each and every one of you.

That’s right. A challenge.

If you only take away one thing from my talk today, I want you to remember this: it isn’t where you’ve been, what you’d done or what you’ve got: it’s what you do with it that counts.

What I want to do today is challenge you in what you do with what you’ve got. I’ve got three stories to share with you today – one that might help see how to work with what you’ve got, one about the perspective you should have, and one that is about why you should do it, rather than talk about it.

Find something you want to work hard, be passionate and get better at

As I mentioned before, I’m a drop out. It was early 2000, and the whole world was crazy. The internet was changing everything, or so they said. I’d been dabbling as a freelance web developer to make some extra money to spend on beer, back in the days when that meant writing code first, and making things pretty and usable second. The minority of Australian households with internet connections all used modems, and frankly, the quality of web design sucked.

So, in early 2000, I dropped out of uni, quit my job at the Novotel, and moved out of home, all in the course of a couple of months. I registered my company, Internetrix on the 10th of April 2000, and within a week, the Nasdaq crashed.

The dot com bubble burst, and I’d just staked my ability to survive on an industry that was just taken around the back of the shed and shot.

As you can imagine, this situation presented a few challenges. So how was I able to grow from Internetrix from a one-man-band into an award winning company, recognised as a partner by companies like Google, with clients in the US, Japan, China and of course here in Australia?

In short, there were three things – work hard, be passionate and never stand still.

Selling thousands of dollars of IT services to businesses when you’re a 20 year old with no track record is bloody hard. When they’re small businesses, it is harder. When they’re small businesses in Wollongong, it is almost impossible.

If keeping a fledgling business going wasn’t hard enough, the government introduced the GST when I was only 3 months in; I had to learn accounting and tax, and quickly, since I couldn’t afford an accountant.

And being young meant I was easy prey for bad actors – between being ripped off and having people threaten to sue me I had to learn quickly how to survive in the jungle.

It was frigging hard work, but thankfully I didn’t have the temptation of a cushy graduate position as an alternative of making it work.

This could have been because I wasn’t a graduate – I’d dropped out. But it wasn’t.

This could have been because the whole industry had just exploded and no one was hiring IT people, especially drop-outs with very little experience.

But it wasn’t.

I pushed through without the temptation to do anything else because I’d been bitten by the startup bug – the freedom and excitement of creating something out of nothing was just too intoxicating for any mere job to ever be enough after that.

I didn’t start Internetrix to get rich. I started Internetrix because I had a believed that the internet was indeed transformative.

I also believed that your average business they had been doing it wrong – they spent money on a website without knowing why, and how the investment was going to pay off.

From the beginning, had a passion for building a startup that helped clients get a positive return on their online investment – this passion put my business on a good footing, and I was able to develop long term relationships with clients that allowed my business to grow.

But this energy for hard work and passion to throw yourself at something isn’t enough – in our industry, you have to have a hunger to keep learning. Things change so incredibly fast. You need to be constantly reading, experimenting, learning, hacking and tinkering.

It is only by being at the top of your game that you can combine your willingness to work hard, with your passion for the field, and know when you stand in front of a client, a colleague and a new hire that you have what it takes. IT is a meritocracy, without the baggage of other professions, so you’ve always got to be willing and able to bring the best to any occasion. Cramming won’t do it. You need to be continually training, and if you’re working in a field that you don’t care about, that you’re not passionate enough to read about in your spare time, do something else.

So, what’s the lessons here? Since what matters from here is what you do with what you’ve got, make sure you’re prepared to work hard, be passionate and stop improving at what you’re doing. If you’re not, you should do something else.

Play on a World Stage

In mid January 2006 I found myself in the Hard Rock Casino in Las Vegas  as a guest of the owners of MySpace, which at the time being was the world’s 4th most trafficked web property. Later that week I was pitching to the world’s most respected venture capital firms, the people who’d make the initial investments in Google, Yahoo, EA, Facebook and many other household names.

I spent three months living at the home of Mike Arrington, the founder and editor of Techcrunch.

This all happened because I co-founded a company, Omnidrive, with a fellow uni dropout, Nik Cubrilovic in mid 2005. If you’ve used Dropbox, you’ve got a good idea of what we were building – cloud based storage with clever sync technology between multiple devices. And while our business failed (and Dropbox just raised a round of capital on a $1B valuation), the crazy roller-coaster experience was one of the most valuable things I’ve ever done.

Thrust into the limelight of Silicon Valley and playing the startup game at the time Facebook was just getting going was an amazing experience, not for what I learned about business, fundraising or the industry, but because of what I learned about myself.

Driving down Highway 101 through the heart of Silicon Valley, you see the headquarters of companies like Oracle, Yahoo and Google. Seeing these buildings, and realizing they were real places, with real people working there, people just like you and I, was paradigm shifting.

When it comes to technology, Silicon Valley is unquestionably the top level the world stage. It is where the best in the world compete and define technology worldwide. One night I was lucky enough to have dinner with Marc Andreessen, the founder of Netscape, because a friend of a friend made an introduction and he was free and keen to find out about what we were doing. It is just that kind of place.

While initially feeling very inadequate and out of my depth, it didn’t take too many meetings with VCs, too many conversations with entrepreneurs at dinners and beers with senior engineers from places like Yahoo and Google at parties to start to realize that I had what it took to go toe to toe at this top tier game.

And it wasn’t anything special about me. I was an average student. To this day, my staff would ban me from all hacking and meddling if they could. And yet, as time went by, I got the sense I wasn’t out of my depth.

I thought about the dozens, if not hundreds of tech people I’d work closely with in Australia over the years, and realized that they could also hold themselves in this, the beating heart of technology globally, and could honestly regard themselves as being world class. The distance between Wollongong and San Francisco might be great, but the difference in calibre of technologist wasn’t nearly as great as I’d imagined.

The University of Wollongong has one of the best IT programs in Australia, and so what I’m saying is that you have what it takes to go toe to toe with the best in the world too.

Two UOW alumni who aren’t that far ahead of you – and one of whom was sitting unemployed on North Wollongong beach in January – have built a startup in the last 6  months. After going to Silicon Valley a couple of months ago, they are now in acquisition discussions with some of the biggest names in technology fighting over them.

These guys are just like you, and if they can do it, so can you. Why shouldn’t you be the next Steve Jobs, Bill Gates or Mark Zuckerberg? Seriously.

So, what’s the lesson here? When it comes to thinking about what you’re doing to do with what you’ve got, make sure you’re mindset is to be world class and play on the world stage.

Be the man in the arena

This last story is not my own, so it is probably the most important of three stories I’m going to tell today.

Theodore Roosevelt was the 26th President of the United States, and when he became President in 1901 at age 42, he was the youngest man ever to do so. Widely regarded as one of the best Presidents in US history, Teddy was invited to give a speech at an occasion like this at Sorbone University in Paris, one of the world’s oldest Universities, established in the 12th Century.

In his speech, he reflected on the temptation among the learned and privileged scholars and academics before him to become commentators, critics and cynics. He cautioned against this, and delivered some of the most stirring words I’ve ever read:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

There is little use for the being whose tepid soul knows nothing of great and generous emotion, of the high pride, the stern belief, the lofty enthusiasm, of the men who quell the storm and ride the thunder. Well for these men if they succeed; well also, though not so well, if they fail, given only that they have nobly ventured, and have put forth all their heart and strength.

When it comes to rising to the challenge of what we’re all going to do with our education, our skills, our lives, I believe this message is the most important. As President Roosevelt says elsewhere in this same speech, “To you and your kind much has been given, and from you much should be expected”.

As Informatics graduates, you have more power, more opportunity to change the world, than any other group in the history of mankind. I mean that. Think through history, and think about the forces that are going to drive, enable and facilitate the future of our world more than any others. Technology is common to all of them, for good or for evil.

Just take a moment and reflect – today, there are now more than a billion people online, and if you throw in mobile phones there are billions more.

We’ve seen how technology has changed the world in Egypt, Tunisia and other parts of the middle east in the last few months.

Closer to home, the opportunities to change healthcare, education, how we live, how we work, and more are vast. We’re only three or four decades into the information revolution – even if we accept the pace of change now is much faster, compared to previous revolutions – industrial, bronze, etc – we’re surely now in little more than the first early rays of a new dawn.

I believe we all have the power, the opportunity and the responsibility. But, to make a change, to make a difference, you have to be in the arena.

So, how can you get into the arena?

Of course, I have a natural bias towards seeing the arena as being a part of a startup. You put it all on the line, and even if you fail you still learn so much more than you would working for a bank or the government in a graduate role. There has never been a better time to do a technology startup – thanks to cloud services the costs of getting going are lower than they’ve ever been, and with a mature web audience of over a billion people, and app stores and the like making distribution and payments easier than ever before, I’d encourage all of you to keep the idea of doing a startup in the back of your mind.

But, being the man in the arena doesn’t just mean doing a startup. It can mean passionately advocating for change and improvement in a workplace. Or using your technology skills to help a cause you’re passionate about. Whatever you choose, the key is to both avoid the temptation to just throw rocks or criticism and cynicism from the stands, and show the courage to get down into the arena.

So, when answering the challenge of what are you going to do with what you’ve got, make sure whatever your doing, you’re doing it in the arena, for that’s the only place that matters.

Conclusion

From here, you’ll follow many different paths, across careers, across the world.

You should take this time to reflect and look back with pride on what you’ve achieved – enjoy this moment and the sense of achievement that rightly comes with it.

But also realize that from here, it isn’t what you’ve done to get here that matters – it is what you do with it that counts.

When it comes to choosing your challenge, work hard, be passionate and always keep getting better.

When it comes to framing your challenge, be world class and don’t be afraid to play on a world stage.

When it comes to how you tackle your challenge, remember to always be in the arena, fighting to succeed but not afraid to fail.

Good luck and I wish you all the best in rising to the challenge of doing something amazing with what you’ve got.

Wollongong is on a burning platform

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Over the last couple of years, I’ve been getting increasingly concerned about the future of our city. Leaving aside the rot exposed through the ICAC investigation, I’ve been mostly worried the future of the city from an economic perspective.

Are we going to be a place where our young people can build careers & families with confidence and a sense of optimistic opportunity?

Or are we going to increasingly be a hollowed out city, with a population that in large part commutes to Sydney for work, or lives off Centrelink, or comes here to to retire?

Are we going to be proud and strong, or are we going to be like Tasmania – a small backwater that everyone looks down upon and only survives because they suck in taxes paid by the rest of Australia living in large part off handouts?

My worries about the future of our city have grown even more acute over the last few months.

Our city has operated with a bit of a handicap in all 31 years I’ve lived here – the downsizing at the steelworks and in the broader manufacturing sector has been playing out since the 1970’s. But while we’ve stoically pushed forward over the years, I’m concerned that rather than just the disappointment of unfulfilled potential that we’ve learned to live with, we’re actually facing some very serious challenges that could threaten the viability of our city.

Our Two Fires – Carbon Pricing & Dutch Disease

In the short to medium term, there are two external forces, more than any others, that are affecting Australia’s entire economy.

The first is the transition to a carbon constrained economy, and while there might be debate around the details and timing of a carbon price, I think most people accept that reducing global dependence on carbon (ie, coal) as an energy source is inevitable.

The second, and much more important and threatening issue in my view, is Dutch Disease, the situation where a high currency value because of exports in one part of the economy – in our case, the mining/resources boom centred around WA – makes it almost impossible for exporters in other parts of the economy to compete.

While Carbon Pricing and Dutch Disease are having a negative economic impact in lots of communities around Australia, there are few, if any, that are threatened as much as our city and region.

In a message to all his staff earlier this year, new Nokia CEO Stephen Elop told a story that I think has strong parallels to the situation our city is currently facing:

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

I believe our city too is standing on a burning platform.

Examples of our industrial decline

Lets have a look at an example, in the form of Bluescope, the region’s largest employer and also responsible for tens of thousands of related and multiplied jobs.

Bluescipe recorded revenue of $4.75B in their Coated & Industrial Products Division (which is pretty much all of Port Kembla), down over 20% from over $6B in sales two years earlier (2008). And this is just sales – during this period, raw material costs went up, and the Australian dollar increased in value by more than 70% since late 2008. This exchange rate movement – the Dutch Disease in action – has made every person on payroll, every megawatt of electricity and other AUD expenses 72% higher now than their international competitors, assuming no increases in wages, power costs and the like.

Little wonder then that Bluescope experienced a drop in profit of 85% between 2008 and 2010 (and in the GFC and the 2nd half of 2009 they actually made sizable losses). While today’s announcement of an additional $300M in industry assistance for the steel sector (read Bluescope and OneSteel) will make some people in the city feel comfortable (and it isn’t tied to the carbon tax legislation, so the Greens would have to support it – good luck with that), $300M isn’t a lot of money compared to the $1.25B per year in revenue that Port Kembla is down compared to 2008. Even a government, with all the resources of treasury, can’t compete with global market fundamentals – just ask George Soros, the man who broke the Bank of England in September 1992.

BSL.AX - no wonder the share price is down 90%

 

There have been lots of other examples where trade exposed employers in our region have become extinct. We’ll all remember the closing of the Bonds factories in the area last year, the latest in a long line of shutdowns and mass layoffs which in previous years have included brands like Midford, and even more recently, locally owned Poppets. Unfortunately, the ledger is stacked with much more bad news than good on this score.

When it comes to our traditional economic base, our city has been lurching from one crisis to the next, while the rest of the world passes us by. It doesn’t have to be this way.

Recognition, leadership & vision

Facing up to these challenges requires an honest debate, strong leaders and the willingness for our community to come together, face facts, make some tough decisions and put in place a plan to change our economic base.

So, is there a frank debate about these issues at the moment? Are our leaders – both incumbents as well as aspirants – speaking out, being honest, and putting forward a plan? Let’s have a closer look.

Local Government

Our city is going to the polls in just 7 weeks time. I’ve been following the news as more people throw their hat into the ring, and I’ve been really hoping to hear someone out there talk about the elephant in the room.

But, alas, all I’m seeing is an empty and meaningless debate about which group of candidates is going to have better consultation and more inclusive government than the next.

What of debating the big issues, like the future of our city?

On the whole, the candidates have been silent about this, and those that are making noises about anything of substance are currently running on platforms made of platitudes that few would argue with, but which on their own are utterly meaningless.

Sure, you could argue local government is roads, rates and rubbish. I disagree – a strong Mayor and City Hall can act as a very effective leadership and lobbying force with the levels of government that actually have power, not chains – but that raises the question – where are our State and Federal representatives on this?

State & Federal Government

I’m heartened that the State and Federal members I’ve talked to about our burning platform situation are very aware of the issues. My sense from talking to them is that they see the same bleak future if we keep doing what we’re doing. The problem is, changing the nature of an economy isn’t easy, cheap or quick.

Unfortunately, they’re not out in front on the debate, and while I’m disappointed, I can also understand why.

If I was Sharon Bird, Stephen Jones or Ryan Park, I wouldn’t want to come out and scare the horses unless I had a plan to turn fear into hope. To bring up this issue without knowing you can get the support of your caucus and the treasury to make the investments to do something about it would be what Sir Humphrey would call “courageous”.

Sharon, Stephen and Ryan are worldly and smart; while some of the crazier voices in our public life might suggest fixing the exchange rate, putting up tariffs and other failed policies to provide the perception of short-term relief, our members know that going back to the “good old days” isn’t possible without a flux capacitor and a Delorian.

When it comes to bold initiatives and investing in action to transition our regional economy, our members are also hamstrung, even if they have a plan. Our safe seat status at state and federal levels of government means that our members will always struggle to get attention from the party and concessions from Treasury, and the safe seat status owes a lot of the current economic makeup of the city, which doesn’t help create the motivation for change either.

Starting a debate

Our city has been making a gradual transition over the last few decades, but the size and speed of the threats – the intensity of the fire burning under our platform – is stronger than ever before. The Finance and Insurance sector – thanks to the likes of the IMB, Community Alliance Credit Union (formerly Illawarra Credit Union), Oasis Asset Management (now known as a division of ANZ and known as OnePath) – is now the largest employer in the region, and Greg Binskin and the team at Tourism Wollongong have consistently gotten in front and espoused a vision for a strong tourism sector in the region which they’re making a reality with dogged determination.

But, to be honest, what we’ve really got here is a number of disparate actors working to improve the fortunes of the city through their own actions – what we don’t have is any real leadership, debate of vision for the future of the city, which our community can participate in and get behind.

This is a real shame, and while we continue to be mute and complacent, we ensure that by doing what we’ve always been doing, we’re going to keep getting what we’ve always been getting.

Learning from others – a tale of three cities

We’re not the first community in the world to face serious challenges like this – I’ve researched three examples which we can look at as proxies for our situation, so we can learn from their mistakes and successes. There’s a lot we can take away from the way others have faced and overcome the same adversity and threats we’re facing now. Here’s a little information about these three cities below.

  • Sheffield in England suffered for decades as the pain of the loss of their manufacturing and industrial economy in the 1970’s led to widespread unemployment and a contraction in their city and population, and have only just started turning things around.
  • Detroit, a cautionary tale, is still suffering and shows no real sign of improvement on the horizon.
  • Waterloo in Canada, saw the writing on the wall and transitioned their industry very very successfully before they declined, creating a really smooth transition and a great success story.

Sheffield – an industrial twin

The first proxy city to our own is Sheffield. The home of British Steelmaking, Sheffield saw a 10 fold increase in its population in the 1800’s through the industrial revolution, however when international competition on its inefficient sector took its toll from the 1970’s, Sheffield saw its population decline markedly (down over 7% in the 10 years to 1981, and negative each other post-war decade until the last few years).  Anyone who’s seen The Full Monty, set in Sheffield (1997), will have a feel for the bad times that city has seen.

Sheffield has since invested in developing its higher value business services sector, and while accepting the lower job contribution made by the manufacturing sector compared to days gone by, a focus on technology and real innovation has helped to bring prosperity back to manufacturing in this natural cross-roads in the middle of Britain.

None of it would have been possible without a strong, coordinated plan and commitment of various stakeholders – for more information, have a look at this excellent case study on how Sheffield is becoming a knowledge region. For specifics on how their regional governments are working together with detailed plans, check out the “Moving Forward: the Northern Way” website and plans.

Detroit – a cautionary tale

Detroit. Motown. The City of Detroit, which used to be the 5th largest city in the United States, has now shrunk to be 18th, with a population of around three quarters of a million. Only New Orleans has gone backwards further, and Detroit can’t blame a hurricane for its woes – Detroit’s failings are all man made.

The home of the American automotive industry, Detroit has been in decline since the 1980’s. As the Economist details:

Employment has fallen every year since 2000. Even as the carmakers recover, they will not resume their role as guarantors of middle-class prosperity. State leaders have struggled to respond to structural shifts. Unfortunately, rather than reform a collapsing revenue system, they have passed short-term fixes. Attempts to reinvent Michigan have moved fitfully. Grants for college students did little to encourage them to stay after graduation. Tax credits for green manufacturing industries may create too few jobs at too great a cost, according to Don Grimes, an economist at the University of Michigan.

Detroit is what happens when a city faces a series of structural challenges and threats that are as certain as gravity, and then put their head in the sand. The city levies an additional 2.5% income tax on its citizens – this was probably a good idea when the city was prosperous, but now it is a massive disincentive for anyone to live there, especially given its high levels of crime and general decay. Some statistics show their unemployment rates falling, but the reality is, people are leaving the city and its surrounding counties by the hundreds of thousands. Perhaps there is a future for a smaller Detroit, but $50B in Federal bailouts for the 3 big US auto-makers in the GFC seems like it might not have been the best investment that could have been made.

Another American city that I have done a bit of research on is Pittsburgh, the former home of the American steel industry. Pittsburgh has seen a dramatic downturn in its own steel industry, and while their ability to cultivate a high tech and startup sector looks really promising, it is still in many ways early days – the City is still losing around 10% of its population each decade, and has been since the 1960’s. Hopefully, Pittsburgh can achieve the same sort of success as Waterloo, below.

Waterloo – our Canadian doppelgänger

The town of Waterloo, Ontario, has got to be the closest thing Wollongong has to an international twin.

  • Waterloo is around 100KM from the largest city in Canada, Toronto, their equivalent of Sydney. Wollongong is 83KM from Sydney.
  • The population of the City of Waterloo is around 100,000 people and the population of the region Waterloo is centred in is around 492,000 people. Wollongong, Shellharbour and Kiama LGAs combined have around 300,000 people, with another 150,000 if you include Wollondilly and the Shoalhaven LGA’s, giving an Illawarra total of 450,000.
  • Waterloo has a strong and internationally renowned university, the University of Waterloo, which is actively engaged in their city. In addition to being a significant employer in the city, the University of Wollongong is increasingly taking a leadership role in helping to shape the future of our city (such as through the Innovation Campus).
  • Waterloo has historically been an industrial town, with strength in tanning and rubber. In the 1980’s the industry suffered a downturn, related to headwinds in their main downstream market, Detroit, and thousands of jobs were lost. From the 1970’s, the Illawarra region has suffered similar frequent retrenchments and large rounds of layoffs in from industrial sectors.

What sets our two cities apart, however, is what Waterloo did the face of its own structural change. Instead of grinning and bearing its fate, a number of civic leaders got together and decided to try and build a new, emerging industry to take up the slack.

The outcome of this effort, which recognised the opportunities an innovative and engaged University could provide when combined with relatively close proximity to the financial capital of the country, has been nothing short of amazing. The City started focusing on technology, and they managed to grow their industry from a total revenue of C$300M in 1997 to over C$19B (yes, B as in billion!) in 2007. The best known product of Waterloo’s success is undoubtedly Research In Motion, the company behind the successful Blackberry mobile phone.

After spending a week with Tim Ellis, Chief Operating Officer of the Accelerator Centre in Waterloo earlier this year, I’ve gotten a much deeper appreciation of what they’ve been able to do, and I’m firmly of the opinion that we can do something similar here in the Illawarra. The University of Wollongong has signed an MoU with the University of Waterloo – I expect many more beneficial things to come out of these two institutions cooperating.

One part of a vision for our future – creative, high tech & very liveable

I believe our city needs to take strong action to deliberately re-shape our economy if we want to be more than God’s waiting room, a bogan backwater and a place for exhausted commuters to sleep each day.

However, the isn’t a single silver bullet, and there isn’t one industry or sector alone that is going to change everything for us and make for a better, sustainable future.

I do believe, however, that the creative sector, particularly backed by technology, can play a very important part in helping to change the fabric of our city and its economy for the better.

In my recent post on the 5 Pillars of Tech, I reflected on the nature of the IT industry in our city, and put forward a case where a Startup led technology sector could have a massive and positive difference in the future of our city:

A technology Startup is product focused. They’re often developing software, and although hardware is still possibly, it is at least an order of magnitude harder to do, and it requires a lot more capital than you can usually find in Australia. Being software product focused makes you very capital efficient – no need for plant, equipment; just people and ideas and the odd laptop or two.

A technology Startup is globally oriented – they might not be selling internationally, and their first 4 clients might be companies who share the same building as them, but generally speaking, a startup is trying to solve a niche problem in a new way for a global market.

By being product focused, often software-based with a zero marginal cost of production, a technology Startup is also highly scalable. With more than a billion people online now, and the growth in smartphones and their associate app marketplaces, distribution has never been easier or less tied to your geographic location. In this sense, being a city of a quarter of a million, in country with only 22 million (which makes us a flea on the back of a Chihuahua riding on an Frigate – I’ve done the maths, and these are honestly the right ratios) doesn’t have to be a critical disadvantage.

As a foundation investor and mentor in StartMate, and the founder of two technology companies that now employ 16 staff, I’ve seen first hand how powerful and catalytic the Startup sector can be for the wider economy. Also from my 5 Pillars post:

When it comes to the role that Startups can play in contributing to the economy of the region, the best thing about them is that they’re easy to start, they harness the things we have – smart people, lowish costs of living – and their development and cultivation is within our control.

They’re also great job creators – 20 companies with 10 staff creates the same opportunities of one large company imported into the region – and even if these startups fail, the experiences, lessons and skills developed by getting out there and doing it are incredibly valuable, whether the founders choose to do another startup, or join the ranks of the other technology sectors.

I’ve recently come back from spending a month in San Francisco, which for those who don’t know is the “captial” of Silicon Valley. Part of the time I spent there involved talking to investors, and many of them were asking about where we’re based, and whether we’d move the team to Silicon Valley if they invested in us. I told them, no, are you crazy? Why would I do that? They asked for details about what made Wollongong a great place to grow a startup, so I told them the following things:

  • Talent – the University of Wollongong produces 1 in 7 technology graduates in Australia. In Silicon Valley right now you can’t hire an engineer for love nor money – I’ve never seen a war for talent like it. Just telling prospective investors the graduate statistic was enough to get them asking how they might be able to look at helping the companies they’ve already invested in – who can’t hire good technology engineers – to come to Wollongong.
  • Stability – Wollongong is an absolutely beautiful place to live. Knowledge workers can base themselves anywhere now the world is flat – having a team based in Wollongong is great for the team, and great for the business too. I heard from large multi-national employer in the region that they experience staff turnover of 5%, whereas their Sydney office, which in every other way is identical, faces 50% turnover a year. Even without factoring in soft-costs like the cost to the business of losing all that knowledge each year, the hard recruiting and training costs for this kind of turnover they’re seeing in their Sydney office are crippling, and makes Wollongong a much better place to be.
  • Diversity – if the world is flat, it is also now increasingly online. There are billions of internet users, and we’re not far from having more mobile phones than people on the planet. What isn’t changing any time soon though are the needs to speak the language and be connected and comfortable with the culture of your markets, which are increasingly Asian based. Our time zone, our strong cultural diversity and the language skills that that brings us are not insignificant, and I think they’re almost always underrated. My team today includes three people from China, one Canadian, an American, a Kiwi by birth, and doesn’t include the English, Vietnamese, Irish and other cultural heritage we all bring to the table.
  • Proximity – we’re an hour from the commercial capital and largest city in Australia. We’re even closer to our main international airport, and then an easy flight to almost anywhere in the world. We’re on the a growth time zone – Asia – for the first time in our country’s history. But we’re still small enough so that more than half of my staff walk to work each day. Less time commuting to work, markets, investors and clients means more time to spend either building a world-class company, or enjoying life with our family and friends.

For these and a litany of other reasons, I think Wollongong stands a great chance of becoming a technology and startup powerhouse, in much the same way that Waterlook in Canada has become a powerhouse on a global stage and reinvented their economy at the same time.

So, how do we make it happen?

Next Steps

The most important next step for all of us is to start to raise the alarm. Unless our city wakes from its slumber to realise the platform it is dozing on is on fire, we’re going to end up like Detroit – so hollowed out, broken and depressed that things will get better only because they really can’t get any worse. If we waken the community now, and start an honest debate about our future, we might be able to pull off a Waterloo; even if we fail, we won’t be any further behind than we are now.

To facilitate this, I’d love to see something similar to Melbourne’s Wheeler Centre here in Wollongong. Imagine something led by the Mercury, which makes use of our newly refurbished Town Hall, to facilitate the debate.

Let’s give our elected representatives some ammunition to take to Canberra and Macquaire St.

Let’s learn from the successes of others. Action, cooperation and agility is much more important than a big overarching plan.

Let’s encourage the University to keep building its relationship with Waterloo so we can benefit from their experience.

Let’s look at ways to supercharge our new and emerging industries. Tourism, financial services, technology, education. We need to focus on the industries that grow the economic base and bring jobs, income and prosperity into the region. Health and Community services, which have grown a lot of the years deserve our appreciation, but they don’t grow the economic base – they exist only if the economic base can be taxed enough to pay for them. When it comes to technology, the closing comments in my 5 Pillars of Tech article provide a bit of a blueprint; I’m sure Greg Binskin can probably provide his own specific advice for the tourism industry.

Whatever we do though, we need to remember, if we want to keep getting what we’ve been getting, we should keep doing what we’ve been doing. We need to do more. We need to do better.

We’ve got so much potential – to rob our children of the opportunity they deserve to have, and consign ourselves to the fate of a slowly decaying industrial town mired in depression, disadvantage and disappointment for merely a lack of action is just not good enough.

5 Pillars of Tech

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Aside from my work as an entrepreneur with Internetrix and Hiive Systems, I’m also pretty active in my community as a board member of Regional Development Australia (Illawarra).

The Board of our RDA is made up of some pretty impressive people from lots of walks of life, leaders and achievers with very diverse and interesting perspectives. For a range of reasons, I’ve generally focused my efforts around projects related to technology, entrepreneurship and to a lesser extent youth issues (I’m the youngest face around the table, but at 31 I’m not what you would call representative of youth anymore unfortunately).

Anyway, I’ve been invited to speak at a few things around the traps recently as a bit of a champion of the sector, and often people want to know a bit about the shape of the sector. While the team at IRIS have great statistics, the perspective they’re looking for from me often relates to how they can help, work with or engage with the sector – they’re more interested in colour, experiences and challenges than numbers. Over the course of doing a few of these lately, I’ve come up with the following way to explain the 5 Pillars of Tech from my perspective, at least as they apply to a regional setting like here in the Illawarra.

  1. The Smiths
  2. The Firemen
  3. The Suits
  4. The Scientists
  5. The Startups

The Smiths

The Smiths, as in “Blacksmith”, are generally speaking services companies. They are labour intensive, are based in the region, are privately held and your classic example of an SME. They derive the majority of their revenue from the area, and they range from one-man-bands through to more established local players like AVC, Unitech and Accent. They sell to businesses (because B2C is largely uneconomic in a professional services context today).

Because the barriers to entry of setting up an IT business are laughably low – you just need to know more about technology than whoever your intended client is – this sector often has difficulty playing nice together. It isn’t at all uncommon for a company to start out doing anything someone will pay for – websites, cabling, networks, custom application development, training, you get the drift – which creates problems because in a small market that has a reputation for being frugal, companies in this category are almost always fighting for scraps. The big money – what there is of it – usually goes to the Suits, or is kept in house to feed the Firemen (who often aren’t that capable at obtuse tasks, but the desire for job security and information asymmetry with management means this often doesn’t matter, or isn’t known until too late, if at all).

So, what can we do to help the Smiths develop their businesses and their contribution to the economy are? There’s lots of things, but the two that stand out are:

  1. Connecting with potential clients – particularly the ones with budgets and an investment mentality that value advice – to get to know them a little better and to give them a look in on the projects they’re doing.
  2. Fighting the hate – the fact so many of these businesses are fighting for crumbs and depend on new projects and clients to feed their families next month makes them very competitive. This is natural in markets, but the problem with IT (as opposed to other professions, like legal, financial, medical) is that there aren’t really anything that makes it clear you’re complimentary, not competitive. Also, since people are desperate and hungry when they’re getting started, the first time you find out about a new player is often when they’ve nabbed one of your clients (and then proceed often to screw up the project), or even worse, a loyal client shares the stories the new player has been telling to try and steal the business. This has happened to me a lot over the years, and with a first impression like that, it is often hard not to write someone off.

The Smiths play a really important part in the ecosystem, particularly in the Illawarra, in that they provide a great way for people to get started. Often businesses you’d class as a Startup are actually running off the profits or at very least revenue earned by the founders being part time Smiths, part time Startups.

The Firemen

The firemen are technology professionals who work on a full time basis inside companies large enough to have IT departments. As with all larger organisations, there’s a fair degree of difference between the awesome world class experts on one side, and the plodders who’re just there for a paycheck on the other.

One of the unfortunate things for the Firemen is that in almost all cases, they’re seen as a cost centre in the company, someone who works hard to keep the lights on and the business running, but they don’t get showered in praise for corporate performance, they’re rarely seen as strategically critical to the business and if things break or stop, everyone looks at them like they’ve screwed up. In this sense, they’re more like the firemen on a train than the ones on a big red truck (but they’re often racing around the organisation putting out fires – Lulzsec anyone?)

How can we help the firemen contribute to the value our sector provides to the economic base? It is a bit tricky, since they’re not driving the trains they work on, but there are probably two things that can make a difference:

  1. Skills/knowledge development – if you’re part of a small team – or all by yourself – in a larger business who doesn’t really care about IT until it all goes wrong, then you tend to be pretty professionally isolated. Technology moves really fast, and even if your business doesn’t, staying sharp and current can only be good for your organisation, as well as your career prospects. Regular lunch style events, especially where you get exposed on a professional and social level with the other parts of the industry can help reduce the isolation and will hopefully spawn new ideas that add value to the company.
  2. Helping the best ones become startups – there are some people who’s skills and talents are that could, that potentially world class, that keeping them shovelling coal in the cab of the steam engine isn’t the best result for the industry and the region. Things like Startup Weekends (where the top quality folks can have a taste of what startups are all about without having to burn their boats), and encouraging participation while they’re Wantrepreneurs at things like Silicon Beach drinks will be critical.

While the plight of the Fireman isn’t very glamorous, firemen, scientists and to an extent suits have all been critical to the development of world class, high performing technology sectors. Boulder Colorado has lots of firemen working in their aerospace, health and education sectors, many of whom spin out and join things like TechStars to build their own startups.

The Suits

The Suits have a lot in common with the Firemen, but have the distinction that they are working in technology focused businesses who’s clients are mostly (all) based outside the region. This sector contributes a lot of grow the economic base of the region – because they’re bringing in income by exporting expertise of their local staff – and most of the time, these sorts of businesses are imported, not built. Local examples include CSC (who now earn >50% of their income from clients other than the BlueScope and OneSteel operations here) and the new Mphasis operation that the University of Wollongong has worked so hard to bring to the Innovation Campus.

When asking how we can help the Suits to grow the economic base of the region, the answer is simple (since we have so few of them): we need to attract more of them. In this sense, there’s probably three different things that can be done:

  1. Hunting them – this is where the University of Wollongong, the Council and Industry and Investment, and the efforts that they make on an ongoing basis at great expense (is Craig Peden in the country? Probably not – he’s out hunting in the subcontinent).
  2. Welcoming them – if one hunters (who we should now think of as suitors, since they will never close a deal without bringing them here to “meet the family”) brings home a new date, we should make sure the city and its industry is in a position to roll out the red carpet. Focus on the positives. Tell the good stories. Don’t take them to Bellambi. All the basics. And whatever we do, we need to make sure we never whinge, bitch and moan about our own lots in life when we’re trying to help one of our brothers impress a girl with how cool the new (potential) family is.
  3. Evangelising the city – in our own work and our own technology circles, we should do what we can to evangelise the city. One of our big advantages is our beautiful natural environment. Take photos and try and make people jealous. Beat the drum for the city when appropriate (my Silicon Beach friends are groaning right now at mentioning this. Again). We live in a beautiful city. You can walk to work, and if you commute, it will almost certainly take you less than 30 minutes. Our staff turnover in this city is 10 times less than Sydney. Our University turns out one in 7 technology graduates in the country. We’ve got a lot of be proud of and legitimately evangelize. Get out there and spread the word.

The biggest problem with the suits, unfortunately, is that we’re not the only ones hunting them. The competition is fierce, and as a country we’re suffering a nasty bout of Dutch disease. While the amazing efforts by our hunters need to be applauded, to assume that we’ll be able to have Suits alone transition our city from a coal and steel town to a high tech powerhouse would be very very dangerous and naive.

The Scientists

The Scientists are a particularly interesting group. We’ve got some incredible researchers at the University of Wollongong, and if you look at places like Waterloo in Canada, a lot of their strength and growth has come through commercialising, if not pure research, then by smart research minded folks going out and becoming The Startups. In our region, I can only really only think of one example – iTree Software – who you’d consider as being in this category so far.

The path to commercialisation for a university is a very very very tough one. The reasons that someone chooses a career in research – and the way they’re rewarded and recognised, by sharing rather than protecting knowledge – create some very strong tensions and limit the ability for a lot of scientific endeavour to be able to make a difference to the economic base of a region in the short or medium term. This isn’t to say we shouldn’t try – we definitely should, and it is fundamental research that led to the initial successes of Silicon Valley, the birth of Cochlear here in Australia, etc – but this is more of a long term play where better research, and perhaps even a spin-out company that commercialises it and employs lots of people can happen, but like the Suits, it is a bit out of our control the speed that this happens with.

The Startups

The last pillar of the tech industry as I see it is the Startup. While the Startup could look to an outsider to be the same as one of the Smiths – and often they moonlight as a Smith to pay the bills – a Startup is a very different creature.

Unlike the “services” focused nature of a Smith, a Startup is product focused. They’re often developing software (although hardware is still possibly, it is at least an order of magnitude harder to do, and requires a lot more capital than you can usually find in Australia.

The Startup is globally oriented – they might not be selling internationally, and their first 4 clients might be companies who share the same building as them, but generally speaking, your startup is trying to solve a niche problem in a new way.

By being product focused, often software-based with a zero marginal cost of production, a Startup is also highly scalable. With more than a billion people online now, and the growth in smartphones and their associate app marketplaces, distribution has never been easier or less tied to your geographic location. In this sense, being a city of a quarter of a million, in country with only 22 million (which makes us a flea on the back of a Chihuahua riding on an Frigate) doesn’t have to be a critical disadvantage.

The region actually has a reasonable track record of producing Startups. Infocomp, a true startup that developed and licenced software to some of the biggest names in global finance is just one example. They managed to live through the incredibly long sales cycles and risk aversion of their target market, selling a very very important software platform to conservative companies, all from Wollongong. Another example is the team from Oasis Asset Management, who built an incredible tech focused business, also for the financial services sector, all from here in Wollongong. While they’ve had to move to the US to raise funds, Stuart and Anthony, UOW alumni started Grabble and are kicking goals and showing that a couple of local lads can stand tall amongst the best in the world in Silicon Valley. I’m working on my own startup, and things are coming along well with our product, AffinityLive.

When it comes to the role that Startups can play in contributing to the economy of the region, the best thing about them is that they’re easy to start, they harness the things we have – smart people, lowish costs of living – and their development and cultivation is within our control.

They’re also great job creators – 20 companies with 10 staff creates the same opportunities of one Suit that the hunters bring in – and even if the companies fail, the experiences, lessons and skills developed by getting out there and doing it are incredibly valuable, whether the founders choose to do another startup, or join the ranks of the Firemen, Suits, Scientists or even switch back to be a Smith while they come up with their next idea.

What sorts of Startups should we be encouraging here in the region? My criteria/list for the ideal startup to be cultivating is as follows:

  • Globally oriented – we’re in a small market. We can use our local region, or our proximity to Sydney to help in the early stages of validating an idea and set of business hypotheses, but unless your Startup has a globally oriented mindset – you want to be the best in the world, and see the world as flat – you’re just not doing it right.
  • Highly scalable – as they say in The Social Network, “A million dollars isn’t cool. You know what’s cool? A billion dollars“. If we’re trying to really move the needle, we should be aiming high. The Startups we cultivate should be highly scalable.
  • Capital efficient – one thing that the region – and in fact the entire country – suffers compared to other places to build a startup is our access to capital. Raising seed or early stage money in a nation where our wealthy investor types know a lot about rocks, retailing and residential development means high-risk, early stage technology struggles to attract much investor interest. So, whatever Startups we cultivate, we need to accept that they will need to live in a capital constrained world.

So, what do we need to do to help this sector to grow and contribute to the economic base of the region? There’s a few things:

  1. Evangelising the opportunity to potential entrepreneurs – what did you want to be when you grew up? I’m pretty sure it wasn’t an entrepreneur. If I had a dollar for every time some guy in his mid 40’s looked at me, sighed, and said “I wish I’d started my own company when I was in my early 20’s, when I didn’t have financial responsibilities of kids, when I had more energy and youthful ignorance”, I’d be rich by now. Our education system, because of its roots in an industrial-age economy, is designed around creating employees. This is fine – because entrepreneurs are a small subset of the people who need to come together to make something happen – but the problem is that is almost never talked about or evanglised to our best and brightest. This needs to change. We need to get this story out in front of our best and brightest, show them how others just like them have done it, and then we’ll increase the number of people starting out on this journey.
  2. Supporting the early phases of startups – much like an infant child, and new Startup is a very very fragile. They are also very fast learning. They need advice, nurturing, and in some cases protection. If the barriers to starting include entering into a 5 year commercial lease, signing complex licencing agreements and spending thousands on professional advice and company registrations, you’re going to turn a lot of people away. A new breed of incubator, that is focused on incubating people and ideas, not selling square metres of office space is revolutionising the seed stage of startups around the world. Watch this space for more in the near future.
  3. Creating a startup community/culture – the other thing that we need to do is connect our Startups together. Being an entrepreneur is lonely. You face all sorts of challenges, and the usual places you go for advice – friends, family – are probably not going to be much help in the same way as if you had a problem with a bad boss or relationship hassles, the sorts of things most people have experience with. Creating a community of entrepreneurs, bringing them together to share their challenges and successes is critical to Startup success.

The Startup sector, more than any other, promises to be the most likely and most achievable source of the kinds of change our industry needs to help drive and lead in the region. The challenges are many, but the costs and barriers of getting started are relatively small. As they say, we need to JFDI.

Conclusion

The technology sector, even in a relatively small and tightly knit place like the Illawarra, is a very diverse creature with lots of needs amongst its actors. With our small undeveloped land area, strong university and international linkages (Mascot is close, and we have a very multicultural background which is great for being globally oriented), the technology sector – along with tourism and financial services – is where we need to be leaning to ensure our city has a strong future.

What do you think? What do you need? Feel free to share your thoughts in the comments or email me directly – geoff.mcqueen@gmail.com.

Restarting all supervised processes on a server (daemontools)

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A quick one that hopefully my geeky friends, followers and random Google searchers will appreciate – a way to restart all services being managed by the popular Daemontool’s supervise package on Linux.

We use supervise extensively for running our various custom daemons that power AffinityLive, and because we’re doing very rapid development releases we’ve recently been seeing some problems with module code at the heart of our app being updated, yet our various daemons not being kicked, and thus using out of date code. There’s the great svc command that you can use to kill a particular process, but doing them all as bulk doesn’t work (unless you’re in as the fully fledged root user, but that isn’t a smart thing to do on live production systems).

To solve this, I wrote a one-line bash script. While not tricky or complicated, the tight permission controls over the supervise directories made it a little more fun than the hello world examples out there.

So, if you want to restart every single process being supervised on a particular server, here’s how:

for i in `sudo ls /var/lib/service/`; do sudo svc -k “/var/lib/service/$i”; done

Of course, if you don’t want to be so brutal as to kill your supervised process, and instead want to send it a HUP or an ALARM, or, if you want to stop all supervised processes for some reason, you can sub out the -k for the other arguments detailed on the svc man page.

Hope that is useful to someone else out there sometime!