On moving to 'The Valley'

I’ve been an entrepreneur for over a decade, and I’ve been working in tech that entire time. But just this last week, I made the move. I now live in Silicon Valley.

Why do it, what does it mean for my life, my businesses and my team in Australia, and does it make me a traitor or a sellout to my pretty public ambitions to build the Aussie startup tech scene in general, and the scene in my home town of Wollongong in particular?

Why move, why now?

So, the first question is probably – why move? The answer is actually very simple and very rational – because I needed to.

Hiive Systems, the startup that I spun out of Internetrix a couple of years ago, needs the money, and this is where I’ve got the best chance of getting it. For the last couple of years, my co-founders and I have been developing and improving our product, AffinityLive, and over the last 6 months we’ve had it in public beta. We’ve been getting a lot of interest in the product, but so far we haven’t tried to market it at all. On startup parlance, we’ve been an engineering focused startup – of the 6 full time staff currently in Hiive Systems, 4.5 of them are developers.

But now it is time for us to take the product to market, and while it is a business product that our clients will pay real money for (and in some cases already do), we need to ramp up our costs to hire people who will be dedicated to sales and marketing and partner development and other non-engineering things. Oh, and as my team will tell you, we could certainly do with some more developers too!

Raising up to a million dollars in Australia for a high risk tech venture – and remember, they’re all high risk – is very hard work. I was at an excellent event called Funding Connect run by I&I and Slattery IT, and I was flabergasted that there were Australian angel investors there explaining that they funded Angel rounds for equity for $200K. Doing a round for equity – going through the negotiation around valuations, issuing stock, dealing with all the lawyer related costs – isn’t just time consuming; it also costs serious lawyer money, perhaps as much as 20% of the round.

Conversely, I’ve got friends who’ve raised over a million dollars in a week or two from angels without dealing with valuation or lawyer equity issues – they’ve used a form of debt called a convertible note, much more appropriate for early stage sub million dollar deals. Sure, they’re rockstars with exits and Y-Combinator cache, and I’m under no illusions that things will be quick or easy with what I’m doing – thanks very much, crazy world markets – but I know for sure my chances here are a lot better than back in Australia.

So, with the combination of a product coming out of public beta, increased capital requirements in the business and the reality being that the market here in Silicon Valley hasn’t been this favourable for raising money in a decade have all come together to make now the right time.

What does this mean?

Moving countries isn’t trivial. I mean, it is a lot easier in these days of broadband internet, Skype videoconferencing, smartphones and the rest of the technology that I’m into up to my eyeballs, but it still has some serious challenges.

On a personal level there’s the taking 10 steps back issue. In Wollongong I had a really nice house, I finally had it kitted out with all the stuff I needed, and Charlie Horse Dog and I had a good routine and things going on. Now I’m living out of a suitcase. I don’t know where I’ll be living next week, or next month. I don’t have an office yet either, so I’m now once again a digital nomad without much at all to his name other than a bag full of geekery and a stack of AffinityLive t-shirts.

On a professional note, it is also creating some challenges, but I’m lucky to have an absolutely awesome team in both Internetrix and Hiive Systems. My teammates are incredibly resourceful, show a lot of initiative and have a can do attitude that management consultants would give their right arm to bottle.

The Internetrix business has been more or less autonomous for a couple of years now under the leadership of Dan and Mike, and frankly when I get involved in client projects as anything more than a technical pinch hitter, things tend to end up the worse for it! Things are in great hands.

In the Hiive Systems business, there’s a real sense that this is our chance to do something on the world stage, and everyone is working hard to do their thing. Eamonn and Hugh are stepping up on the product direction front, Glenn is even more the head geek and code monkey than ever, Chris, even while travelling on a rare holiday with her family has been getting up at 3am to do code pushes before going fishing with the family. Another awesome highlight has been Crespo, who’s embrace of everything bold and Aussie is awesome and unparalleled – in his own words, he’s been up for “having a crack” at anything, and doing well at it.

So, what I’m hoping it means is that I can raise some money, hire a team for sales and marketing here in the US so our Aussie team doesn’t have to get up so damn early all the time (and I can get some more help for them on the engineering front back in Wollongong), and that I can throw some resources at growing the AffinityLive without continually raiding the retained profits of Internetrix (which has its own capital investing opportunities in Australia and mainland China).

Playing the long game

So what of selling out? Doesn’t packing up and moving to San Francisco to build the business mean I’ve given up on Australia as a great place to build a startup? Does turning my back on my home town make me a hypocrite, who tries to build a startup culture and evangelizes to get support from the most important institutions in the city, just to leg it just as it gets going?

My answer to all of that is: absolutely no f*cking way.

There are some massive advantages to building a technology startups in Australia, and even more in my home town of Wollongong. While Silicon Valley has a lot of advantages – you can meet someone at a party who can do a deal that makes your startup as a strategic partner, or get introduced to someone at a conference invests millions into your company – it has some serious disadvantages.

Silicon Valley is currently experiencing a massive technology skills shortage; even in the shadow of the dot com crash, the hunger for talent and ability to turn innovative ideas into fortunes was still present. Hiring an engineer/developer here is almost impossible, even more so now. Even in bad times when people aren’t in such demand, the amount of ‘bed hopping’ that goes on in this city is incredible; if you’re not moonlighting – which is kinda harmless and it is great to see smart people testing their hand and learning what works and what doesn’t – there’s a much bigger pressure in the Valley to keep on moving from gig to gig, up one small rung at a time.

While this can be great for people trying to get a start, or moving from a terrible graduate role to something personally fulfilling, it creates a massive problem for entrepreneurs. You’re trying to build a company, and often this means applying the lessons you’re learning in a cumulative fashion, particularly early on. You learn things, you make mistakes, and you keep making things better with each iteration, one improvement after another. Unfortunately, losing valuable talented staff every 6 weeks because Twitter is having a tough time to find someone to manage their spam queue – and your soon to be ex staff member thinks “‘hell having Twitter on your resume is da bomb” – makes it really hard to build, I don’t know, the next Twitter.

Thankfully, these sorts of problems are much less of an issue in Australia. We have a higher level of respect, loyalty and commitment on both “sides” of the employment relationship. And while I think generally that social construct is a bit bullshit and industrial revolution anyway, perpetuated by parasites who earn their living being confrontational for its own sake; in technology, the reality is that you really all are part of a team, and the meritocracy is alive and well, especially in a land with such healthy disrespect for authority.

In my home town of Wollongong, you’ve got some added adventures. I walked to the office today in 12 degrees Celsius winds, blowing at about 20 knots from the arctic, with fog and cloud rolling over the city down to about 200 feet. The sun didn’t come out until 3pm, and even then, Wollongong in winter, beside the sea with the golden beaches and beautiful green escarpment, has it all over this place. Our costs of living are much lower – I was paying $275 a week for a three bedroom house in Wollongong, and I’m about to start paying $650 a week for a single room in a three bedroom house here. Yep, you read that right.

When you’re a startup, and cash is king these lower costs are a real advantage. And while those of us in startup land unashamedly live to work, we also work to live – the ability to clear your head with a dip in the Pacific or a walk in the trees makes a real difference to your sanity.

So, in summary, there are massive advantages in doing a startup in Australia in general, and Wollongong in particular. Lower costs, better and more long term/meaningful teamwork with amazingly talented people, mean collectively that if you’ve got a good idea, good leadership and a lot of luck, you can build something world beating.

But, to really take on the world, you need to take on the best in the world. And sometimes that means being in Silicon Valley. And sometimes it just means taking it to them.

What does this mean for Australian entrepreneurship? I think that is the sweetest part. We’re not the cheapest place in the world. We’re certainly not close to big markets. We’re an ideal starting ground, proving ground, the place where ideas are hatched and great, world class companies can be built. Sure, while capital markets are immature, and distribution platforms mean you need to be near your customers/partners/acquiriers in most industries, the Valley will continue to act as a massive magnet. But I’m hoping – and I believe – that the secret to actually making a difference in the Aussie tech scene isn’t some protectionist, fence the place off mentality, but instead is to embrace the global market, global talent and global capital, and to provide the kinds of experiences, financial benefits and more to your founding team Down Under, so if it all works out they have the confidence to do it all again with their own venture, and if it doesn’t work out, odds are they’ll have been bitten by the bug, have learned the lessons from being close to the failure, and will try their own hand anyway.

This is what I mean by playing the long game. This is a multi-decade plan, which will only succeed with engagement, successes, exits and doing it all again. One startup, one entrepreneur, one great team at a time.

And that, more than any other reason is why I’ve moved to Silicon Valley. I can’t wait to see you all here, or in Australia, or somewhere else on this amazing, abundant and opportunity filled planet again. Soon.

12 thoughts on “On moving to 'The Valley'

  1. Hi Geoff,

    Just read your blog. Brilliant stuff mate. I wish you all the best in getting what you deserve. You are a great example to all Australian business people on how to make business work for you.

    I hope that one day soon you’re dreams will come true and we see you back in Wollongong; teaching the business community how to make it big in the world. Golden opportunity for you so make the most of it.

    All my best wishes mate.

  2. Glad to see you go. I give you 60 months.
    Get your first million, turn it into 10 or 12. 60 months.
    Then take another 10 and do it again.
    Look forward to being able to say I know him when …
    Enjoy the ride.
    Jeff

  3. Many of the same thoughts I’ve had about my decision to move to SF. There are so many aspects of living and working in Australia that I miss, but sometimes you gotta do what you gotta do – for your business or your career.
    More importantly, it’s great to see that you’re able to get past the fear of being ousted back home to take a risk at growing the business. Plus, you’ve found a team that you can trust to get everyone through a (continuously) challenging time. That’s rare; probably nowhere moreso than SF.

  4. Well done on the decision. The Valley is an incredible place. After moving to the Valley we still have 20+ people back in Brisbane… so Australia has done just fine out of it and there is no way we could achieved everything we have without going OS. You’ll have a blast in the Bay Area – it is a great place to live – and it’ll help your startup.

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