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David Burt explains why startups are essential to our standard of living

David Burt is the Director of Entrepreneurship at UNSW, where his team helps students, academics, staff and alumni turn their ideas into a startup. He also serves as Non-Executive Director for RapidAIM, an agriculture start up, Planet Ark, a not-for-profit environmental behaviour change organisation, and Cicada Innovations, an incubator for Australian science and engineering startups. In his conversation with guest host Will Tjo, David discusses how he got started in the startup world, his work with UNSW, and why nurturing the startup ecosystem is essential if the average Australian is to continue to enjoy a high standard of living into the future

Mentioned

UNSW’s Founders Program: https://www.founders.unsw.edu.au/

RapidAIM: https://rapidaim.io/

Planet Ark: https://planetark.org/

Cicada Innovations: https://www.cicadainnovations.com/

Transcript

David Burt: Hi everyone, I’m David Burt, I am the director of entrepreneurship at the University of New South Wales. And there I run something called the Founders Program, and we help any UNSW student, staff member, or alumni go through the journey of exploring if a startup is for them. And if it is we help them get started in the right way and help them get to their first few million dollars of customer revenue or capital raised so that they have the best possible start to their journey.

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William Tjo: Amazing, any favorites that you’ve come across so far?

David Burt: Yeah, in terms of you know, what we do at UNSW, it’s any student, staff member or alumni so each of those different groups of people approaches startups quite differently. So you can have students that start next generation technology companies, a great one is a company called Forage, which helps students have virtual internship experiences. And this was a company that was started in about 2017, 18, went through the UNSW Founders Program and now has raised about $40 million in capital, you know, starting to become a really fast growing global company. It’s a really good example of a student startup.

David Burt: We have another one which is called Bandicoot Imaging, which was started by some image scientist alumni, used to work for Canon’s R and D lab in Australia. But when they closed that down, a few of the engineers got together and started a company, called Bandicoot imaging. So came back to the university and went through the Founders Program as they started their company.

David Burt: And then we also have a lot of really smart scientists and researchers at UNSW, and we’ve helped a number of them start companies including one called Contactile, which sort of, next generation robotics company bringing that cutting edge scientific research and technology into startups.

William Tjo: This is a very broad question, but what do you think makes up the characteristics of a successful startup? Is it just a groundbreaking idea or founders that are relentless?

David Burt: Yeah, so most of the startups that I’ve worked with and continue to work with are started by scientists and people that fundamentally want to change the way something is done in the world.

David Burt: A really great example of that is a company called RapidAIM, which was started by a couple of founders, Nancy Schellhorn along with her co-founders Darren and Laura, and they wanted to change the way that pesticide was used in agriculture. And they had a new technology, which is a sensor device, which can detect the presence of pest insects and they started a company to essentially accelerate the process of technology adoption so that people eventually will use less chemical pesticide because they’ve got more confidence that their pest management strategies are working.

David Burt: And this, sort of the reason I’m bringing out RapidAIM is the example of what does it take to be a successful startup is you have these group of very smart, very motivated, very hardworking founders that want to change the world. And so I think if you get a confluence of the right team, an interesting technology or integration of existing technologies, a valuable market then you’ve started well.

William Tjo: Yep, with what you said before in regards to being a scientist, that sort of peaks my interest. Is it always a prerequisite to have that deep expertise into your startup in order for it to be successful? Is it possible for say a young, passionate founder with not a lot of experience or expertise or knowledge in that particular industry to still be successful?

David Burt: Yes, that’s definitely true. And I think Y Combinator has proven that this many times over and I think what a lot of people forget is when Y Combinator was first getting started. I can’t remember what year it was, but a lot of people didn’t take hypothesis seriously, that you could have a young startup CEO that could build quite a valuable company. And but I think it’s very accepted fact now, that really, with the right team and the right network of support around them first time, young, relatively inexperienced founders can build huge global companies.

David Burt: So it’s possible, it doesn’t mean that it’s likely, still hard. But I think for Australia’s economic future, the more young people that we have starting well in their new companies with the right support means that it’s going to be a better economic outcome for everyone. So yes, first time young founders can build massive globally successful companies. The company Forage I talked about earlier a few minutes ago is a great example of that.

William Tjo: I see. David, you’ve got almost a decade of experience working in entrepreneurship and the startup ecosystem. What drew you to this space?

David Burt: Yeah, so in late 2014, I was working at the CSIRO, which is Australia’s national science agency and was quite interested in the process of research commercialisation. And as part of that, saw some really interesting things happening in the US with a program called the Innovation Corps program or I-Corps program, that was funded by the US National Science Foundation.

David Burt: And really, there was evidence coming out that the great sort of research commercialisation outcomes are happening. There was a guy called Steve Blank who is writing quite prolifically about this method and the success. And so I was looking at that and reading that and along with a guy called Beau Leese we designed on the back of a napkin, a program to help scientists commercialize their science. Sort of give scientists much more of a leadership role in taking a technology from a scientific context into a commercial context.

David Burt: And so that was when I really got quite interested in this process of what role does startups play in science commercialisation and, you know, fortunately a guy called Larry Marshall came along and seed funded it and when he became the CEO of the CSIRO and then we were able to demonstrate some really good evidence that you can help scientists start companies and it’s a really valuable thing to do. Then, long story short, Larry using our evidence that we generated was able to position the ON Program as it then became into the NISA, the National Innovation and Science Agenda that came out in 2016.

David Burt: And then that enabled us to spend about $40 million over five years, taking about four and a half thousand scientists through the ON Program which was this process of helping all of these scientists figure out the pathway to impact for the technology and if a startup company was the right way forward for them and their technology and, you know, we created about 65 new companies through that process.

David Burt: And I think it’s important to note that there was a lot of other things happening at the same time in the ecosystem, especially driven by the CSIRO. That initial thinking done by Beau Leese and a few others, including Bill Bartee and Phil Morle and Larry Marshall resulted in the creation of Main Sequence Ventures, which has had a massive impact on that science commercialisation, research commercialisation space. So, there are a lot of things happening inside of the CSIRO. Small team of people were really thinking about how can we increase the mixing rate between entrepreneurs and scientists to try and get more deep tech companies started.

William Tjo: Interesting, when you say that the ON Program began in 2014, it seems that a lot of the support structures for startup founders began within the last probably decade or so. When you look at other geographies, like in the United States, it happened a lot longer before that. Why do you think we’re sort of late to the party here?

David Burt: Yeah, better late than never. Party’s, definitely in full swing. So, you know, it’s yeah, we took a little while to get there and listen, I don’t have the comprehensive history of startups globally, but I think it’s important to put a flag in the ground and understand that there is a path dependency to a startup ecosystem maturity.

David Burt: And it’s the wrong question to be like, hey, how can we be more like Silicon Valley? Because we’re never going to be like Silicon Valley because Silicon Valley is the dividend of a trillion dollars of U.S. Department of Defence spending. So the fact that the US pursued the strategy for the cold war that it did, it turned to a lot of the universities and industry around that Silicon Valley area that was really sort of, simple way of saying it is intercontinental ballistic missiles, need computer chips.

David Burt: And so the people that they tapped to do the deep technology cycles on how do we design these things? How do we produce these things, really kick-started the genesis of what Silicon Valley is. So Silicon Valley is a dividend of essentially national security policy in the US and you can look at some of the other really interesting vibrant startup economies like Israel or China, and you can see similar links between different elements of national security or national economic policy and really vibrant startup sectors.

David Burt: So in terms of why is Australia a little late to the party? Well you know, we come from a different context. We’ve been incredibly lucky country, we’ve largely been able to become a first world high standard of living economy by digging things out of the ground.

David Burt: So what’s gotten us here has been great and fantastic, but that’s not what’s going to help us be prosperous in the future. So yeah, Australia’s a little late to the startup party. But we’re here now and it’s growing well and it’s believable that if we’re able to keep the momentum going and keep growing, we’ll be able to really ensure that at the end of the day, Australia’s living standards are maintained at that high level. That’s going to come from, you know, the contribution that the startup sector is going to make to the economy.

William Tjo: Yep, I get your point. It’s not something that you can easily just copy paste. Every single geography and their startup ecosystem had a completely different history and why they came about, and Australia was just different. You mentioned that if we continue on this current tangent perhaps we’ll have a better standard of living and so on what excites you about the next 5 to 10 years for our startup ecosystem?

David Burt: Yeah, I don’t know about better, but maintenance would be great. I think Australia already enjoys one of the best standards of living in the world. And I think what has underwritten that has been generations of resource extraction from the Australian economy, like from, kind of the Australian geography. And so, that for a number of different reasons, there are a number of trends that are working against that sort of geographic dividend, underwriting high, relatively high standards of living. And so for me a key question is how do we maintain high standards of living for all Australians and sort of startup sector as a really believable contributor to that.

David Burt: And so in terms of what’s exciting, I think we have a world class research sector. We have a world-class education sector. We have a relatively free of corruption, commercial environment, we have a democracy. So we actually have all the fundamental elements that make for an economy and a society that’s really supportive of and conducive to startup formation.

William Tjo: I want to change gears a little bit, in terms of who bears the onus of supporting this ecosystem you briefly mentioned in Silicon Valley, it was a trillion dollars being poured into universities, those sort of research areas. Then is it the government that bears the onus of creating this system or an ecosystem?

David Burt: Yeah, this is where it’s important to recognize that having a vibrant startup ecosystem requires a lot of different things. One of the most important is people that step up to be founders. People that step up and say, I am going to take the risk to quit my job, to mortgage my house, to start a company that has a relatively high chance of failure.

David Burt: And so on an individual level, becoming a startup founder is economically just sort of the expected value of that decision is lower than going and getting a job, frankly. And so at an individual level, starting a company is a deeply irrational thing to do. Now from a whole of economy level, you actually want as many people starting companies as possible, within reason because that’s how you get economic development.

David Burt: And there’s really good research that shows the vast majority, if not all of net new jobs in an economy are created by firms less than 10 years old. That includes more traditional SMEs as well as startups. But the sort of takeaway from that is there’s a lot of evidence that suggests you need people stepping up to start companies.

David Burt: That could be a cafe, that could be the next Atlassian. That’s where job growth comes from, that’s where skill retraining and refreshing comes from. And so here’s where we get this tension between at an individual level, starting a company is frankly an irrational thing to do, but in an economy level, we actually want to see many people stepping up to start new companies. So how do you reconcile that?

David Burt: It’s essentially a bit of a tragedy of the commons that creates the bubble of permission for the role of government. We’re looking at that and we can go, we can describe this as a market failure. And so there is a role for government to step in and deliver some degree of support, economic support for those people that are stepping up to start the next generation of companies. And we see that, we have some good settings around that in Australia.

David Burt: You can see that in terms of the tax incentives, some of the discounts on fees, you don’t have to pay payroll tax until you breach a certain threshold of head count or salary paid in your company. And then we also have the role of the universities. Universities are an extension of government. They’re government owned organisations. And so I would suggest that the government sector has a powerful and needed role in supporting and nurturing the people that are stepping up to start the next generation of companies.

William Tjo: How about in terms of successful founders coming back to develop the ecosystem and tied to that question is, do you think that government support into our ecosystem is inefficient? I come from the perspective of, the government just tries to solve this problem by throwing money at it. Developing this accelerator and this incubator and just funding when it, it doesn’t really create successful startups.

David Burt: Yeah so two very separate questions there. The easy one to answer is successful founders coming back and being involved in helping the next generation. And that is absolutely necessary for the ecosystem, startup ecosystem in Australia to be successful. So regardless of what you’re doing as a practice, if you view being a great startup founder, the same as being a great doctor or being a great engineer, having mentorship and guidance from those people that have done it before, and sort of gone through that hardship and that struggle and have lessons to pass down and have networks to open up and plug people into, that’s absolutely required.

David Burt: And so I think there has been an element of certain successful business people in Australia have a great economic career from starting a company and then kind of go dark and go live on an island or a yacht somewhere. That’s definitely bad for the startup ecosystem.

David Burt: But I think you sort of look at the current generation of startup founders that have had a degree of success over the past 10 years. And most of them are showing up and giving back, which is fantastic. And that’s where again, universities can play a powerful role there. We see a lot of alumni wanting to give back. So with the Founders Program at UNSW really only exists because of philanthropic donations of people from the UNSW community. Some of them alumni of the university, others actually aren’t alumni of the university, but just love what we’re doing.

David Burt: Michael Crouch, Dr. FF Wong, Maha Sinnathamby, Chris Baxter, all of these people have donated to UNSW like millions of dollars, like over the past 10 years about $20 million of donations to support the next generation. It’s not just their money, it’s their time and their networks as well. So successful founders giving back with their expertise, their mentorship, their money, is absolutely necessary and needed.

David Burt: In terms of government support for the startup sector, it’s a much more nuanced and difficult topic, but by way of analogy, government spending is always going to be inefficient. It’s just a matter of making it it more efficient over time. And probably the best analogy to draw is something like the Pharmaceutical Benefits Scheme.

David Burt: So the government will subsidize medicines that have a really broad based, powerful impact on the community. So if you’re a diabetic, don’t quote me on this, but I’m pretty sure there’s some element of government subsidy for those people that need insulin. And if there’s not, there should be because a lot of people need that medical treatment.

David Burt: I’m not a medical health expert, whenever I talk about this is dangerous, but the principle is there, the government now, in the way that the government operates that scheme, I’m sure there’s some inefficiencies, but the PBS has been running for decades as far as I’m aware and I think that’s a pretty good government intervention. And so yes, you can always find inefficiencies, but the key thing to measure is what is the impact of that spend and is that spend getting more efficient over time? And that’s the important principle to measure government by.

William Tjo: So in essence, government spending will always have a degree of inefficiency, but it’s just if they’re continually improving over time, it’ll just get better and better.

David Burt: Yeah and that’s where data is really helpful. And probably one of the things that is weakest at the moment, in the Australian startup ecosystem is a lack of data. So we had a really great mechanism for collecting data called Startup Muster. But the last time that organisation was funded to do its data gathering and analysis, I think was 2017, 18.

David Burt: So we are struggling from a lack of data, and frankly, I’m not able to have an informed opinion about whether government support for startups is efficient or not at the moment, whether it’s getting more efficient or not, because we don’t have good data on what’s actually happening in the ecosystem at a granular enough level to be able to sort of pass judgment on government policy.

William Tjo: What would you say as a community and an ecosystem we could still be doing better today?

David Burt: Yeah, it kind of depends on what position you hold in the ecosystem. So if you’re a startup founder, build a great company, if you’re a successful startup founder show up and mentor and invest back in the next generation. If you’re a stakeholder then design or implement a policy that’s going to support the sector. So it really depends on what seat you occupy on the bus.

David Burt: From my perspective, I’m super fortunate to be sort of running this startup support engine for the University of New South Wales. And we show up and we try and gather a community together, and help the next generation start a company. And that looks like everything from running very early stage curiosity events that help people ask themselves the question of what is a startup? Why should I care? Is it for me? Like we need every single 18 year old in the country to ask themselves that question, is a startup for me?

David Burt: Is this something that I should be interested in, should I care about? Is this a career? And then for the small percentage of people that answer that question in a positive way and go, yes, I’m interested in a startup. They need education, they need events and experiences and to be supported. So in terms of what we can to be doing better, like everything. But that’s too big of a conversation. Think people need just consider what resources do they control or influence?

David Burt: What incentives are there and then find ways to increase the impact, the positive impact that they’re having on supporting that next generation of startup founders to start and grow great companies.

William Tjo: Before you mentioned, helping 18 year olds discover whether entrepreneurship was the right path for them, and then you said that out of our small percentage. Why did you mention small? Do you think that there is not enough 18 year olds seeing entrepreneurship as a viable pathway as a career?

David Burt: Oh I think I can probably prove that not enough 18 year olds are asking themselves is a startup for me, but I think the same is true for 19 year olds, and 20 year olds, and 40 year olds and 50 year olds. There’s not enough of a support there for people to consider the question. And that’s because there is no business model that’s successful around that.

David Burt: You know, I get a little upset at the sort of number of people that sort of are selling education around entrepreneurship and telling everyone that you can be a founder. And so I think the more nuanced way to look at the equation is great startup founders can come from anywhere, not that everyone can be a great startup founder.

David Burt: And that’s both a skills and personality piece, it’s also a stage of life and there’s a lot of moons that have to align for things to go well. And so I think, I’m a big fan of entrepreneurship and startups, but I meet a lot of people who really want to be a startup founder for identity reasons. You know, they’re like, oh, this seems like a cool thing to do. And that’s not enough. That’s not a good enough reason to go start a company. Like I’ve seen people lose their houses because their company hasn’t worked.

David Burt: So you don’t want to jump off that cliff inappropriately. But I think in general, there’s not enough of a narrative and not enough support to help anyone regardless of age or background consider is this startup thing for me. And again, that’s why government has a role. That’s why the University of New South Wales has a powerful and effective role, working at the earliest stages of people’s journey.

David Burt: Like, if you choose a great venture capital firm, like Main Sequence Ventures, they don’t have the business model to go into a high school and talk to every student about entrepreneurship. Now they might drop in now or then, they might find a way to communicate with that audience at scale using the newsletter or video technology, something like that. But they’re not going to be able to give those students one-to-one attention. But for any student that decides to study at UNSW, we’ve got the resourcing, we’ve got the model that we can interact with all of them on a one-to-one basis.

David Burt: So the Founders Program at UNSW helps about 5,000 people a year and we can do more cause a lot of what we do is connect the next generation of founders so that people are a couple of years ahead of them or to a great a mentor who’s part of our alumni network. It really comes down to this question of who can interact with the next generation. That’s the lens that I look at it through because I’m at the University of New South Wales. So just depending on your position in the ecosystem, it’s a different way to answer that question.

William Tjo: Lastly David, if a new entrepreneur or founder came to you and given all your experiences, mistakes and so on, what’s the one piece of advice that you would give to make sure and help their startups succeed?

David Burt: Yeah, it’s tough to come up with one piece of advice, but you know, I think instead of a piece of advice I’d give them, the conversation I’d look to have with them is to really ask them and be curious about why they want to start a particular company. What is it about going on that journey that is motivating for them? Because I think the, I’ve worked with hundreds of founders over the past decade and the thing that all the successful ones have in common is they have a powerful, intrinsic motivator for why they are building a company.

David Burt: And that looks different and there is a financial element to that as well, but the dominant element of that intrinsic motivator, the thing that gets them out of bed every day, even when it’s consistently hard is because there’s something quite motivating and authentic and valuable about that company.

David Burt: Usually changing something about the world, like come back to the example of, you know, Nancy and Darren and Laura with the RapidAIM, they want the way that pests are managed in agriculture to be different. They want much less chemical pesticides used in agriculture, and the way to do that is to start a billion dollar company that helps farmers change their land practices.

David Burt: So the less about a piece of advice and more about a conversation around, why do you want to go on this journey? What does success look like? Why is that worth struggling for? And if they have a great set of answers to those questions, then I think that’s a really good signal that they should keep pursuing this path of a startup and entrepreneurship as a way forward. If they don’t have compelling answers to those questions, then it’s a bit of a signal to go back to the drawing board a little bit, before you jump off the cliff.

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Credits

Production Credits

  • Andy Jones
  • Will Tjo
  • Alex Carpenter
  • Alan Jones
  • Oliver Gaywood
  • Aleshia Spencer

Special Thanks

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  • Alan Jones
  • Murray Hurps
  • Maria MacNamara
  • Peter Davison
  • Pete Cooper

Music Credits

Music by Lee Rosevere

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