Transcript Synced · select any line to jump ▾ 0:00 Adam Spencer: Let me tell you about our partner, Teamified. If you need to build a top-notch team quickly, Teamified is your go-to solution. They not only provide fractional CTOs, they can also do contractors and even remote team members tailored exactly to your needs. And whether you're looking for expertise in the Philippines, India, or Sri Lanka, Teamified has you covered. What's amazing is that Teamified uses a blend of AI and human expertise to cut hiring times by 50%, cent. Their platform handles everything from automated onboarding to day-to-day management and even performance tracking. You can also handle rewards and recognition, buy equipment, and order training all through their platform. Simplify your hiring process and get the best talent fast with Teamified. Check them out now and transform your team. Go to dayone.fm/teamified. That's dayone.fm/teamified. 0:54 Bruce Tulloch: T-E-A-M-I-F-I-E-D, and get started today. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you, NTP, for helping us bring helpful content to founders and the startup community in Australia. Back to the interview. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you, NTP, for helping us bring helpful content to founders and the startup community in Australia. Back to the interview. 2:46 Speaker C: Hi, I'm Adam Spencer and welcome to Day One, the podcast that spotlights Australian startups, founders, and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell the story of Australia's most inspiring founders and how they built their companies. You're listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. On the episode today, we have— 3:18 Speaker D: Hi, I'm Bruce Tullock. I'm the co-founder and managing director of Bitscope Designs, an Australian company that designs and manufactures IoT and cloud computing solutions for industrial and educational use around the world. I'm also Chair of The Studio Limited, which is Australia's first media tech incubator based at the Sydney Startup Hub, and Director of New Technologies at Jetpack Aviation, an innovative Australian-owned business that has, was the first to successfully develop and fly the world's first jetpack around the Statue of Liberty in New York, 2015. Beyond these roles, I'm passionate about improving outcomes in education with creative use of technologies for learning in the fields of science and technology, engineering. I'm arts and maths, often referred to as STEAM, sometimes STEM. Via Bitscope, we collaborate with the Raspberry Pi Foundation developing products and services to teach coding and projects of that sort, and we also use them in our industrial applications. And more recently, also with Bitscope, I launched and developed a platform to seed or start the ecosystem in Australian hardware manufacturing businesses. So in a nutshell, That's who I am and what I do at the moment. Fairlight was an Australian company founded by Peter Vogel and Kim Ryrie, two young engineers in the late '70s, and I joined Fairlight in the mid-'80s, and a large part of my early career was both working for Fairlight initially and then in joint venture in a company that I set up where we developed audio post-production systems for the film and television industry in conjunction with Fairlight. They developed editing systems, we developed dubbing systems, and the highlight of that was we successfully got quite a presence throughout Hollywood, the major film studios, and we secured an Academy Award in Science, Technology Award in 2001 for, as they put it I think, transforming the way Hollywood makes sound for picture. And that was the development of a 24 and 48-track digital audio dubbing system that replaced building-sized rooms full of older equipment. That was what we spent most of the '90s doing. John, at that time, was the CEO or the managing director of Fairlight in the United States, based in initially Culver City and subsequently elsewhere close to Hollywood in Los Angeles. 5:43 Speaker E: Talking about the studio, what drew you to being involved? 5:49 Speaker D: It was sort of partly by accident and quite serendipitous in a way. Chantal is someone I've known since school days, but we had for about 3 decades gone our separate ways, and we bumped into each other through mutual friends, who's in fact my partner. And she was talking about the desire to establish an incubator and accelerator platform for businesses in the media and creative technology space, because such a thing did not exist. And she'd done a— her master's thesis exploring how Warner Brothers had done it in the US and said, "Let's set one up here." And she invited me, based on my experience in the audio post-production music industries from the '80s and the '90s, to join her. And so I joined the studio as a member when we founded the organisation, when it was just a series of PowerPoint slides. And then it was an interesting story the way the studio was created because Chantal had a very powerful vision. She pulled together a number of people, myself included, recruited, put together an advisory group, but then started building through a media mailing list and then through regular events that were hosted at Fishburners a large community. And then off the back of that pitched for and was one of 4 successful respondents to the state government's request for those interested in establishing incubators in what was to become the Startup Hub and the only startup for startups in the Sydney Startup Hub. 7:16 Bruce Tulloch: Mm-hmm. 7:16 Speaker D: And so we were founded in 2018, opened by then Treasurer, now Prime Minister, Scott Morrison, and we commenced operations when the Sydney Startup Hub commenced operations, and we've grown from 0 to 90% within a year, and we've now managed to, well, as of the last financial final report, incubated more than about 150 startups, collectively raised more than $41 million, I think it's closer to about $80 million now, created hundreds of jobs across New South Wales, and held in in that time more than 300 internal and external events, activities, workshops, masterclasses, established women's, Studio Women's Network, pitch to investor nights, founders forum. All these sorts of things are key to the operation of any incubator, but I think the interesting thing about the Studio is bootstrapping something like that from the ground up in a very short space of time was an interesting exercise. And my role at the moment has been for the last 2 years as chair of that organisation. 8:10 Adam Spencer: Okay. 8:10 Speaker E: I'm sure we'll come back to the studio and Sydney Startup Hub a little bit. Yep. But when would you say you first really got involved in startup land, as it were? 8:24 Speaker D: Probably around 2010, 2011. Prior to that, certainly, I mean, I, Bitscope is the second business that I had founded. And so I had done this before. I would consider consider Fairlight itself back in the '80s Australia's first hardware incubator, even though it was a company, the number of founders that have come from employees at that organisation to successful businesses since then is quite stellar. But in terms of my direct involvement with the Australian startup ecosystem, it really came in through the door of education. So Bitscope has always been a company that developed products where we published pretty much everything we do and how we do it we were encouraging others to join us in a development capacity. We focused on those working in research development universities, engineers working in R&D departments in large corporations. That's what we did since the company was founded in 1999. But in 2011 or '12, we heard about this interesting little gadget appearing in the UK called the Raspberry Pi, a little credit card-sized computer developed by a guy called Evan Upton. Mm-hmm. To, in his mission, was to improve educational outcomes in computing in the UK, and that turned out to be a radically successful business. They've gone through 4 iterations and we're partners with them and have done a lot of work in developing technological solutions for, based on Raspberry Pi or associated with it. And that brought us into contact with a lot of educational applications because the Raspberry Pi Foundation is specifically a foundation focused on improving education, school through tertiary, but the Australian side of things seemed to be like a wasteland as far as I could tell in terms of any coordinated efforts or solid ecosystem. There wasn't really one at that stage. 10:13 Speaker E: 2010 was about, from, you know, various people that I've spoken to, about really the start of things. Nothing much really happened before then, but it was still still a very nascent period, 2010, 2011, 2012, when Fishburners opened in 2012. From your point of view, if you could, you know, what was happening? Community size, were there, what kind of other programs or support? 10:38 Speaker D: So I would say to the extent there were programs or solutions available, they were associated closely with universities and they were to do with what universities then in a very, shall we say, in a nascent way trying to develop the outbound opportunities for students and encourage or create opportunities that weren't just going into a job for an existing company. In other words, more of the entrepreneurial track. But they took a long time, in my view, to really cotton on to both the opportunities and, as I see it, their responsibilities to reduce the barriers between the, you know, coming out of an education system and into a vocational world. And I think prior to 2010, on the industry side, you had, as you do now, but maybe had more then, local contract-based manufacturers and other businesses that built stuff and did stuff. I should, should add that my focus is very much in hardware startup ecosystems. The whole cloud-native software and SaaS business world hadn't really taken off. The internet hadn't developed that far. Mm-hmm. By far the concept of apps on devices was developing, but it was still very, shall we say, not well formed. But I'd say around 2010, 2011, you started getting other companies beginning to jump on the bandwagon that Apple had pioneered with the iPhone. The idea that you had mobile computing first as opposed to desktop computing. The rise of mobile devices, tablets versus desktop computers. Mm-hmm. That all started happening around about then, and then you had things like Raspberry Pi appearing in 2012. And from our perspective in the industries we operate, that's when you started seeing a lot of change and more players— government, education, and industry— were beginning to say, look, there's these opportunities, we're going to have to innovate to catch up or to maintain our competitive edge, but our structures as corporations and governments is not well suited to that. And that's when you started, and I think some of these ideas came from looking overseas, about the idea of incubators, the idea of accelerators. The whole VC model from Silicon Valley, of which I have had some direct experience, has sort of been exported and transformed in various places, and Australia has its unique take on that, as far as I can tell now. But it took me, I'd say, 7 years or or so. I would say 2010 is still pretty early. It would be 2013 onwards is when it really started to pick up. 13:07 Speaker E: Can you tell me more about that direct experience that you've had with VCs? 13:12 Speaker D: So mostly with Fairlight, with the joint venture business we had with Fairlight. Our very early experience in the '80s was with the pitfalls. They weren't called VCs then, they were called MICs, Management Investment Corporations. And we learned firsthand firsthand what a stock market crash can do to the owners of a business that are fairly highly leveraged. So Fairlight Instruments, as it was then, went out of business and I became unemployed. In fact, that's what launched me into my career now, is that I took a bunch of mates who were in R&D, set up a company and offered contracting to develop ABC Radio systems in the transformation of the ABC from East Sydney through to the Ultimo complex. So in a sense, it was a lucky break for me and those who saw the opportunity, but also it was an interesting insight to see what happens when a company that was very successful— Fairlight was very successful. They had a huge order book that they couldn't fulfil for lack of capital because the MICs that owned them were struggling from the wake of the '87 stock market crash. And it highlighted to me how closely related market action can have for, shall we say, high-risk investors, in that case MICs. So in more recent times, the experience with venture capital has been through Jetpack. Jetpack Aviation went through the Y Combinator program and managed to raise capital, which is funding what it's doing now. And that was a very interesting, very American process. I would say it's not something that translates to Australia very much at all. But the whole Ecosystem which really involves not just sources of funding, but incubation acceleration. It's very important to have mentorship and experience because young founders, in my experience personally back then and now as I see, is there's a lot of unknown unknowns. They don't know what they don't know. And I think the idea of an ecosystem is to plug a lot of those holes without them having to reinvent every error that those who've gone before them have made. But it also means matching skills and education with appropriate roles within startups and then developing the sort of economic model that is attractive and appeals. And that changes too a lot over time. And so I think in the Australian system, and I've also looked at the Israeli system, particularly in relation to what the studio has been doing, how much— sometimes very heavy government support and involvement, other times it's much more private equity or venture capital driven. In other cases, around crypto economics, it's, you know, in 2017 there was the ICO craze, and more recently people have seen a lot of stuff happening in that space. So it's a, you've got to be agile and dynamic to understand where the opportunities lie, and what is, shall we say, vaporware or a bit of a mirage versus something more substantial. 15:59 Speaker E: Do you know Alex? 16:01 Speaker D: Yes, I know Alex. I like what he's doing. 16:04 Speaker E: If you had to guess what he was referring to with the best parts of the ecosystem, what would you say they were? 16:10 Speaker D: Probably to do with, I put a lot of effort into building relationships and trying to make it easier for founders to find the contacts. And I don't just mean who's got money to invest or which grants to go after, they're important things. The hardware ecosystem, project page has a sort of overview of what it is, or where my views are, where my interest lies. And I would say a lot of what I'm interested in doing rhymes with what Chad does. The difference is that Chad is very comprehensive in his data gathering and data that he generates from the ecosystem, whereas I tend to be more about what are the best models, what are the best ways to form relationships relationships online and offline. It's one of the reasons I immediately took to what Alex had set up with the Guild, because although I think there are a lot of challenges ahead and it's a long, long-term play, the concept is a, is an important one. We've done it in a small scale within the studio with the Founders Circle, and the idea is that in keeping the signal-to-noise ratio high and developing those relationships, so it's all about trust in those relationships without having to invest a lot of time backwards and forwards in meetings to develop that trust? How do you create a— not just a platform, but an environment in which people who have very commonly aligned interests, even though they might be working in very different fields, can share in a way where they avoid each other's mistakes by sharing tips and ideas about how to avoid them, but also how they might then collaborate? Because there's a lot of opportunity for startups particularly to work together in a way that is collaborative whilst they might even in some senses be competitive with one another. Overcoming those barriers is one of the things I'm most keen to try and find solutions for. 18:04 Speaker E: I want to talk more about the hardware side of things in just a moment, but one quick question about, you mentioned the challenges that we're going to face moving forward. Were you talking specifically in relation to the Guild or generally in terms of the ecosystem? 18:19 Speaker D: No, generally in terms of the ecosystem and some of that is reflected and indeed Alex's intent I think is to experiment with solutions because I don't think anyone's got the answers to solving a lot of these problems and in many ways you have to experiment and try. Fundamentally it's a question of economics for anyone who participates is how much do I have to put in and what do I get out of it? And any business that's gonna succeed, your income has to exceed your outgoings or your upkeep becomes your downfall. And I think the perspective from startups is often they're so focused on what they're doing that a lot of the other parts that make for a successful business, which is knowing the customer, knowing the opportunity, working out the runway and the ramps and the investment required to get there, not just this is a great thing, everyone will want it, but actually getting the due diligence and the opportunities in market verticals to actually seed and grow a business. Those sorts of things are areas where I think there's a lot of gaps in the knowledge that young founders have, and there are gaps in what the ecosystem, in Australia at least, can provide to fill them. 19:25 Speaker E: In terms of the hardware space within this ecosystem, would you say it's the less sexy version, It doesn't get as much time in the media. Is that true? And if so, why? 19:38 Speaker D: Look, there's a variety of issues. A hardware business, or a business, as I like to call them, a business that has hardware as a key part of its value proposition. So it's not necessarily building widgets, but it might have widgets as part of what it offers. When you compare that, like most VC money in this country and around the world, going into two main forms of startups. SaaS plays, SaaS businesses, and biomedical technologies and so on. In terms of hardware, the problem with hardware is that unlike SaaS platforms, which can explode in value if they hit the right streak, it attracts risk capital in a way that they can realistically expect 5 to 10x returns returns in 3 to 5 years, and you get some big money that way, making big bets on, on SaaS plays, and they can scale really quickly. Hardware businesses don't. They scale more slowly. They have unit costs that software businesses have. They have upfront certification and manufacture risk and R&D risk. That said, if they are successful, they can become entrenched. They can become very solid cash producers down the track. But getting to that point requires different mindset to investment. And I think one of the best models in Australia, limited in scope though it is, is the Medical Devices Fund. The Chief Scientist of New South Wales oversees that. And the model, I won't go into the details of it, but suffice to say it's a longer range, deeper pocketed model to invest in technologies that might take longer to grow, but when they do, they become, you know, very dominant. I think that's the problem, or the, shall we say, the missing link in terms of hardware-based businesses. So in a nutshell, they have unit costs that software businesses don't have. They grow more slowly, but they can get vendor lock-in in a much stronger way than software businesses if they're successful. They have much larger upfront costs and R&D risks, risks that software businesses tend not to have. 21:48 Speaker E: What do you think, as a community, generally speaking, what do you think we're doing really well, slash, what makes the Australian startup ecosystem unique? 21:58 Speaker D: So, I think we have a few big advantages, and bear in mind that my commentary will come from my areas of interest, which tends to be hardware-focused. Businesses, but I'd say the tyranny of distance is much less of an issue than it used to be, and our geographic location in Asia places us in a, a really good position for where the growth is likely to occur globally. That's one thing— proximity to Asia and our relationship with Asian nations. So whilst I'm very keen to develop the Australian hardware ecosystem, I also think a key part of that is working very effectively with with our Asian neighbours and partners in achieving that. But another area that applies across all startups, I would say, is a deep resource of talent that is culturally aware on a global basis. Western Sydney, for example, is basically a melting pot of people from all cultures and places and corners of the globe. I think this is something that Australian businesses can leverage in a way that perhaps others nations are not so able to, and I think that's probably quite an advantage for us. In terms of anything else, I don't know that Australia does have a lot of advantages. We've had advantages in the past, in my experience, in terms of the quality of the educational outcome and raw talent. I think, and this is not a comment on the students going through, more I think, in my view, a bit of a debasement of the education education system over the last 25, 30 years, we don't have such an advantage in that respect, the way we used to. But I think that's probably one of the negatives. But in terms of the positives, they'd be the two most significant I would cite. 23:38 Speaker E: Do you have any unpopular opinions about the Australian startup ecosystem? 23:43 Speaker D: I would say that there is a degree of short-termism in the investment mindset that precludes success for many startups that might have a global vision and a really good idea. And a lot of them will find funding and support overseas, not in Australia, because the view here is very myopic. If you look at the way corporates view startups, they say, well, we're not interested in the early ones, it's too risky. And the bigger ones, we're not interested in paying what they're really worth. And only if they can actually 'Let's actually solve a particular problem that we've got,' rather than looking at more scalable, 'Let's actually create a new business.' There are some exceptions. I would say Telstra with Telstra Ventures and the way they spun that out is one change in a good direction. But the other big challenge is the utter lack of consistency and, like, you can't rely on it for a long time in terms of government policy towards Australia's startup ecosystem, it chops and changes with the weather. You get grants and then that's it. There's no sustainable support. Even now, more recently, and this came out of discussions we had directly with the New South Wales government through the Sydney Startup Hub, they asked us what's one of the biggest problems faced by startups? Well, we said, customers. Where do they get their customers from? In Australia particularly, we recommended quite strongly in a series of papers papers and roundtables, that government use its purchasing power, its procurement power, to create markets for startups based on problems government needs solved. And since then you have the Accelerating R&D in New South Wales initiative and the procurement initiatives that have come out as a direct result of that. Small but good changes in the right direction. So if I had to say two of the big things about the ecosystem is it's fragmented. The critical mass, we're not quite there. I would agree with Peter. 25:36 Speaker E: Mm-hmm. 25:36 Speaker D: In saying we haven't quite got an ecosystem in the sense that they exist elsewhere in the world. I would say the fickle nature of corporate involvement and the, as an engineer I would call it, the impedance mismatch between corporate mindset and startup mindset hasn't been bridged effectively in Australia, and the inconsistent and, shall we say, intermittent support that government gives to the ecosystem. 26:02 Speaker E: If there's one thing, just one thing that we could be doing better as a community, what would that be? 26:10 Speaker D: I guess restructuring the way government provides support to the ecosystem in a way that is less prone to the vagaries of day-to-day political objectives, I suppose. Decoupling it. From politics and putting it more as a sort of institutional pillar. And for examples of what that means, I would cite the likes of Israel as having a very vibrant startup ecosystem and scale-up ecosystem for two main reasons. One is the level of government support without government saying, "Okay, and what's our cut, our take, our ROI on this?" They need to be focused on KPIs that are to do with jobs and business creation, all the rest of it. Not what stake can we get out of what money is gonna come back. The short-termism is too strong. So I would say that probably would be one of the biggest things you could do to support the ecosystem. But there are myriad others. 27:09 Speaker E: In the very early years, like that first decade, can you remember a thing, like just something that happened that made you go, wow, things are really rolling now? 27:20 Speaker D: So 2018 is when we opened our doors, 2017 is when we're doing fit-outs and stuff, so I would say that in those early years nothing really springs to mind as being a sort of pivotal development. When Fishburners were founded, they were at the sort of leading edge of that idea, the idea of an incubator and a coworking space. I would say if you look at some of Australia's unicorns, like one of its oldest, Atlassian. They were just a bunch of guys solving problems for customers very effectively, and they grew organically with those customers, but there was no sense of support or ecosystem around them. They developed their own. There wasn't anything in support of them doing that sort of thing. So I don't think there really was anything, but what I would say, and this is very much to the state government's credit, the experiment that is and remains The Sydney Startup Hub is an excellent one because effectively what they're doing is saying, what would it take to get critical mass in a physical location with enough businesses together to actually produce a net positive of significant outcomes for new business and startups? The money they put in, the vision around the project, it has been a very good one. Now it's been really seriously challenged by COVID and the idea of physical coworking spaces is something that needs to be, well, reinvented. It's still very important to have it, in fact it's critical, but then it needs to be tied into a broader online virtual, and that's why things like the Guild, things like Venture Cafe, and other online resources like the one we're talking through now, for example, becoming more important, but they're still very fragmented. 28:57 Speaker E: If a brand new entrepreneur, founder, whatever, come to you tomorrow, given everything that you've learned, all your Your mistakes or your lessons. 29:05 Speaker C: Yeah. 29:05 Speaker E: If you could give them one piece of advice that would slightly increase the chances of success, what would you tell them? 29:12 Speaker D: I would say before you endeavor to develop your great idea or whatever, find out and know in concrete terms who your customers are, where your market's gonna be, and what is the true unfair advantage of what it is you're developing. Developing that means you'll succeed where others have failed. Everything else flows from that, but most important is who's your customer and why do they want what your great idea. We're in very challenging times in, well, I hope the short term in terms of the disruption of the pandemic, but more long term, there are some huge changes which will impact the way startups operate. In fact, the way business and the society at large operate. And they relate to disruptive technologies, often cited as automation, robotics, AI, those sorts of things. But I would, among them, I would also very much cite crypto technologies, as in not cryptocurrencies, but more distributed technologies, and the impact they're going to have on what funding models for new business will arise in future. And I am interested in, and have invested in, and worked with a number of projects that work in that space and they're turning on its head the thinking around what makes, not just for a successful business, but an investable one. I think there needs to be some transformative thinking around how you develop a business in future, 'cause the way you developed them in the past doesn't work in the future, in my view. So I would say we're at quite a transformative point in terms of starts and that, applies again particularly to businesses that have hardware as a key part of what they do. 30:53 Bruce Tulloch: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you're listening right now. 31:00 Speaker E: Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. 31:07 Bruce Tulloch: Thanks for listening and see you next time.
