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Peter Davison: All it takes is guts and a vision

With no experience but a lot of guts and vision, Peter Davison moved to Silicon Valley and started a Venture Capital firm with a friend in 1998. They had several early successes, most famously as early investors in PayPal, in which Peter was a key advisor to Peter Thiel on business and product strategy. Since returning to Australia Peter has founded, built and sold several internet businesses, and founded Fishburners, a not-for-profit co-working space and incubator which has played a key role in the growth and development of the Australian startup ecosystem. In his conversation with Adam, Peter tells the story of how he initially was motivated to found Fishburners because he “didn’t have any friends”, as well as sharing his perhaps controversial views that the now traditional VC backed startup trajectory may not be the best route for many founders.

Mentioned

Fishburners: https://fishburners.org/

Peter Davison article on UTS website: https://www.uts.edu.au/current-students/news/first-investor-paypal-shares-his-journey-and-advice

Transcript

Peter Davison: I’m Peter Davison, and I guess I’m most well known for being the first non-family and friends investor in PayPal, back in the day. We were pretty instrumental in getting them off the ground and giving them a business model. Since then, I’ve floated around the world, helping different startups and institutions. I started a Chinese venture capital firm in Shanghai. I started Fishburners back in the day, funded that. And just a bunch of other things that I’ve been doing. A lot of education and a lot of just sort of advice to different governments and so on.

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Adam Spencer: Why entrepreneurship? Why investing? Where did that come from?

Peter Davison: Mate to be honest, I was a very high achiever at university. But not a very good student, by the way. I just winged it. When I went to Australian workforce, it was an absolute disaster. I just couldn’t cope. I couldn’t cope with the culture, the values. 

Peter Davison: My perception that it was very not innovative. It was very sort of corporate and political, and it was absolute hell for me. Yeah, I was very ambitious. I was a technologist, and a mate of mine at university, we just sort of made a pact to each other, that one day we’d get together and do something big, as young dudes do.

Peter Davison: And so honestly, the internet came along. He’d made a lot of money in banking and he was completely sick of it as well. And he said, “Hey man, why don’t we do a VC firm? I’ll fund you to go fly around Silicon Valley and find some deals for us. So I’ve got the money, just go and make us lots of money.” 

Peter Davison: And I’d never been to Valley before. I’d never been involved in a startup before. I did know technology. I’d never been in that whole scene at all. I think I’d been to California once, but not Silicon Valley. So it was really just an act of desperation, to be honest, just the young guys, act of desperation. I did know the internet very, very well, and that was unusual. I think that was a bit of a secret, because I’d worked at Melbourne University, and that was the hub of it.

Adam Spencer: What year are we talking that you kind of went flying around?

Peter Davison: ’98 and ’99, yeah.

Adam Spencer: And when you say you knew the internet well, what do you mean by that?

Peter Davison: See, I was at University of Melbourne, which was the hub of the whole internet network. And it was also the domain registry monopoly. I was running a team there in intelligent decision systems, which had nothing to do with the internet. But the worldwide web started out and we were the first to get decent access and good internet. And so we were all messing around with that, and it really got me interested in that. 

Peter Davison: So I’d plumbed the depths of the internet, looking for businesses and founders and how this all worked. So, but I mean, the reason why a guy like me, with no background, no sort of pedigree in this area, could succeed, was because of the internet. You could poke around the corners of the internet, looking for good companies, looking for good people. You didn’t have to be a part of the networks, so I really leveraged that a lot. 

Adam Spencer: Were there any early… like ’98 in Australia, were there any early whisperings or precursors to the startup tech ecosystem that we have today?

Peter Davison: Not from my point of view. Let’s see, I was in Sydney, but I hadn’t heard about it. There were probably some sort of rich, sort of wealthy circles talking about it, but it wasn’t very… It certainly didn’t pervade corporate, and I hadn’t heard about it. I guess I didn’t have many mates in this area. I had technologists mates, but they were all working jobs. So I wouldn’t say, no, not at that stage. No.

Adam Spencer: So you fly over to the US, start scouting. What was the VC firm’s name that you and your mate started?

Peter Davison: Girdle Capital.Girdle is an Austrian mathematician. It’s not a piece of clothing.

Adam Spencer: Okay. How many conversations would you say you had, or opportunities to explore, before you sat down with Peter Thiel for PayPal?

Peter Davison: So I actually flew over there with the MP3 stuff, because the MP3 was very accessible and I could see it was going to be a bit of a revolution in the music industry. And I really studied that hard. So I went and met the guy who started the sort of most popular MP3 player, called Winamp. 

Peter Davison: And he was in Sedona, Arizona, which is this beautiful place that’s nowhere near Silicon Valley. And I got to meet him and I got to meet a guy called Rob Lord, who actually was a bit of an internet pioneer. And I really learned a lot about Silicon Valley. I mean, this is another part of the secret, is that I let… I talked to all these people and I really got up the curve of the right jargon, how the internet works, how things are being monetised, what’s getting funded and so on.

Peter Davison: That deal actually fell through, which was sad, because they eventually sold for $80 million. But they wanted to offer the whole company to us for 50 grand. But the good thing, was that everything I was looking at, was turning to gold. So I was onto something, I was picking up on something. I’d met Musixmatch, which was sold for $200 million. I’d met mp3.com. It offered us an investment for $10 million. And they were eventually sold for 300 million, but at one stage, were a billion dollars. So everything was turning to gold, but we didn’t capitalize on that. We were a little bit too nervous that this pirate scene could suddenly be at this massive music takeover.

Adam Spencer: Yeah. ’98, ’99, 2000 in the US, what struck you most about the ecosystem over there, kind of coming from Australia?

Peter Davison: Oh mate, chalk and cheese. When I talked about business in Australia, a guy like me, people were like, “Ah, settle down. Wait your turn. Who do you think you are?” That sort of thing. I walked around Silicon Valley pretending I was a venture capitalist. I mean, I was a venture capitalist, but I felt like I was pretending, and people just embraced it. I was young, I was ambitious. It seemed that I had money, and my friend did. I had a briefcase, and it just had an air of, “Yeah, yeah. I’m not going to laugh at you, because you might be the next big thing.”

Peter Davison: It was the best experience of my life. I really felt, yes, there is another place to be, and it doesn’t have to be like where you are right now. And there’s a place that embraces your crazy dreams, and where young people are kind of heralded. It was fantastic, man. I know it sounds a bit romanticised, and it probably is still in my mind, but at that stage, I just was getting doors opened. There was no question of who I was, wait my turn or whatever. It was embraced, and I could get intros to some really hot people. It was fantastic.

Adam Spencer: When did you move back to Australia? Or was it just like business trips over to the US, to scout?

Peter Davison: No, I stayed there for a couple years. We were so, off the seat… By the seat of our pants, that we hadn’t sorted out our visa. So I actually had visa problems at one point and got excluded from the country, which is hilarious, because we were PayPal investors at this time, and we were big shots. But we were becoming the potential to be big shots. But this one guy said he didn’t like my visa, so he excluded me from the country and then the crash happened. So I came back in 2001, I think it was. So I was there for a few years. It was all a big kind of blur of activity.

Peter Davison: You know, frankly then, man, honestly, I could have gone back. Peter Thiel was putting out feelers for me to work with him, because my partner told me he was. Because guys like me were sort of rare, that were guys who were technologists, who were in VC. That was my sort of shtick. Later on, I became a dime a dozen, but at that point, I was pretty valuable because I kind of really knew how it worked. But I didn’t take any of that, man. I just stayed back in Australia. It took such a mental kind of effort to exist in that world, and fight my background. It was mostly a psychological reason, why I didn’t pursue it.

Adam Spencer: Being in Silicon Valley, that romantic view of it that you have, and just loving it so much, what was your thinking, moving back to Australia in the early 2000s? What was the plan?

Peter Davison: I mean, things were happening. You had a good guy that I know, I was pretty close to, but he was at Macquarie Bank and he met me in Silicon Valley, and he was sort of introducing to me a few companies. And yeah, I just felt, this is not the same. Don’t get me wrong. The founders are fantastic. People who can survive in this environment, I suggest are better… What I would consider, better entrepreneurs, than people who could get a check for 20 million bucks. These guys had to fight to survive.

Peter Davison: So I really respected the founders, but not the ecosystem. You really had to be someone super special to make yourself stand out. You had to fight a lot of things to stand out. So the ecosystem, no, it wasn’t the same. I was thinking, well, what’s the point? I mean, what’s the point of being an investor here? It’s not thriving. I’ve got to wait for these occasional ones to pop up. 

Peter Davison: Look, I was a bit blown away by the Silicon Valley world. It really just sort of said to me, it doesn’t have to be like Australia. It doesn’t have to be like this. It really taught me that, often, the best of the evils is to move geographies. So yeah, it wasn’t changed, man. It wasn’t changed at all. There were starting to be a few things. I poked my head up a bit, in about 2001, 2002. There was the Jodie Riches and guys like that. It wasn’t an accessible scene, by any means, at that point. You had circles of wealth investing, that was kind of about it, at that stage.

Adam Spencer: Have you ever found anything close to reliving that experience in Silicon Valley?

Peter Davison:  I mean, China, there’s excitement because there’s so much money there. So yeah, there’s pockets there. It’s quite an exciting place. The future is possible, and crazy people are getting funded. I liked the Berlin scene when I was there. I was there at a pretty good time. So we’re starting to get quite exciting. And Berlin had sort of created itself. 

Peter Davison: You see, Munich wanted to be the capital of Germany, startup capital of Germany, and it was, and yet these two guys, the rocket internet guys chose Berlin, which was this artsy kind of rundown city. And they turned it into the German startup capital. It was a fantastic historic place as well, and I sort of love that stuff. But it really had a vibe about it as well. So that’s about as close as I’ve come, where you really feel the possible all around you. So yeah, but nothing quite like Silicon Valley.

Adam Spencer: And before we hit record, you mentioned it would be good to figure out what Australia is missing. All the characteristics that you see, drawing on that experience from Germany, from Silicon Valley, from China, what do those ecosystems have that maybe Australia can learn from?

Peter Davison:  This is sort of a system wide issue, rather than picking on any particular group of people. I mean, we are a rich country. But we’ve got rich off the back of natural resources, and continue to do that. And so, the sort of capital that’s created here, is more… Has a different flavor to it. It doesn’t have sort of a speculative, anything’s possible, type of flavor. 

Peter Davison: And what you do notice, is in these other ecosystems, is that okay, you’ve got some big successes, but the flywheel starts. People talk about the flywheel. I don’t see the flywheel in Australia. What the flywheel means, is reinvestment in the local scene. Tech management from that company that was present within the ecosystem, has started their own companies and started investing in their own companies. I mean, if you look at Silicon Valley, 60% and up of the unicorn founders, are repeat, quite successful entrepreneurs, who’ve had at least a sort of 50-100 million dollar exit previously. Right? 

Peter Davison: So yeah, it’s a different story. So yes, you’ve got these successes, but here’s what you’ve got to ask, right? When you talk about an ecosystem, you’re talking about a piece of dirt called Sydney. I mean, I’m not rubbishing Sydney. I’m saying, you’re talking about geography.

Adam Spencer: Yes. Yeah.

Peter Davison: Right? You’re talking about keeping people local, right? You’ve got to ask yourself, what is it about the local ecosystem, that keeps people here? Now in Silicon Valley, it was semiconductors in the early days. In Israel, when it started, why did people stay in Israel? Well, there was religious reasons, it was the Homeland, but there was also… There’s this very strong specialisation in cybersecurity, which came from the fact that young men had to do service. And a lot of them chose to go to technical colleges, and were coming out very skilled in cyber security. That’s what kept them there. Even if they became successful, they wouldn’t move to the Valley, because there was too much of a concentration of cybersecurity skills there.

Peter Davison:  So you’ve got to ask yourself, why are people going to stick here? How do you solve that problem, when the resources… When you’ve got to ask yourself, why are tech people here more likely to join startups and take risks and so on? Unless you’ve got something that keeps them here. Now we do have things that keep them here, but they’re not that sexy. 

Peter Davison: I mean, they’re the natural resources and the health tech, there’s energy. These are things that we’re very… We’re actually very good at in technological spheres, but it’s not sort of mainstream kind of innovation. I think if we were to talk about what policy should be at a top level, we should be encouraging the ones that are going to stick. And if the others start by themselves, great. But you’ve got to ask yourself, why would an Atlassian or a Canva, middle, top management person, decide to restart a company that they feel is going to be sort of adjacent, adjunct to Canva success, in Sydney? How quickly are they going to leave?

Peter Davison: So what you see happening here, is you don’t have much thick soil. You’ve got to a desert here, and whenever it rains, you do get a bunch of beautiful flowers. And I think we’re seeing a lot of really beautiful flowers, but they’re not necessarily going to complete their life cycle and become the soil of the next ones. 

Peter Davison: So you’ve got to ask, if you look through the list of all the top companies out there, and you say, what’s in common with them in terms of human capital? They struggle to get tech management. You only need to talk to Matt Barrie about that, and to Mike Cannon-Brookes. I’ve heard them both say, about how they can’t get Silicon Valley management over here.

Peter Davison: So you’ve got to ask yourself, why are people going to stay here? And I think you’ve got to focus on your strengths. I would say one thing, if you look at the publicly listed companies in the tech sphere in Australia, you do see a lot of FinTech. Now, some of it’s very localised type FinTech, like superannuation and stuff. But I think the other thing about FinTech, is that it does tend to pay well. And the quality of a lot of these other ecosystems, when they started, was that you had a lot of unemployed tech people looking for jobs, who couldn’t find them. 

Peter Davison: So they had nothing better to do than do startups, whereas we have a very well paid workforce in the tech sphere here. So they’re taking a bigger risk to join a startup, right? So FinTech has those salaries. So I see some potential in FinTech, but you’ve got to really zoom in. You can’t just broadly say, oh, startups, tech, throw all money at that. I don’t think that’s the way to go, to create an ecosystem.

Adam Spencer: Depending on who I talk to, and as I mentioned, we’ve done about 100 interviews so far, some people are really, really, really for government supporting the ecosystem in a variety of ways, and some people are against it. Where do you fit on that spectrum?

Peter Davison: It’s a little bit nuanced, but I mean, with respect, I don’t care what these guys say, because I don’t think they… I honestly don’t think a lot of people have actually studied this and studied the historical record on this. And so people just sort of talk about their sort of home baked knowledge. Mate, I went and studied… With respect, I went and studied economic history and I was doing a PhD for a while, so let me speak with some authority about this, if I may toot my own horn.

Peter Davison: So look, the government never creates ecosystems. Government jumps on the back of the flywheel, as it starts to start to really turn. That happened in Silicon Valley, that happened in Israel. It’s the way that things are done. So Australia, I think tried to do that too early. We didn’t have the flywheel turning yet. It started to have the ESVCLP structure in place, because that was the sort of standard. 

Peter Davison: So I honestly think though, that Australia should be more focused on its innovation in its natural resources. A lot of people say, “Oh, there’s only a finite amount of stuff in the ground.” That’s not actually true. We’ve only just scratched the surface. Why can’t we innovate about digging deeper mines? I mean, we are leaders in technology in this area. It is the source of our wealth. There’s nothing wrong with being a natural resources based economy. Most of the leading countries in the world, the wealthiest countries in the world, are to a large extent, natural resource driven, including the US, I would say.

Peter Davison: So why don’t we focus on where we’re strong and where people are going to gather and stay? And let’s innovate in those areas, and let’s have government support for those areas, to really advance technical people in those areas and try to create centers where we do attract the best people in those areas. And I think we would, because we have such strong skills in those areas. Healthcare is another one that we’re strong on. 

Peter Davison: Here’s the one nuance to that, that I want to add, that I don’t hear from anyone, right? And that’s this. Look, the truth about productivity and technology. We know entrepreneurship’s a source of productivity gain, and technology plays a big part of it. But the truth of it, is that the adoption of technology is more important for most Western countries than the creation of it.

Peter Davison: So if you’ve got a very vibrant, fertile business ecosystem, that’s willing to try the latest themes and has the people with the skills to help them upgrade their technology, that’s where most of the productivity gain comes from. There’s very good studies about this, and including in the US. In the US, it’s about three quarters, one quarter. One quarter from their own technology creation, and three quarters from the adoption of it in places around the world. 

Peter Davison: So one thing Australia’s very good at, is adoption. We’re very wide eyed about the world, and so we tend to adopt very quickly. And the stats are there, that shows that we were very strong adopters of ICT. So what you can do… And I think this is where places like tech central might have its best value creation, is in keeping the local environment psyched about tech, right?

Peter Davison: Creating employees that go into the big companies, who are going to adopt very quickly. That is the truth, that we’re very bad at creation of new technology. I mean, historically, compared to some of the leading ecosystems. But we’re a very, very strong adopter, and adoption is even more important than creation. 

Peter Davison: So I think governments should bear in mind, when it creates something like a tech central, that it’s not just about creating unicorns and having vibrant sort of flywheel that makes a lot of rich guys even richer. It’s about creating an environment that infects the business culture, so that we are always on top of the new technology, we’re always looking for the next advantage. That’s what I see the role as government adds. 

Adam Spencer: If we can just jump back on the timeline for a second. A lot of people point to around 2012, right? When the ecosystem started to ramp up a bit. Is there anything that happened in that prior decade, after you moved back to Australia, that kind of, you saw things getting put in place, some foundational work starting to happen?

Peter Davison:  I mean, there were financial institutions that had sort of speculative components to their funds, and that was becoming increasingly prevalent. But to be honest with you, by this stage, I had sort of given up on geography. And this is another factor we need to consider, that what I saw, is that a lot of businesses were be being built completely online. With no connection to the geography. 

Peter Davison: And that’s increasingly going to be the case. You’ve got very mobile venture capitalists now, investing all across the world. What’s the connection to geography? So I actually started internet businesses and got involved in this, almost underground world, that the venture capitalists and no one else really talks about, and very, very rarely overlaps with that world, of people becoming substantially rich. Not billionaires, but substantially rich, by just working from their bedrooms and working and attacking markets, right?

Peter Davison: So what was going on in my mind, is that, look, why focus on this ecosystem that’s got all these obstacles to achieve where it needs to be, to become a Silicon Valley, when there’s this whole other virtual world out there? It’s even very prevalent to me. A lot of the people in Fishburners, who were successful, you’ve never heard of, and you will never hear of. 

Peter Davison: But I hear of them because they were with my friends, and they’ve gone on to do amazing things with gaming and e-commerce and a whole bunch of other stuff. There’s all these guys that have really, really smashed it, but they don’t want to be known. They don’t get on your radar. They don’t want to talk to venture capitalists, yet they’re running mini empires in different places around the world.

Peter Davison: You see, what you’ve got, is a local group of vested interests that need geography really, to thrive. And so that’s where they look. And so you’ve got universities, government, you’ve got startup factories, you’ve got venture capitalists. They’re all largely about geography. It’s becoming a little bit less so, but largely about geography, so that’s what they push. 

Peter Davison: There’s a guy called Davie Fogarty. He’s actually raised investment, poor guy. But he was this young kid that just, from his bedroom, created this e-commerce empire in South Australia. These are the sort of things. And then when they do poke their heads up and become successful, then this ecosystem claims them, of course. But they were homegrown. They were self grown, right? So I suspect that, that’s going to be a large factor as well, that’s going to drive us away from this idea of geography.

Adam Spencer: What do you think is the defining factor in those types of entrepreneurs, that do start those e-commerce businesses from scratch, in their bedroom or in their lounge room, whatever? What makes them special? That’s what I want to try to figure out. 

Peter Davison: Well, one of the things, is been bitten by the startup culture. That is important, man, because a lot of these people are not in Silicon Valley. The people I’ve met in America, and there’s tons of them in America, they’re like, “Why would you join a startup?” And they don’t have that pull from all the press, and the hype about the startup scene. So what they’ve done, is they’re generally, often quite nerdy. Maybe they’re tech people and they’ve floated around the internet, and they’ve seen money happen in circles around there. And they’ve decided, well, there’s money out here, and no one knows about it in my geography. Why don’t I see if I can capitalise?

Peter Davison: A lot of them are disillusioned, like I was, about the local workplace environment. Look, to be fair, I’m not your usual guy. I’m a tech guy, and I was very ambitious and I was a bit full of myself and all that. So I think you probably got a lot of those guys. There’s a whole culture of guys that don’t want to be startups, they don’t want to network, they don’t want to go to events. But they’re really good at out what’s selling, what’s working on the internet, what the latest thing is. And they really don’t want to go into a job. Some of them still work, but the ones I’ve seen… There’s a different class of people as well now, that are non-tech,that are starting, because the tech has now becomes to so accessible to everybody.

Peter Davison: You see people setting up Shopify sites. And I honestly think, man, that a lot of them had the good fortune of not being infected by the startup scene, which will totally distort what they think a success is.

Adam Spencer: That’s really interesting.

Peter Davison: Yeah, man. Because once they’re a vulnerable person looking to have an alternative path, is told that the only path is this high growth raise capital, it completely changes the perception in their mind about what business looks. 

Peter Davison: Here’s the other thing about Australian entrepreneurs, because it’s so tough and it’s such a capital, scarce environment, you’ve got to be an actual entrepreneur to be successful. In other words, you’ve got to be resourceful. You’ve got to hustle. You’ve got to really seek out, sniff out where the opportunities are. 

Peter Davison: And Australians, because of the capital scarcity, I think you see a greater prevalence of that here. And so that’s a great environment to get on the internet with, and start sniffing around, low cost, trying to make money and trying to bootstrap, don’t necessarily get co-founders and contracts and everything. Just try to make something work. It’s very different, man.

Adam Spencer: I love that.

Peter Davison: It’s a very different mindset. 

Adam Spencer: What was the thinking around starting Fishburners?

Peter Davison: Yeah, that’s a good question. Look, I had no friends, basically. So I’d come back from Silicon Valley for 10 years, and I was living out… I mean, I came back to Australia and I thought, well, if I’m back in Australia, there’s no point poking my head up. I’ll just go underground and do this internet stuff. And I was out as far as I could, from civilisation, i.e Canberra. And then later, Wellington, in New Zealand. 

Peter Davison:  I had no friends. And no one knew what I’d done. No one knew. I didn’t tell anyone, I didn’t seek press. It was a, no one had cared when I first came back. So I asked this… My accountant introduced me to this guy who was doing this little hosting company, and that’s about as great much choice as we had in Canberra back then. And I was trying to work with him a little bit.

Peter Davison:  And then he met this other guy who knew about the Sydney startup scene, and they said, “Oh Pete, why don’t you come to an event one day in Sydney? You’ll make some friends.” You know, and I did. And I went there, and Niki Scevak was there, and Mike Casey was there, and a whole bunch of other guys were there. And they asked me what I did, and I don’t think they believed me at first, but I told them I was the first investor in PayPal. 

Peter Davison: And they were like, what is this guy, who lives near Queanbeyan, dresses like he does, with this terrible haircut. He speaks like some kind of rural guy. He must be pulling our leg. I think that’s what they thought at first. But they’re like, “Oh, PayPal investor. Oh, right. Okay. Yeah, sure mate.” Like yeah, I’m glad they let you out today, of your hospital or whatever.

Peter Davison: But eventually they cottoned on that I just… I’m not the kind of guy that seeks sort of status. To me, it’s very internal. I’ve always realised for myself, that you’ve got to find your own measures. I’m very extreme on that. So I just wanted to make friends, to be honest, man. And here’s the thing about Fishburners. Look, we were playing a little bit of a double game there, man, because to ride the wave, you had to talk startups, right? So to impress government, you had to talk startups, high growth, all that. So there was a lot of that around. You can ask the original Fishburners, when anyone came to me, I was saying, “Hey man, you don’t need to do this. There’s this other path.”

Peter Davison: So a bunch of guys listened to me. I was only there for a year or so. I mean, I floated around all the time, but I was only hardcore there in the first year. And those guys have gone on to do really well, and are so thankful that they never touched VC. That now, they have complete life freedom. I mean, as much as life gives you freedom, especially when you have family. But they float around, they’ve done very well for themselves. But they were getting bombarded by this VC, pitching, all this stuff. And I was saying, “Man, you don’t need to do that.” And coming from me, it didn’t make real sense because I’m the PayPal guy.

Adam Spencer: Yeah, it’s not making sense to me right now.

Peter Davison: Well, see mate, I don’t think I’m quite like Peter Thiel, who is just sort of… I think has a flavor of deliberate contrarianism. But I do believe in kind of, very strongly questioning the dominant ethos. Right? And the dominant ethos with startup. And I’d already had 10 years saying, this is not a startup place. It’s just not ready. You’ve got a better chance with your career, by learning how to build a business. I’ve seen it. I saw it, man, when I was in Silicon Valley even, during those times and all the times after. 

Peter Davison: So it was probably about 2003, online. I was messing around with search engines, I was making good money for that. And this one guy approached me from nowhere, seen me on the search engine. And he was this young guy from Paraguay, right? And he saw that I had this traffic, and he set up this new site. He said, “Hey man, do you want to be an affiliate of mine? I reckon I can make you a lot more money.” And he was just this guy from Paraguay. And I said, “Okay. Yeah, let’s try it, man.” Everyone’s trying things. 

Peter Davison: And I did make a lot of money with that guy. He did that over and over again, with lots of other different people with lots of traffic. He now owns a television station, owns a mobile phone company. He’s this big shot. People have talked about him being president of Paraguay, but Paraguay’s got its own political issues. He’s not sure he wants to have his children kidnapped.

Peter Davison: This is what I mean, man. I meet these guys that come out of nowhere, and then become… And he never raised any capital. He’s only been to the US once, and that was after he became quite wealthy. He stays in Paraguay, he’s got no… There’s no ecosystem there. I think he was doing it for his family. And he was a bit of a hustler. He’s not a tech guy at all, which probably helped him, because sometimes tech guys like me, get stuck in their love of technology. Whereas he was like, look, I respect tech guys. I’m just going to put it all together and take a piece of the action. 

Peter Davison: You see what I mean? I was trying to focus on building those guys, and I’d already seen that when I started in Fishburners. We had to cover both things. But honestly, man, your best bet… Now I’m not talking about what’s best for the economy at this point. I think that’s natural resources and focusing on innovating that. But for you as an individual, your best bet is not to take money, generally speaking. Unless you are in part of an elite group of business people, coming from an elite school or network, your best bet is to learn how to do it yourself.

Peter Davison: And I can promise you, 20 years later, that it’s just as vibrant and possible now, to become a financially independent person with zero money down, almost. A domain name, a few other things. And from the comfort of your own bedroom. And it’s probably never been as possible as it is now. So I’m a realist. I guess that’s what you’d call me, a realist. I’m not a futurist, I’m not an idealist. I’m a realist. And the reality is that, that’s your best bet in these days. I’m not someone in love with technology. I’m not someone who loves views of the future. I’m still, at heart, a realist, who just happens to have a lot of these tech skills at the same time.

Peter Davison:  Hopefully, that explains a little bit why I’m the PayPal guy. I’ve seen Elon. I talked to Elon, I talked to Peter, I advised Peter. I saw how rich he could be. When I came back, I thought, oh my God, I mean, that’s fantastic. But it’s a fantastic environment, yeah you can reach the heights, but it’s not for everyone. And I thank my lucky stars that I had these advantages in this unique period of time. If I went there now, without my reputation or anything, I wouldn’t go anywhere, man. 

Peter Davison: So I’m very realistic about what made me successful, and why nobody like me could pull that off, right? So it’s all about realism, I guess, in the end. And the realist inside me, tells me that your better bet, is to grow online. Why wouldn’t you do that? And then you can live anywhere around the world. You don’t have to work in a job again, and you also have the option of growing to a startup, if you’ve caught onto something that turns out to be good.

Adam Spencer: And looking at either today or the future, in terms of ecosystem, what are some of the biggest gaps today, that if we have any chance of creating a really rewarding and flywheel ecosystem, what do we need to do?

Peter Davison: I mean, there are other types of ecosystems you can create here, which I think would be really advantageous. So first of all, don’t forget that the world is not all about Silicon Valley. Especially now, right? It’s just not. It’s a small part of commerce on the internet, and in technology. The gaps, it comes down to human resource and human capital. It comes down to what differentiates us against the world. What do we have here, that would be hard to duplicate or hard to lose, in terms of people, right? 

Peter Davison: No doubt, we’ve got a really smart group of people here, right? I’ve seen really great entrepreneurs, in my definition of entrepreneur. Really great technical people. Okay? But why would they stay here? And the answer is, well, because we are the best at this in the world. We’ve got the best ecosystem, the best professors, the best speciality in this world.

Peter Davison: I think you start from that, and grow outwards. You don’t scatter gun it. I don’t want to discourage all these fantastic companies we’ve got around. It is fantastic what they’ve done, but what are they doing to start the flywheel? And don’t think you do that by government. That’s always been done by private initiative. 

Peter Davison: These guys are not silly. They go, “Well, why would I start in Australia?” And if they see something that’s advantageous, in terms of growth for the long term, within their vehicle, then they might start seriously backing their… Perhaps Atlassian might decide that, well, we do have this ecosystem of really smart tech management people and tech people who are adjacent to what we’re doing, and I want to really invest heavily in that. Now, we’ll see what they do. Same as Canva. Do we have this design crowd that’s better than anywhere else, or that’s going to stay here in Australia? Are they going to reinvest? I’m not putting pressure on them to do that. It’s a system wide question.

Peter Davison: But look for those signs, right? And I would suggest to you, that the best chance we have of that starting to happen, is by a focus on where we’re strong. And not this shameful kind of embarrassment of the fact that we’re a natural resources based economy. We have become a strong natural resources based economy, because of innovation, because of innovation. 

Peter Davison: Why don’t we encourage more mining engineers and agricultural tech engineers, and energy… Why don’t we become a center of that, and attract them, and use that as the sort of beacon of how we grow outwards? Look, Israel did that, and they’ve grown outwards, right? They go in all sorts of different things, not just cybersecurity. But they focus on a strength, where the capital and the people will then stick around to help grow their geography, right? So that’s my answer for the geography question.

Adam Spencer: Is there anything for the documentary that we’re trying to create, that you think that we should include, that maybe we missed?

Peter Davison: I want to say that, I don’t think we’re that far advanced, to be honest, so that’s what I want to say. Yes, we’ve got some good companies. But see, that to me, comes from the accessibility of global markets and global technology and ideas, rather than that we’ve… That’s just the one off kind of enablement from this globalised world that we’ve got. It’s not because we’ve really started to take off. Did you talk to Matt Barrie?

Adam Spencer: Yes, that was an amazing interview.

Peter Davison: Okay. See, look, Matt talks a lot of stuff, I read in the press, that I think, yeah he’s way out on a limb. I think he’s far too about the scene than I am. In my view, he goes way off and he’s far too bullish. But I have fantastic respect for the guy, to stick around in Australia when it probably made more sense to go overseas, and really try to make it work in this country. Plus, I also have respect for the guy, that he kickstarted his company by acquiring previous successes, rather than sort of bootstrapping his way and selling a story. He’d look for realistic signs. I have a lot of respect for what he did.

Peter Davison: I don’t share his view of the future. And I think we should be natural resources focused, and he thinks we’re a house of cards economy. I don’t believe that. But I do have a lot of respect for the fact that he was a guy who was willing to stick it here. Why did he stick with it here? And does he think that there are people out there, that would stick with it here in the future? Because I’ve also read how terrible it is to try to find tech management. He’s written publicly about that.

Peter Davison: Which I feel really sorry for. Why did he stay here, when it was so difficult to attract these people? And has that changed? So I look towards what Matt says, in terms of his experience, because he’s stuck it out quite a lot. In terms of the other stuff, I mean, you’ve got to give it to Blackbird to try… Are they creating the flywheel? They’re introducing a lot of international investors and they’ve really done some good stuff, but I don’t share their view that it’s all happening now, give it some money and make this up. I don’t share that, but you’ve got to hand it to them. 

Peter Davison: Look, the government is trying to do the best, but they are too influenced by wealthy success stories. They don’t go to grassroots. I think the federal economists understand, I think they’re too inspired by flashy things, because it’s sort of populist, rather than get to the grassroots of it. I mean, I think government should step back a bit, to be honest. And I know the startup scene’s putting their hand out, “But I think that’s wrong.” That is wrong. Government should stay out, and focus on our strengths, and let that side of things go.  

Adam Spencer: This is the advice question, If a new entrepreneur came to you tomorrow, what would you tell them to do? What would be your advice?

Peter Davison: I’d say, Mate, have you gone to an elite school? Is your dad in an elite network? Have you had an elite job? Okay. Are you either financially pretty well off, or so dissatisfied with the system, that you can’t do anything else? Okay. Maybe you should think of startups. Maybe you should go on this path. 

Peter Davison: Why don’t you go get an office in Surry Hills and mix with those guys? Mix with what you’d have to call, the elite circle. Don’t mix with the grassroot circles, frankly.” Just because, why? Not because they’re not as good, but because they don’t have the access to the capital. And those boys in the elite networks, are looking for elite people. So you’ve got Buckeridge if you don’t come from that, and that’s the reality. 

Peter Davison: Otherwise, I would say, on all other cases, and that’s a majority of cases, build it yourself. Why would you work for a venture capitalist? Why would you go on that ridiculous journey of burning yourself out, when you can be financially independent and more, while having your own freedom, working around the world, completely owning your company, starting new ventures, meeting fantastic people? Why would you do that to yourself? Your opportunity is far greater than the visible circles in the local environment tell you. Just get amongst it, man. Get amongst it, and you’ll see there’s so much more choice than what the mainstream tells you.

Adam Spencer: I love that. Last question, as you know, I’m trying to create a documentary about the Australian kind of startup community, it’s true origins, as well as I can. I do want to tell an accurate and truthful account. I want investors, entrepreneurs, policy makers, academics, people from all corners of the kind of community, to listen to this story. Any one of those categories, or all of them, to sign off, what do we need to hear from Peter Davison? 

Peter Davison: The world is a massively big place now, that in the year 2000 thereabouts, was connected like we’ve never seen before. You don’t know, I guarantee, you don’t know the opportunities that are out there. I guarantee, you have not even scratched the surface of what is possible to make your life now. So what are you doing, mixing with your local crowd, trying to make friends with people that you happen to be sort of born around, when the world is such a bigger place? Just disconnect. Go somewhere completely different, where these people exist. There are places like Puerto Rico, where there’s all these digital nomad scenes around the world.

Peter Davison: And there’s virtual places, if you can work in a virtual world. Most people can’t, because they’re highly socialised. But try to practice being an introvert. Practice being an introvert instead of the socially minded person that we are told is what an entrepreneur is. Practice digging deeper and finding those gold nuggets of life opportunity, that are so invisible to our average, daily sort of journey. That’s what I’d say, man. 

Peter Davison: Opportunity. Look for it. It’s there. I really can’t believe, man. I’ve been in this scene for years, for years, and it’s still driven by a small group of people in this small connected circle, and that don’t see beyond their own little environment. There are some, but you’re never going to hear about them, because they don’t want to be well known. Try to seek those invisible people out. You will learn so much. That’s what I’d say.

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Credits

Production Credits

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

Special Thanks

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

Music Credits

Music by Lee Rosevere

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