Brad Parsons talks about the risk tolerances of different startup ecosystems
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Brad Parsons is CEO and founder of Movus, a company that provides monitoring tools for industrial equipment with the mission of preserving the earth’s resources by improving the efficiency and life of industrial assets. At the time of recording Movius is active in 16 countries, and has ambitions for further growth. In his conversation with guest host Will Tjo, Brad discusses how he has seen an increased emphasis on funding for startups with a focus on environmental sustainability, as well as his belief that Australia’s startup ecosystem suffers from a greater degree of risk aversion than other nations.
Brad on LinkedIn: https://www.linkedin.com/in/bradparsons/
Adam Spencer: Hi. I’m Adam Spencer and Welcome to Day One, the podcast that spotlights Australian startups, founders and the organizations that empower Australian entrepreneurship.
Adam Spencer: We go back to the beginning, to tell a 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.
Adam Spencer: This episode was conducted by guest host, Will Tjo.
Will Tjo: Hi everyone, and welcome back to the Australian Startup Series interviews. Our guest today is Brad Parsons. So good to have you on, Brad.
Brad Parsons: Hey, Will. Thanks for having me here.
Will Tjo: So, to start us off, could you introduce yourself for the audience?
Brad Parsons: Sure. My name’s Brad Parsons. I’m the CEO and founder of MOVUS. We’re a technology group based out of Brisbane.
Will Tjo: Could you tell us a bit about what you do at MOVUS and how did it start?
Brad Parsons: Sure. Started the business back in 2015, which we’re now seven years old, which is pretty exciting. What we do is we provide a service called FitMachine. FitMachine monitors machine health continuously. Our customer base is industrial, and we are currently operating in about 16 countries around the world.
Will Tjo: Brad, would you say that you’ve always been an entrepreneur? Take us back even to your university days.
Brad Parsons: I’m not sure I was an entrepreneur, but I certainly didn’t fit the mold. My bosses would always be a bit nervous on their feet. I was never happy with the status quo, and that’s probably in the history of my career, I was always looking for a better way to do it and always challenged the conventional thinking, and I think that hasn’t stopped. Now, I’ve just got a better mechanism to take that and run with it.
Will Tjo: Yeah, definitely. Sounds like the stereotypical startup journey. Didn’t fit the mold, was unhappy with the status quo, decided to go out there and do something about it when you saw an opportunity. So, with MOVUS, would you classify that as a social enterprise?
Brad Parsons: When you look at us from the outside, you’d say, no. Anyone that is in this business, we’ve had a couple of new team members join this week, and I typically spend time with them, they soon realize that under the surface we are. Maybe I’ll give you a quick insight into why that is. Currently, across the globe, there’s about 2.3 billion electric motors, and they use roughly half, so about 43 to 46% of the world’s energy, but unfortunately, only less than 3% of those are actively monitored for health, so there’s enormous energy footprint out there that is consuming way more than it should, and that’s where our focus is.
Will Tjo: Yeah. Just in essence, improving efficiency using less energy.
Brad Parsons: Absolutely. Absolutely.
Will Tjo: What was it like back in 2015 when you launched your business, MOVUS?
Brad Parsons: Fair to say, I came out of 25 years of corporate, gave up my very well-paid consulting career. The startup ecosystem, certainly in Australia, was in its infancy, shall we say. There certainly wasn’t support and wasn’t the breadth and depth of capability that there is today, I’ll tell you that much.
Will Tjo: Yeah. Did you join any accelerators or those startup infrastructure support structures?
Brad Parsons: Yeah, I did actually. I joined ilab, which is part of UQ. There were very few in Brisbane. There’s probably three or four to be honest. Being in Brisbane, not being obviously in Sydney and Melbourne, at the time, it was very immature. Wasn’t too many investors, not too many startups to hold up and benchmark against. There were a few, SafetyCulture, Airtasker. SafetyCulture’s a Queensland based business, based out of Townsville, but there wasn’t too many to look to. So it was a real learning experience, fair to say.
Will Tjo: Yeah, absolutely. How has the ecosystem grown over the last seven years from your perspective? Has it been a good surprise?
Brad Parsons: I think certainly there’s been a lot of attention and obviously we just talked about investors, so more recently you see the likes of super funds investing. I think that’s a sign of maturity. Yeah, I think there’s still a long way to go. I mean, I’ve visited other countries, I’ve been to Israel, I’ve been to San Fran, so I’ve seen where it can go. Certainly there’s been a lot of focus on not trying to be pessimistic, but on startup theater. So there’s a lot of, here’s the business model canvas and we’re going to teach you that. I think the biggest weakness we have here in Australia is the next step beyond that. Once you’ve got a business up and running, the support really falls off pretty quick.
Will Tjo: Yeah. It’s interesting that you mentioned when you went to other ecosystems, like in Israel, that it’s sort of a mold of where Australia can be, and I’m curious on your perspective on why is it that we’ve lagged behind?
Brad Parsons: I think this episode’s really focused on day one. So day one is really what the ecosystem’s focused on. Day two, Amazon, Jeff Bezos calls about day one. Largely they’ve kept that mentality and thinking. I think for us we need to look at what do you need once you’ve got that business up and running, what skills, what introductions, what network? How do you raise capital? How do you price? How do you grow a business in terms of people and capability? There’s all of those things, and I’m fortunate that I had 25 years in corporate, so running large global teams, but there isn’t that support within the ecosystem to enable entrepreneurs to do that, and the fall off rate is pretty high as a result. Obviously it’s difficult as it is, but it’s difficult without that ecosystem support rallying around you.
Will Tjo: Yeah. So in essence, it’s just the, I guess, basic ingredients of what an ecosystem should have that’s still somewhat lacking. It works for you because you had 25 years of corporate experience and you were able to leverage that, but for people who don’t have that experience, it’s still quite difficult.
Brad Parsons: Yeah, absolutely. And we talked about Israel. Israel, if you’ve been there or you understand that society, everyone goes through military service, everyone goes through that. It’s mandatory, and through that they have this quite strong network that results. They’ve gone through some pretty strenuous life changing experiences in that time, so they all bond really well and their network’s really strong, and they’ve taken that into the startup thinking, and hate to use the phrase, but they’ve almost militarized that journey from idea through to exit, and there’s a very strong process and that network is really strong. We’ve got to the business model canvas and we’ve stopped. That path to exit or that path to raising capital, listing, it’s just non-existent as far as I can tell.
Will Tjo: Yeah, I liked what you mentioned about how there’s quite a lot of startup theater going on, and it’s just every other day we hear headline news that startup X has raised $5 million or 20 million or so on, and we celebrate that as opposed to actual revenue, actual earnings and so on.
Brad Parsons: Yeah. I was just on a VC call with the US, San Fran based VC this morning. There’s some celebration when those raises are going through, but you don’t hear about the successes and the growth and getting to cash flow positive. It’s all about the raise. It’s not necessary about the outcome or the impact that those businesses are having.
Will Tjo: Yeah. Do you think overall we’re still on the right trajectory?
Brad Parsons: I think there’s early signs of that. There’s certainly been some great success stories, but generally there’s businesses that are out there building global. I mean, here in Australia, you have to be global. Same as Israel, you have to be born global. We’re now operating our technology in 16 countries. Having businesses that have the support around them that can get to that point and that understand the pains of global growth and global presence, I think we’ve still got a lot of work to do, unfortunately.
Will Tjo: Yeah. Switching gears a little bit into that tangent, what do we do better than other ecosystems?
Brad Parsons: I think due to our size, what I’m seeing more, certainly more recently, is more impact, so the ecosystem and the startups that are popping out are more impact-focused. They’re not necessarily about raising a bunch of capital and getting a nice exit. What I’m seeing the themes coming through the startups is there’s themes around sustainability. There’s themes around new types of food. There’s themes around making a difference in the lives of people, and I think that’s pretty exciting. Having impact as a result of what you’re doing really drives a differentiating, and I’m certainly seeing that more here than I am overseas.
Will Tjo: Yeah. I’d love to get your opinion on this idea of impact because there is a prevailing attitude that impact and returns is mutually exclusive. Do you think that’s the case in startups?
Brad Parsons: Definitely not. I was just looking through, working with one of our customers this morning. He’s a large gold miner. You can see there’s a lot of VC capital and there’s a lot of capital in general that is trending towards those businesses, not just startups, large multinationals that are sustainability focused, that are looking at their energy profiles, that are looking at their energy mix and looking at their future, and that’s where the smart money’s all headed, and that’s just not in large multinationals. That’s at the startup level. You’ll see more and more cash will be heading towards that, and in our next raise, we’re certainly looking at VCs that adopt that and support that.
Will Tjo: Yeah. What do you think was the catalyst for that? What changed prevailing attitudes?
Brad Parsons: Over the last couple of years, we obviously had COVID and COVID’s driven some very interesting behavior, and there was already behaviors globally where the focus has been less about globalization and more about localization. You’re looking at the society you live in. You’re looking at the person down the road. We’ve all had to be in lockdown for the last couple of years, and if you’re in Melbourne, I really feel for you guys, you’ve been in Melbourne longer than any country in the planet. But in doing so, what you’re doing is looking at your local impact, looking at where do you source your goods from? Supply chains obviously being under a lot of stress, semiconductors through to fertilizer, there’s a whole range of that. And I think that localization, that focus around localization, that focus around where do my bananas come from, I think that’s going to continue and amplify.
Brad Parsons: We’ve seen with Ukraine recently that there’s a lot of supply chains disrupted, and even Scott Morrison came out recently and said, “These are the seven things that we need to focus on.” And fertilizers, as I just mentioned, and semiconductors, no surprise, they’re on the list. Businesses and people globally are looking at where does their product come from, and how can they secure that and how can they make sure it’s as sustainable as possible?
Will Tjo: Yeah, absolutely. Do you have any unpopular opinions about our ecosystem? So something you believe is true, but others aren’t on the same page?
Brad Parsons: Yeah. I guess at the risk of being a bit controversial, I think everyone is of the belief that most of the startups that we breed are globally focused. I don’t think they are. I see a lot of businesses that really trying to make a market out of their local city or even Australia. There’s just not the market size. We’re 2% of the world economy. Unless you are thinking global literally from day one, then what you’re building only has a very small market size. And we look after machines, and you’d think every factory in every plant in Australia has plenty of machines, and we could make a sizable business. But the reality is, that’s not the case. You need to be looking overseas immediately.
Will Tjo: So Brad, what we’re trying to do with this podcast is to document as historically and accurately as possible our ecosystem, and we’re aiming to reach all corners of the ecosystem from policy makers, founders, investors, entrepreneurs and so on. Is there anything that’s on your mind that you think about that they need to hear?
Brad Parsons: It’s quite clear that the growth in this country is not coming from the big multinationals. The growth is coming from startups like ours, scale ups. That’s where the future of the economy is, and unless you’re putting the investment behind it, unless you’re putting support mechanisms behind it, then the future of the country’s growth is at risk. That sounds like a big statement, but it’s true. When you go back through, you look at the figures on where the growth of employment is coming, it’s typically from businesses of this nature.
Will Tjo: Yeah. I’d like to dig in a little bit to when you said support mechanisms, is it just funding or what sort of support?
Brad Parsons: Yeah, it’s much more than that. Driving an international intellectual property agenda or strategy, how do you think about that? How do you think about trademarks? How do you think about patents? How do you think about branding, naming? You might name your brand XYZ, but it might be offensive in another country, and I think there’s car manufacturers that have been on the wrong side of that. So, thinking about all of the aspects around that, we just did a sizable amount of work around our pricing and rethinking our pricing and strategy, and finding local expertise around how to price, how to evolve from a pay per month to a pay per use to a pay per value. Having the talent and the capability here that can support businesses like ours that are going through that evolution, we need to go overseas, we need to be on late night calls for Europe, or we need to be on early calls for the US because there’s just not that sort of breadth of talent support here.
Will Tjo: And it’s a recurring theme that I often get with a lot of founders that I’ve interviewed that oftentimes they resort to going overseas to say, establish a headquarters or to get funding or in your case to seek out talent and expertise, and it is quite a shame that we can’t provide that to our entrepreneurs here in Australia.
Brad Parsons: Yeah, absolutely, and we’ve had multiple offers. One of the VCs in our last round said, “We expect you to stand up an office in eight to 12 weeks in the US.” And that’s the condition of the term is you’ll gradually move your presence to the US and you’ll be California bound. That’s a harsh reality and a pressure that just keeps coming. I get approaches from US VCs or European VCs every week, and there’s that inherent pressure. Some are more globally focused where the group I was talking to this morning had six or seven offices around the world, but certainly US VCs, they want a presence there and they want the business to be close by. That pressure’s always there and the funding is enormous out of those ecosystems, like Silicon Valley.
Will Tjo: Has the, I guess, rate of adoption for your startup, has it been easier to establish in Australia or those other 16 countries?
Brad Parsons: I wish it was the reverse. Australia has this mentality of we’re quite easy going. The reverse is actually quite true in business is that they’re actually quite risk averse. The US businesses are more technology centered. They will look to experiment, learn and adopt technology actually much faster than we do. So, I guess I have the premise, if you can make it here, you can make it anywhere, because it is obviously a small market with risk averse corporates or industrials, which we’re obviously focused on. If you can build a marketplace here, then the US is much easier, so the flip side of that is why would you create a market here? Why wouldn’t you just get up and move?
Will Tjo: Yeah. Why are we risk averse?
Brad Parsons: Good question. I wish I could put my finger on it. Maybe it’s a product of the size. Maybe it’s a product of the sophistication of the leadership. Having worked in corporates, I can speak from firsthand. I guess the need to innovate, the need to evolve businesses just doesn’t seem to be here. I mean, we’re one of the richest countries in the world. I saw a statistic that by medium wealth, we are the richest in the world, I think by 2020. When you’ve got that level of comfort, you’re not under pressure. Israel has unfortunately, quite a tough culture. They need to innovate, the need to adopt, the need to go global because everyone’s looking under their car to see what’s under there. They’re in a pretty constrained and difficult environment in that part of the world. We’re on our island paradise in the middle of South Pacific. Life’s pretty good. Why change that? And I think that’s probably part of the driver.
Will Tjo: Yeah, absolutely. It’s just because we’ve had such a great lifestyle by median wealth, the richest country in the world. We’ve never felt the need to innovate and stepping out of our comfort zone, essentially.
Brad Parsons: Yeah. You can’t keep digging bigger and deeper holes in the ground. That’s not a way to innovate.
Will Tjo: If a brand new entrepreneur or founder came to you, given all your experience, your wins and mistakes, what would you tell them to increase their chances of success?
Brad Parsons: Never stop learning. I probably spend an hour every morning. This is my time, where I go for a walk, I get some exercise, see some greenery, and then it’s podcasts. It’s listening to those that have succeeded, those who have failed, and I think if you accept the status quo, then that’s where your business will be. If you’re constantly challenging, learning, curious, growth will come.
Will Tjo: Yeah. What are some of the sources that you listen to?
Brad Parsons: There’s a guy called Ray Reich, the Metrics that Measure Up podcast, US based. There’s a group called NFX and really focus on network effects. So predominantly, some of these innovative VCs that really talk around the challenges of scaling. Once you get beyond the business model canvas, as I said, you need to start to learn and understand that there’s many aspects of running a business that is global, and constantly learning would be the biggest learning that I have, is never accept and always challenge the status quo.
Will Tjo: Yeah, that’s amazing. Brad, what’s next for you and MOVUS?
Brad Parsons: For us, we’re really getting our house in order for our next round of global growth. For us, it’s about building up the team and finding a great investor or investors, probably towards the end of the year, early next year. But the world’s just come out of the shadow of COVID. Hopefully, we can put that behind us, and for us, it’s about ramping up the growth as the world comes back online.
Will Tjo: Yeah. Brad, it’s been absolutely brilliant having you on the show today. Thank you.
Brad Parsons: Thank you, Will. Thanks for the opportunity and thanks for your time. Hopefully we can evolve the ecosystem to where it should be.
Will Tjo: Absolutely. Brad, if the audience wanted to connect and learn more with you, where could they go?
Brad Parsons: LinkedIn. I spend a lot of time on there, so reach out to me. I’m more than happy to connect and share, however I can help you.
Adam Spencer: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you’re listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. Thanks for listening and see you next time.